Want advice as a 19 year old investor.

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Topic Author
AsteriskMaximus
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Want advice as a 19 year old investor.

Post by AsteriskMaximus »

Hello Bogleheads community!

I began investing a month ago by opening a taxable Schwab Intelligent Portfolio (SIP) account and adding $16,000 from my savings while keeping $4,000 in cash. I believe this was the best course of action because I am currently a student with a extremely flexible but low paying job. I thought that the SIP could act as a high risk, high returns savings while I am young. I have no debt.

Eventually, I will be moving out on my own and continue pursuing a degree. The $4,000 cash will work as an emergency fund for rent, food, and activities. I have scholarships for tuition. I am unsure if I need more cash in the future, so any income I make will be added to this emergency fund until I feel comfortable allocating more to my investments.

I also don't see the benefit of a Roth IRA/401k at this moment because I am unsure how far my emergency fund will carry me. I want to be able to liquidate my assets in the case of any emergency. Once I secure a more formidable full-time job with a 401k I will begin contributing to an IRA/401k.

My total portfolio (SIP + CASH) is composed of:
19.4% CASH
21.7% Schwab Fundamental U.S. Large Company Index ETF (FNDX) (0.25%)
17.9% Schwab US Large-Cap ETF (SCHX) (0.03%)
16.3% Schwab Fundamental U.S. Small Company Index ETF (FNDA) (0.25%)
10.2% Schwab US Small-Cap ETF (SCHA) (0.04%)
07.8% Schwab Fundamental International Large Company Index ETF (FNDF) (0.25%)
05.2% Schwab International Equity ETF SCHF (SCHF) (0.06%)
01.6% Schwab US REIT ETF (SCHH) (0.07%)

In the future, I also want to move away from SIP. After reading more info on the community/wiki, I feel that the Fundamental indexes have too high of an expense ratio and not enough return. Looks like I will be waiting a year before selling/buying to form a new portfolio. What would be the most tax-efficient way of doing this? Or should I liquidate now and Call Schwab to transfer it to a brokerage account?

For my new portfolio, excluding cash, I am considering this 80/10/10:
50% Schwab US Large-Cap Growth ETF (SCHG) (0.04%)
30% Schwab US Broad Market ETF (SCHB) (0.03%)
10% Schwab International Equity ETF (SCHF) (0.06%)
10% Vanguard Tax-Exempt Bond Index Fund ETF (VTEB) (0.06%)

Here is a comparison of SIP and new in portfolio visualizer.

I look forward to Large-Cap growth seeing it's high returns compared to the S&P, and balancing it with broad market and international. I am still unsure about bonds in a portfolio at my age, but to not worry about tax efficiency, I went with a Municipal bond index. Do I have too much in Large-Cap Growth? Should I allocate more towards international or broad market? Is VTEB a tax-efficient bond index for a taxable account?

To sum up my questions: does it sound like I am on the right track for my age? Would my new portfolio be formidable from my 20s to 30s, 40s, 50s, etc.? I hope to have a Roth IRA/401k by my early 20s. Should I actually start it now?

Thank you for reading all the way through this. Any comments/opinions/advice would be appreciated. :D
homebuyer6426
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Re: Want advice as a 19 year old investor.

Post by homebuyer6426 »

You are way ahead of the curve.

Absolutely right to switch to the low expense ratio ETFs. I would also discard the bonds due to your age, but that's up to you.

You stated you want flexibility in being able to use your money. This is why a taxable account makes sense for you. I do the same thing - age 35 - because not only am I looking to retire early, I would also like the flexibility to take a few years off of work if I need to (even though I have no current plans to do so).

I would wait for your first "real" job with a 401k or pension plan before you decide about the Roth IRA. What you get from that job may make the Roth semi-redundant. I have a small percentage of my investments in a Roth, but I am on the fence about continuing to add more, since my workplace has a pretty generous pension plan, and I also have a 401k from a previous job.

Impressed with your level of research and preparedness! Good luck.
43% Total Stock Market | 53% Consumer Staples | 4% Short Term Reserves
Topic Author
AsteriskMaximus
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Re: Want advice as a 19 year old investor.

