NEWBIE HERE! I really look forward to learning so much from this site

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
mstr4j0525
Posts: 10
Joined: Fri Dec 03, 2021 3:10 pm

NEWBIE HERE! I really look forward to learning so much from this site

Post by mstr4j0525 »

My wife and I are currently teachers with 2 young and beautiful children. We live very comfortable in our market, even as teacher because we have acquired very little debt over the years. We make around 10k a month from our jobs and another 3k a month in rental properties. My wife is very comfortable with her life and her future retirement plan but I am looking for a little more. Below is my information and questions, thanks!

Emergency funds: Yes

Debt: Certificate of Sale Mortgage with no Interest, 60k left with 260k equity / RV 20k left @ 5.25

Tax Filing Status: Married Filing Jointly with 2 dependents

Tax Rate: 24% Federal, 7% State

State of Residence: SC

Age: 36

Desired Asset allocation: 65% stocks / x35% bonds - I really dont know if I should be this safe at my age
Desired International allocation: xx% of stocks - I am looking for 100% thoughts and recommendations here because I have no idea.

Please provide an approximate size of your total portfolio (as in 50K, 700k, 1.4M, etc.) or as (high four-figures, mid five-figures, low six-figures, etc.). Low six figures

Show us your current portfolio including all investment and retirement accounts (yourself and spouse or civil partner, if applicable) as it's important to look at the portfolio as a unified whole rather than look at accounts in isolation. Also include the available funds in your employer provided retirement plans.

I am on SC Retirement Pension Plan / So is my Wife. We also have a ROTH IRA, well it’s really hers that we max out. It is through Edward Jones but looking for advice on where to move it as fees are ridiculous and how to do this. I would like to begin maxing out contributions for me in a ROTH, any direction is appreciated.

Current retirement assets

Wife’s Roth through Edward Jones / Low 6 figures
I’m sure it's a type of diversified mutual fund

Contributions

New annual Contributions
Max out Roth IRA

Available funds
50k initial investment
3k a month

Questions:
1. I need to get set up for the long term. I’m not a major risk-taker either. I can retire from teaching in 14 years, and if I invest correctly possibly sooner. I have several rental properties that I expect to help supplement my pension income to what I make now. My goal is 6k a month for the rest of my life to live in my market comfortably and hopefully have compounding money to give my kids when I’m gone and other ventures I may take.

2. Obviously I would like to move away from Edward Jones, it was a mother-in-law thing but fees are ridiculous. What is the best way or best platform for moving my wife's current Edward Jones Roth IRA along with starting my own? All this in addition to my 50k initial investment and 3k per month?

All information is well respected on my end and greatly appreciated
jebmke
Posts: 25474
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by jebmke »

Welcome to the forum.

As to asset allocation ("is 65/35 too safe"), that is something only you can answer. In the end, the best allocation is one you are comfortable with and will stick to - adjusting only if your risk tolerance/needs change, not with market conditions.

With the bulk of the assets currently in tax advantaged plans, I'd consider looking seriously at a Target Retirement type fund that meets your overall allocation target. Alternatively, a three-fund portfolio.

As for platforms. If I were leaving EJ or another similar broker, I'd look at Vanguard, Fidelity or Schwab. Each has its unique pros and cons and various members here who are advocates. They are all solid choices.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Topic Author
mstr4j0525
Posts: 10
Joined: Fri Dec 03, 2021 3:10 pm

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by mstr4j0525 »

Thanks for your information! I don’t have a framework to even define risk? At some point, I would assume your age can “allow” you to assume more risk, granted I don’t know what standard would be. You would suggest working with an advisor from vanguard, CS, Fidelity, etc? Thanks again
alex_686
Posts: 13320
Joined: Mon Feb 09, 2015 1:39 pm

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by alex_686 »

mstr4j0525 wrote: Fri Dec 03, 2021 3:17 pm 1. I need to get set up for the long term. I’m not a major risk-taker either. I can retire from teaching in 14 years, and if I invest correctly possibly sooner. I have several rental properties that I expect to help supplement my pension income to what I make now. My goal is 6k a month for the rest of my life to live in my market comfortably and hopefully have compounding money to give my kids when I’m gone and other ventures I may take.
Teachers tend to be risk adverse. So take what I say for a sense of perspective.

Your human capital is bond like. I am assuming you enjoy a steady salary and a secure position.

You pension is bond like. I am assuming it is state backed with a COLA or inflation adjustment.

Unlevered (debt free) rental properties tend to have the same level or risk and return as BBB bonds. Note - most people overestimate the safety of their rental properties. There are Behavioral Economic issues that tend to come into play.

