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Financial Advice/Services
OhtheVogonity
Registered User regular
Registered User regular
After about a year of saving, I'm within striking distance of my savings goal, ten thousand dollars. So now the question becomes, "What the hell do I do now?". I want to invest and build a healthy pool of money I can use to either start a business or buy a home.
But I need professional advice. To hell with day-trading. I need someone I can talk to about my goals and what my portfolio needs to look like to reach them. And then I need to find a way to buy into those things.
So H/A, who do I go to? Is Charles Schwab a non-evil entity? Will there be someone at my bank (Capital One) who is not an idiot? Who should i look up in the yellow pages? This is all new to me.
But I need professional advice. To hell with day-trading. I need someone I can talk to about my goals and what my portfolio needs to look like to reach them. And then I need to find a way to buy into those things.
So H/A, who do I go to? Is Charles Schwab a non-evil entity? Will there be someone at my bank (Capital One) who is not an idiot? Who should i look up in the yellow pages? This is all new to me.
Oh freddled gruntbuggly...thy micturations are to me/ As plurdled gabbleblotchits on a lurgid bee
OhtheVogonity on
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Congratulations!
Firstly, you'll probably want to keep about a third of that in a "high" interest savings account as an easily accessible "OH SHIT!" fund.
Second, Schwab is fine, and your retail bank definitely has a few guys there as well. Pop in and tell them what you have, what you're looking to do. They'll give you literature.
You can withdraw from a traditional or roth IRA as a FIRST time home buyer penalty free. Now first time home buyer really means that you haven't own a home in the last 2 years, and really it can be for a home for the IRA owner's spouse or children not just the account holder. Also there is a lifetime cap of 10k that can be withdrawn penalty free for the purchase of a first home, so keep that in mind, because you're going to want to put down more than 10k.
Also always keep some money liquid for the "oh shit!" fund. General rules tend to be 4-6 months living expenses if you're a single earner household and 3-4 months if you're a two earner house (ie your wife and you both work and bring home a substantial portion of the income). This is a generalize rule and you can figure out how to tailor it to your situation better depending on job security, expenses, and what makes you comfortable.
I'm assuming you're on the younger side and therefore when/if you invest some of your savings into a retirement account like a 401k or IRA then I'd aim for a heavy chunk of it invested in the stock market, but go a tad safer route and put it into an index fund. you buy shares in the fund and the fund is invested into a healthy mix of stocks and such to mimic an entire index such as the S&P 500 for example by investing in a wide range from the S&P that is representitive of the whole index. So if the S&P goes up then so does your fund. This provides instant portfolio diversity, but I still wouldn't invest your IRA/401k/b money in a single index fund, but maybe just half and then the other half is something else.
Generally speaking at a young age you want to invest more heavily in stocks than bonds as you have some 30 years to ride out the dips of the market and come out with an average % gain much higher than bonds alone. Then gradually you shift your investments over to less risk adverse investments than stock as you get old and older until the majority of your investment assests rest in other areas than the stock market.
This is all mostly long term, and it sounds like you have shorter goals that are more likely within the next 5 years, but it's always super important to consider the long view and never too early to start saving for retirement. Compound interest is your best friend.
I'd say put 1/3 of it in a money market for your oh shit fund, 1/3 into CDs and then 1/3 into starting an IRA.
If your employer offers a 401k with any kind of matching then at least get their matching first, it's free money. Beyond their match point considering the quality of the 401k offered and you may find it's not as desireable as opening a separate IRA with, say, your bank and invest any retirement moneys BEYOND the match % into the IRA instead.