Post by AsteriskMaximus »

homebuyer6426 wrote: Wed Sep 22, 2021 8:07 am You are way ahead of the curve.

Absolutely right to switch to the low expense ratio ETFs. I would also discard the bonds due to your age, but that's up to you.

You stated you want flexibility in being able to use your money. This is why a taxable account makes sense for you. I do the same thing - age 35 - because not only am I looking to retire early, I would also like the flexibility to take a few years off of work if I need to (even though I have no current plans to do so).

I would wait for your first "real" job with a 401k or pension plan before you decide about the Roth IRA. What you get from that job may make the Roth semi-redundant. I have a small percentage of my investments in a Roth, but I am on the fence about continuing to add more, since my workplace has a pretty generous pension plan, and I also have a 401k from a previous job.

Impressed with your level of research and preparedness! Good luck.
Thank you for your kind words and wisdom.

When you mention the switch to the low expense ETFs, should I sell now with the market down, or wait a year for capital gains to be taxed less? If I do it now and invest in the new portfolio I mentioned above, the gains from it might offset the losses within a year. I don't want to act too quickly out of desperation, however.
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retired@50
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Re: Want advice as a 19 year old investor.

Post by retired@50 »

AsteriskMaximus wrote: Wed Sep 22, 2021 7:02 am I also don't see the benefit of a Roth IRA/401k at this moment because I am unsure how far my emergency fund will carry me. I want to be able to liquidate my assets in the case of any emergency.
Thank you for reading all the way through this. Any comments/opinions/advice would be appreciated. :D
To help illustrate the benefits of a Roth IRA I'd suggest the following two wiki pages.

Roth IRA: https://www.bogleheads.org/wiki/Roth_IRA
Roth IRA as an EF: https://www.bogleheads.org/wiki/Roth_IR ... gency_fund

Keep in mind that contributions and distributions to/from Roth IRAs can be confusing, but once you know and understand the rules you might change your thinking.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
homebuyer6426
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Re: Want advice as a 19 year old investor.

Post by homebuyer6426 »

The expense ratio is something that really matters for the long-term. You can keep your old investments for a year in order to get taxed at the lower rate. On $16,000, your 0.25 to 0.04 expense ratio change is going to be approximately $40 for a year if my math is correct. If you're in say a 20% tax bracket, you would need at least $200 in short-term gained capital before your capital gains tax exceeded your expense ratio fee. Which maybe you have. This is back-of-the-napkin math mind you, check my work. Switching the funds now would probably be a fine idea.

Regarding your point I didn't mention about having a tilt towards large-cap, let me just mention that there's no guarantee that outperforms the S&P500 in the future. So I personally do not tilt for Large/Small Cap or Growth/Value.
Last edited by homebuyer6426 on Wed Sep 22, 2021 9:04 am, edited 1 time in total.
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JBTX
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Re: Want advice as a 19 year old investor.

Post by JBTX »

I'd do the Roth IRA as soon as you can. As mentioned you can always withdrawal the amount you contributed. Down the road as your income increases you don't have to worry about tax effects of changing funds or rebalancing or dividends.
epoche
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Re: Want advice as a 19 year old investor.

Post by epoche »

Zowie! You are way out front for your age.

Even given your hesitations about the Roth, I would recommend starting it now with money taken from the SIP portion. I view forgone IRA contributions as an opportunity cost because you never get another chance to put in that year's amount. You can contribute an amount equal to your earned income for the year or $6000, whichever is less. Remember that you can always withdraw the amount you contributed to a Roth IRA free of taxes and penalties at any time. If you have to withdraw those contributions, you are no worse off than if you hadn't put it into the Roth (except that you can't use any earnings on the contributions without a penalty). You also want to start the five-year clock. There is some other flexibility about early withdrawals. Since you are with Schwab, here is their page on Roth IRA withdrawals.
https://www.schwab.com/ira/roth-ira/withdrawal-rules
Some even use a Roth IRA as part of their emergency fund:
https://www.investopedia.com/articles/p ... y-fund.asp

Since you're clearly inclined to learning more, you'll want to move away from the SIP. Sooner is better, because of the benefit of lowering expense ratios also compounds over time.