As such, I would guess that you have a large ability to take risk with your investment portfolio. Willingness is a completely different dimension. Willingness should be the dominate factor here.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Topic Author
mstr4j0525
Posts: 10
Joined: Fri Dec 03, 2021 3:10 pm

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by mstr4j0525 »

alex_686 wrote: Fri Dec 03, 2021 4:51 pm
mstr4j0525 wrote: Fri Dec 03, 2021 3:17 pm 1. I need to get set up for the long term. I’m not a major risk-taker either. I can retire from teaching in 14 years, and if I invest correctly possibly sooner. I have several rental properties that I expect to help supplement my pension income to what I make now. My goal is 6k a month for the rest of my life to live in my market comfortably and hopefully have compounding money to give my kids when I’m gone and other ventures I may take.
Teachers tend to be risk adverse. So take what I say for a sense of perspective.

Your human capital is bond like. I am assuming you enjoy a steady salary and a secure position.

You pension is bond like. I am assuming it is state backed with a COLA or inflation adjustment.

Unlevered (debt free) rental properties tend to have the same level or risk and return as BBB bonds. Note - most people overestimate the safety of their rental properties. There are Behavioral Economic issues that tend to come into play.

As such, I would guess that you have a large ability to take risk with your investment portfolio. Willingness is a completely different dimension. Willingness should be the dominate factor here.
I’m assume you are saying that due to teaching and rental properties owned outright that I have a high number of “bond-like” investments? That actually makes a lot of sense. So how would you invest a lump sum of 50k, well I guess 44 after IRA initial contribution? Thanks man
jebmke
Posts: 25474
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by jebmke »

An advisor is one option. Before going down that route, I'd probably do a little investigating and think about my view of things like volatility. Here is one of Vanguard's tools - it is not complicated and only a guide but it is the kind of risk profiling an advisor might do.

Many years ago I did a questionnaire similar to this with Vanguard (I think back then it was a bit more complex). I did it multiple times - trying to take it after the stock markets had had a series of good days and again later after a series of bad days to see if my views were "stable". I also asked my wife to do the same.

https://retirementplans.vanguard.com/VG ... Step=start

The other firms (Schwab and Fidelity) may have similar tools. If you hang around here for a while, you may also hear from other posters and people who have some ideas on how to think about risk tolerance.

You will also hear a lot of folks here talk about the "need" to take risk versus the "willingness" to take risk [aka risk tolerance]. Those can be quite different. Someone with a pension that covers a significant portion of their retirement spending might have a low need to take risk. At the same time, they may have a large investment portfolio which insulates them from risk and, as a result they might have a desire and tolerance for higher risk.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Topic Author
mstr4j0525
Posts: 10
Joined: Fri Dec 03, 2021 3:10 pm

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by mstr4j0525 »

jebmke wrote: Fri Dec 03, 2021 5:00 pm An advisor is one option. Before going down that route, I'd probably do a little investigating and think about my view of things like volatility. Here is one of Vanguard's tools - it is not complicated and only a guide but it is the kind of risk profiling an advisor might do.

Many years ago I did a questionnaire similar to this with Vanguard (I think back then it was a bit more complex). I did it multiple times - trying to take it after the stock markets had had a series of good days and again later after a series of bad days to see if my views were "stable". I also asked my wife to do the same.

https://retirementplans.vanguard.com/VG ... Step=start

The other firms (Schwab and Fidelity) may have similar tools. If you hang around here for a while, you may also hear from other posters and people who have some ideas on how to think about risk tolerance.

You will also hear a lot of folks here talk about the "need" to take risk versus the "willingness" to take risk [aka risk tolerance]. Those can be quite different. Someone with a pension that covers a significant portion of their retirement spending might have a low need to take risk. At the same time, they may have a large investment portfolio which insulates them from risk and, as a result they might have a desire and tolerance for higher risk.
Absolutely- I have no need to for higher risk, and I’m not necessarily willing to take risk, granted I assume levels of risk is relative based upon your background, status, and values. I feel since having a pension, rentals, Roth, and opening another Roth, I’m safe for retirement. Maybe the more I dig I will see how to retire earlier from my profession through buying years from accumulated wealth in the stock market. Thanks man, I will give this a look - I appreciate it
alex_686
Posts: 13320
Joined: Mon Feb 09, 2015 1:39 pm

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by alex_686 »

mstr4j0525 wrote: Fri Dec 03, 2021 4:59 pm I’m assume you are saying that due to teaching and rental properties owned outright that I have a high number of “bond-like” investments? That actually makes a lot of sense. So how would you invest a lump sum of 50k, well I guess 44 after IRA initial contribution? Thanks man
Yes, that is what I am saying.

I would go 100% equities except for 3 things.