I would be wary of your proposed heavy tilt toward SCHG, since those stocks are also highly weighted in SCHB (the top 8 holdings are the same between the two, and make up about 49% of SCHG and 27% of SCHB, so you'd have about 32% of your portfolio in those 8). These 8 have done extraordinarily well in the recent past, so this is likely an example of recency bias. Why not just use SCHB for your US Equity holdings?

I also don't think you need to worry about tax-exempt bonds until you're in a higher tax bracket. Giving up nominal yield for tax savings at a low tax rate is likely not a good trade-off. I'd spend your time figuring out how much (if any) you want to allocate to bonds given your long time horizon and current bond yields. You could look at I-bonds as an alternative with inflation protection, although they would mature in 30-years which would likely be in your prime earning years (and corresponding highest tax rate). You may be able to protect some of the interest from taxes if used for education purposes.
https://www.treasurydirect.gov/indiv/pr ... glance.htm

It is clear that you will travel far and fast. Keep learning, ask questions and post updates, and we'll be learning from you before long!
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retired@50
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Re: Want advice as a 19 year old investor.

Post by retired@50 »

AsteriskMaximus wrote: Wed Sep 22, 2021 7:02 am ...
I am currently a student with a extremely flexible but low paying job.
...
Looks like I will be waiting a year before selling/buying to form a new portfolio. What would be the most tax-efficient way of doing this? Or should I liquidate now and Call Schwab to transfer it to a brokerage account?
...
Given the statements above about the low paying job and tax efficiency, it may not matter that much if you're filing your own taxes. Lots of low-paid workers barely pay anything in income taxes.

If you're still a dependent on your parent's tax return, then you'd probably want to coordinate with them.

As always, using tax software (like Turbo Tax) can be helpful for modeling different tax "What-If" situations before actually making a move.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
dbr
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Re: Want advice as a 19 year old investor.

Post by dbr »

AsteriskMaximus wrote: Wed Sep 22, 2021 7:02 am

I look forward to Large-Cap growth seeing it's high returns compared to the S&P, and balancing it with broad market and international. I am still unsure about bonds in a portfolio at my age, but to not worry about tax efficiency, I went with a Municipal bond index. Do I have too much in Large-Cap Growth? Should I allocate more towards international or broad market? Is VTEB a tax-efficient bond index for a taxable account?
Unlike evaluating cars by fuel economy, acceleration, and braking and handling, or computers by processing speed, memory, and storage, PV statistics on return are not a property of a fund that you can buy. High returns compared to the S&P is not a valid evaluation.

Attempts have been made to predict expected return of an equity portfolio from other properties of the portfolio and the one that has had some credibility as a robust model is the Fama-French three factor model. There is lots of literature in the area of portfolio factors. In any case the F-F model would say that value rather than growth is a predictor of higher expected return. Because expected return is understood to be the mean of a distribution of possible returns that has significant spread around the mean, it is possible statistically for actual returns over a period to be greater for a portfolio with lower expected return than for higher expected return. Of course that condition can reverse in any period. In any case I don't think there is any suggestion that growth funds should inherently offer greater expected return than the market. Whether or not F-F is predictive today is open to discussion, but there are many doubts.

It is hard to justify anything other than just holding the total market, certainly not based on PV back testing.
pkcrafter
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Re: Want advice as a 19 year old investor.

Post by pkcrafter »

Welcome to the forum,

Here's a link to a prior discussion on fundamental investing.

viewtopic.php?t=333196

Personally, I don't consider fundamental investing as pure index investing.


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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Taylor Larimore
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Re: Want advice as a 19 year old investor.

Post by Taylor Larimore »

AsteriskMaximus:

Welcome to the Bogleheads Forum!

I have two suggestions:

1. Read William Bernstein's free, short, online book written for beginning investors: If you Can

2. Consider The Bogleheads' Three-Fund Portfolio recommended by Dr. Bernstein.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom "There may be better investment strategies than owning just three broad-based index funds but the number of strategies that are worse is infinite."
"Simplicity is the master key to financial success." -- Jack Bogle
tomsense76
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Re: Want advice as a 19 year old investor.

Post by tomsense76 »

Congrats on getting started so early! :D

Put everything you can into a Roth (up to the limit assuming you have earned income to support it). I really regret not doing that more when I was your age. Has it derailed my plans not to? No, but my NW would likely be 10% greater just by doing that. Something to consider. As others note, one can always withdraw their contributions (though not growth) from a Roth. Also it is tax-free so one doesn't need to worry about tax efficiency.

Also would take a look at this info on asset allocation. This should help give you an idea of the volatility you will encounter (risk) for some average amount of return (often called expected return). This thread ( viewtopic.php?t=309472 ) may be of interest since you are thinking of investing your excess cash from your EF. iShares has some ETFs that may work for this. Though there might be a cheaper (lower expense ratio) option at Schwab. So would do a little sleuthing.

PS: Would skip the muni bonds for 2 reasons. 1 they are kind of rougher on stomach than higher quality bonds like treasuries or total bond. 2 munis are priced so they only really make sense for people getting hammered on Federal and State income tax, which is not your case (at least not yet anyway :wink:)
"Anyone who claims to understand quantum theory is either lying or crazy" -- Richard Feynman
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AsteriskMaximus
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Re: Want advice as a 19 year old investor.

Post by AsteriskMaximus »

Thank you so much to everyone who has replied!

After reading your considerations, I will:
  • Look into opening a Roth IRA. I was not aware of the emergency-fund capability of an IRA. I always thought that ANY withdrawal incurred penalties. Glad to learn that is not the case!
    • For the IRA, how does Schwab Target 2060 Index Fund (SWYNX) (0.08%) sound? Even though my asset isn't cash, if I sell SWYNX for less than how much I contributed, no penalties/taxes would be incurred, right?
  • Work with Schwab to convert my SIP account to a standard brokerage account and invest in a new portfolio. I will be accepting the losses with the current market. Can these losses be tax-deductible?
  • Allocate more towards US broad, slightly more towards International Broad, and no bonds. I still personally believe in the holdings of the SCHG, as if investing in these companies personally, and tilt towards this index. I also decided at my age I can risk a bondless portfolio. Perhaps a few years from now I'll learn my mistake and owe one to the community :wink:
    • 65% Schwab US Broad Market ETF (SCHB) (0.03%)
      20% Schwab US Large-Cap Growth ETF (SCHG) (0.04%)
      15% Schwab International Equity ETF (SCHF) (0.06%)
This list is not exhaustive; for new readers, I'm still open to your opinion! :D
Last edited by AsteriskMaximus on Wed Sep 22, 2021 2:35 pm, edited 2 times in total.
Luckywon
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Re: Want advice as a 19 year old investor.

Post by Luckywon »

AsteriskMaximus wrote: Wed Sep 22, 2021 12:55 pm
65% Schwab US Broad Market ETF (SCHB) (0.03%)
20% Schwab US Large-Cap Growth ETF (SCHG) (0.04%)
15% Schwab International Equity ETF (SCHF) (0.06%)
Wish I had done that when I was 19!!!
tibbitts
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Re: Want advice as a 19 year old investor.

Post by tibbitts »

Just to be contrarian, I'd stick to what you have now. For amusement, invest additional funds in your other alternative, and see what the difference turns out to be in fifty years or so.
chris319
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Re: Want advice as a 19 year old investor.

Post by chris319 »

Ah, to be 19 again :D

That's a nice, conservative portfolio — all index funds, I see. At least you're not owning GME, TSLA or virtual currency in a Robinhood account :shock:

You've got 40+ years of investing ahead of you. At your age you can well afford to be a little less conservative. If the market tanks you've got 40+ years for it to recover. You're not 60 years old on the brink of retirement.

No way would I suggest owning individual stocks, but you should at least look at leveraged index funds such as SSO and QLD for a portion of your portfolio. There is a lot of on-line cruft regarding LETF's. Both SSO and QLD have price histories going back before 2008, so all you have to do is pull up a chart on Yahoo! Finance showing the entire life of the fund and judge for yourself.

ETF's are all the rage now and there is an ETF for just about everything, from genomics to artificial intelligence to semiconductors. If you want to add some spice to your portfolio there is GNOM, LRNZ and SOXL.

It is a law of physics in investing that you can't have upside volatility without downside volatility. Volatility cuts both ways. It's up to you to judge how much volatility you can tolerate, keeping in mind that you have 40+ years of investing ahead of you.
Last edited by chris319 on Wed Sep 22, 2021 1:58 pm, edited 1 time in total.
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GP813
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Re: Want advice as a 19 year old investor.

Post by GP813 »

Money x Time = Wealth.

If you continue to invest in broadly diversified index funds you are already ahead of the game because you are starting at 19 years old, congrats.
chris319
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Re: Want advice as a 19 year old investor.

Post by chris319 »

You can do your own backtesting at https://www.portfoliovisualizer.com/

Below is a comparison of 2x QLD and 1x QQQ:

QLD: ProShares Ultra QQQ $10,000 $324,423 26.77%

QQQ: Invesco QQQ Trust $10,000 $88,033 15.99%

They both invest in the same index (NDX).

Here are SSO and VOO:

SSO: ProShares Ultra S&P500 $10,000 $110,144 25.22%

VOO: Vanguard S&P 500 ETF $10,000 $36,047 12.77%

Again, same index.
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AsteriskMaximus
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Re: Want advice as a 19 year old investor.

Post by AsteriskMaximus »

chris319 wrote: Wed Sep 22, 2021 1:55 pm You can do your own backtesting at https://www.portfoliovisualizer.com/

Below is a comparison of 2x QLD and 1x QQQ:

QLD: ProShares Ultra QQQ $10,000 $324,423 26.77%

QQQ: Invesco QQQ Trust $10,000 $88,033 15.99%

They both invest in the same index (NDX).

Here are SSO and VOO:

SSO: ProShares Ultra S&P500 $10,000 $110,144 25.22%

VOO: Vanguard S&P 500 ETF $10,000 $36,047 12.77%

Again, same index.
These leveraged ETFs are definitely an interesting product; it is my first time hearing of them. I'll look into them more, but for the first few years of investing the volatility of Large-Cap Growth is as high as I am comfortable with, until I can settle more funds into my portfolio down the road. I wouldn't want to be in some emergency at the same time the market experiences a drawdown with LETFs.
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Re: Want advice as a 19 year old investor.

Post by 4nursebee »

I wish I had started a Roth at age 19.
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chris319
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Re: Want advice as a 19 year old investor.

Post by chris319 »

AsteriskMaximus wrote: Wed Sep 22, 2021 2:32 pm These leveraged ETFs are definitely an interesting product; it is my first time hearing of them. I'll look into them more, but for the first few years of investing the volatility of Large-Cap Growth is as high as I am comfortable with, until I can settle more funds into my portfolio down the road. I wouldn't want to be in some emergency at the same time the market experiences a drawdown with LETFs.
Right, which is why I suggested them for a portion of your portfolio. So much depends on what portion of your portfolio is in LETF's.

As a retiree, I am heavily into LETF's but I have soc sec and a pension, so I've got a constant income stream no matter what happens to my LETF holdings.
Financial decisions based on emotion often turn out to be bad decisions.
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retired@50
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Re: Want advice as a 19 year old investor.

Post by retired@50 »

AsteriskMaximus wrote: Wed Sep 22, 2021 2:32 pm These leveraged ETFs are definitely an interesting product; it is my first time hearing of them. I'll look into them more, but for the first few years of investing the volatility of Large-Cap Growth is as high as I am comfortable with, until I can settle more funds into my portfolio down the road. I wouldn't want to be in some emergency at the same time the market experiences a drawdown with LETFs.
Before considering a leveraged ETF, you might want to read this wiki page that discusses them.

One piece of timeless investing wisdom is this: Don't invest in anything you don't understand.

See link: https://www.bogleheads.org/wiki/Leverag ... verse_ETFs

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
chris319
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Re: Want advice as a 19 year old investor.

Post by chris319 »

The wiki page contains some inaccurate information. In addition, the graphs are outdated. That's why I directed OP to portfoliovisualizer.com and incorporated the backtest results in a previous post. He can run the backtests for himself and get up-to-date information.

I also noted that both SSO and QLD have historical data going back before the 2008 recession. Just pull up a graph of the entire price history.

People often say LETF's offer 2x or 3x the return of the underlying index. This is incorrect. It is correct to say they offer 2x or 3x the daily return of the underlying index.

LETF's are not that difficult to understand.
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retired@50
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Re: Want advice as a 19 year old investor.

Post by retired@50 »

chris319 wrote: Wed Sep 22, 2021 5:35 pm The wiki page contains some inaccurate information.
Suggest the appropriate corrections in this thread: viewtopic.php?p=212325#p212325

There is little point in having inaccurate wiki pages here at Bogleheads.org. Please report your issue as a new post on the last page of the thread.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
chris319
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Re: Want advice as a 19 year old investor.

Post by chris319 »

I tried logging into the wiki and it refused my credentials.

I'm not going to suggest rewording an article through an intermediary. I'd rather edit the article just like I do in wikipedia.
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retired@50
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Re: Want advice as a 19 year old investor.

Post by retired@50 »

chris319 wrote: Wed Sep 22, 2021 6:09 pm I tried logging into the wiki and it refused my credentials.

I'm not going to suggest rewording an article through an intermediary. I'd rather edit the article just like I do in wikipedia.
Bogleheads has tighter quality control, or so it would appear. You can apply to be a wiki editor if you desire.

See link: https://www.bogleheads.org/wiki/Main_Page

From the page linked above:
Anyone can read the wiki. If you would like to edit it, you must first join the Bogleheads forum. Once you've joined, send a private message requesting access, and you can then become an editor. Information on editing the wiki is available on the left sidebar of every wiki page. Suggestions are welcome by posting in Suggestions for the Wiki.
Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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Taylor Larimore
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Re: Want advice as a 19 year old investor.

Post by Taylor Larimore »

AsteriskMaximus:

Follow The Boglehead's Investment Philosophy and you are almost guaranteed to be a successful investor:

1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course

Best wishes
Taylor
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Luckywon
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Re: Want advice as a 19 year old investor.

Post by Luckywon »

tibbitts wrote: Wed Sep 22, 2021 1:06 pm Just to be contrarian, I'd stick to what you have now. For amusement, invest additional funds in your other alternative, and see what the difference turns out to be in fifty years or so.

I'm betting that OP won't share your interest in this 50 years from now. But if he did, he could backtest any theoretical portfolio at any time using a tool like portfoliovisualizer. No need to complicate his own portfolio to find out the answers to such questions.
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Re: Want advice as a 19 year old investor.

Post by shess »

One of the most powerful gifts I ever received was when my boss in high school gave me a $50 check made out to Twentieth Century Mutual Funds, plus an application form. They're now American Century, and I haven't had anything with them for over 20 years, but it got me thinking!

My biggest mistakes in investing were mostly around FOMO (Fear Of Missing Out). Jumping into something without understanding it, moving things around chasing The Next Big Thing, and just generally overmanaging my selections. It took me 15 years to get past that. I never managed to lose enough money to materially injure my finances, but I did learn some painful lessons on the order of Mark Twain's cat who sat on a hot stove and now won't even consider sitting on a cozy warm one. The past 15 years have been straight 3-fund portfolio, and I honestly cannot see any downside to it, I've basically had the same outcomes as before, I just don't have to obsess over it to get them.

The single biggest and most powerful thing I ever learned was that "Time in the market beats market timing". If you do market timing and you are not successful, you can find yourself losing a lot of your portfolio quickly. You can't solve that by market timing harder. But if you gear up with a solid 3-fund portfolio and just leave it alone, your main decision is how much of your income to put in, and then when to call it a day. You can put more money in to get to your goals faster, but letting it simmer for longer will also work, and both options are pretty straightforward to understand and implement.

I know that you want to imagine that there's a slick trick that you can just find, apply, and profit from. It's certainly what I thought. Why I eventually changed my approach is because I realized that there were all of these smart and well-off people saying things like "Time in the market beats market timing", and I realized ... what if they're right?
chris319
Posts: 1659
Joined: Thu Jan 28, 2021 5:04 pm

Re: Want advice as a 19 year old investor.

Post by chris319 »

Let's assume OP has 46 more years of investing until age 65.

QQQ: historical CAGR = 15.99. After 46 years $10,000 becomes $827,157.

QLD: historical CAGR = 26.77. After 46 years $10,000 becomes $49,317,501.

VOO: historical CAGR = 12.77. After 46 years $10,000 becomes $226,541.

SSO: historical CAGR = 25.22. After 46 years $10,000 becomes $28,004,813.

It's up to OP whether he wants to aim high or aim low.

Warren Buffett didn't get to where he is by aiming low.
Financial decisions based on emotion often turn out to be bad decisions.
chris319
Posts: 1659
Joined: Thu Jan 28, 2021 5:04 pm

Re: Want advice as a 19 year old investor.

Post by chris319 »

Taylor Larimore wrote: Wed Sep 22, 2021 6:35 pm AsteriskMaximus:

1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course
Add:

11. Don't expect instant gratification.
12. Don't try to strike it rich.
13. Keep emotion out of your investing.
Financial decisions based on emotion often turn out to be bad decisions.
Californiastate
Posts: 1516
Joined: Thu Feb 04, 2021 10:52 am

Re: Want advice as a 19 year old investor.

Post by Californiastate »

Patience. Were you in the market in March of 2020? Everybody has a plan until the get hit.
tibbitts
Posts: 23728
Joined: Tue Feb 27, 2007 5:50 pm

Re: Want advice as a 19 year old investor.

Post by tibbitts »

Luckywon wrote: Wed Sep 22, 2021 6:38 pm
tibbitts wrote: Wed Sep 22, 2021 1:06 pm Just to be contrarian, I'd stick to what you have now. For amusement, invest additional funds in your other alternative, and see what the difference turns out to be in fifty years or so.

I'm betting that OP won't share your interest in this 50 years from now. But if he did, he could backtest any theoretical portfolio at any time using a tool like portfoliovisualizer. No need to complicate his own portfolio to find out the answers to such questions.
He'll be more likely to share that interest if he has a chunk of his portfolio invested in both approaches. Besides I don't want to be the only person around here with dozens of funds. I just added another one today (well, technically tomorrow.)
Robert20
Posts: 453
Joined: Fri Apr 10, 2020 10:51 pm

Re: Want advice as a 19 year old investor.

Post by Robert20 »

chris319 wrote: Wed Sep 22, 2021 1:55 pm You can do your own backtesting at https://www.portfoliovisualizer.com/

Below is a comparison of 2x QLD and 1x QQQ:

QLD: ProShares Ultra QQQ $10,000 $324,423 26.77%

QQQ: Invesco QQQ Trust $10,000 $88,033 15.99%

They both invest in the same index (NDX).

Here are SSO and VOO:

SSO: ProShares Ultra S&P500 $10,000 $110,144 25.22%

VOO: Vanguard S&P 500 ETF $10,000 $36,047 12.77%

Again, same index.
Replace SPXL instead of SSO :D
chris319
Posts: 1659
Joined: Thu Jan 28, 2021 5:04 pm

Re: Want advice as a 19 year old investor.

Post by chris319 »

Replace SPXL instead of SSO :D
I can't recommend a 3x fund. My testing has shown 3x to be suboptimal when Mr. Bear rears his ugly head.
Financial decisions based on emotion often turn out to be bad decisions.
vas
Posts: 455
Joined: Thu Mar 06, 2014 11:51 am

Re: Want advice as a 19 year old investor.

Post by vas »

Lots of good advice above but perhaps there are some other priorities to consider. At 19 one of the best things you can do is get yourself educated. Go to school, earn a degree, learn a trade, or otherwise invest in your human capital. If you can keep yourself out of too much debt in the process so much the better. This will pay off in spades.

Another good investment at 19 is your own personnel development. Do some low budget traveling, spend some quality time with a backpack in Central America, Brazil, West Africa, or Central Asia. Go somewhere that will scare you and challenge your every assumption. Your experiences and the people you meet will change you in ways you can't imagine.

Just my two cents. Roths are good too.
“For every complex problem, there is a solution that is clear, simple, and wrong.” - H. L. Mencken
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