1. You say you are risk adverse.
2. You and your wife are teachers, who tend to be risk adverse.
3. Your a newbie who has never lived through a bone crunching market crash.

I kid, somewhat.

Trying to figure out a person's risk tolerance is more art than anything else.

Technically speaking I think you have the ability to go 100% equities in large part becuase you are significant "bond like" assets.

I would go 100% equites because I have skills and experience. But you are not I. I know lots of people who panic during a crash and do the wrong things. You need to figure out what number you can sleep sound at night.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
User avatar
David Jay
Posts: 14586
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by David Jay »

jebmke wrote: Fri Dec 03, 2021 4:20 pmIf I were leaving EJ or another similar broker, I'd look at Vanguard, Fidelity or Schwab.
Additionally, work with the brokerage receiving the funds (i.e. no need to contact EJ), as they have the incentive to see that things go smoothly.
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
jebmke
Posts: 25474
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by jebmke »

David Jay wrote: Fri Dec 03, 2021 7:23 pm
jebmke wrote: Fri Dec 03, 2021 4:20 pmIf I were leaving EJ or another similar broker, I'd look at Vanguard, Fidelity or Schwab.
Additionally, work with the brokerage receiving the funds (i.e. no need to contact EJ), as they have the incentive to see that things go smoothly.
I agree; with one caveat, make sure you understand the cost of liquidating any investments held at EJ that may not be where you want to be investing. Sometimes it is advantageous to liquidate the holdings at the existing custodian in the IRA before transferring. Other times it makes sense to move then liquidate.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Topic Author
mstr4j0525
Posts: 10
Joined: Fri Dec 03, 2021 3:10 pm

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by mstr4j0525 »

alex_686 wrote: Fri Dec 03, 2021 6:37 pm
mstr4j0525 wrote: Fri Dec 03, 2021 4:59 pm I’m assume you are saying that due to teaching and rental properties owned outright that I have a high number of “bond-like” investments? That actually makes a lot of sense. So how would you invest a lump sum of 50k, well I guess 44 after IRA initial contribution? Thanks man
Yes, that is what I am saying.

I would go 100% equities except for 3 things.

1. You say you are risk adverse.
2. You and your wife are teachers, who tend to be risk adverse.
3. Your a newbie who has never lived through a bone crunching market crash.

I kid, somewhat.

Trying to figure out a person's risk tolerance is more art than anything else.

Technically speaking I think you have the ability to go 100% equities in large part becuase you are significant "bond like" assets.

I would go 100% equites because I have skills and experience. But you are not I. I know lots of people who panic during a crash and do the wrong things. You need to figure out what number you can sleep sound at night.
With out any experience, but knowing the type person I am, I am the type to wait out any market dips or corrections since I don’t really have the need for immediate money or the necessary time to stare over investments. You say 100% equities, what equities would you invest in and why. Thanks
pkcrafter
Posts: 15461
Joined: Sun Mar 04, 2007 11:19 am
Location: CA
Contact:

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by pkcrafter »

mstr4j0525 wrote: Fri Dec 03, 2021 3:17 pm My wife and I are currently teachers with 2 young and beautiful children. We live very comfortable in our market, even as teacher because we have acquired very little debt over the years. We make around 10k a month from our jobs and another 3k a month in rental properties. My wife is very comfortable with her life and her future retirement plan but I am looking for a little more. Below is my information and questions, thanks!

Emergency funds: Yes

Debt: Certificate of Sale Mortgage with no Interest, 60k left with 260k equity / RV 20k left @ 5.25

Tax Filing Status: Married Filing Jointly with 2 dependents

Tax Rate: 24% Federal, 7% State

State of Residence: SC

Age: 36

Desired Asset allocation: 65% stocks / x35% bonds - I really dont know if I should be this safe at my age

I'm going to suggest you stay at 65% stock until you've experienced a market crash. Many inexperienced investors actually panic and sell at or near the bottom of a crash.

Ramp up on the learning curve--

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

Risk and Return


https://www.bogleheads.org/wiki/Risk_an ... troduction

Desired International allocation: xx% of stocks - I am looking for 100% thoughts and recommendations here because I have no idea.

Most investors here hold between 20% and 40% international

I am on SC Retirement Pension Plan / So is my Wife. We also have a ROTH IRA, well it’s really hers that we max out. It is through Edward Jones but looking for advice on where to move it as fees are ridiculous and how to do this. I would like to begin maxing out contributions for me in a ROTH, any direction is appreciated.

Leaving EJ--contact the new company (Fidelity, Schwab, or Vanguard?), and they will initiate the transfer. Be sure the new company carries all the funds you now hold because if they don't, those funds won't transfer and the move won't complete. Work with the new company, not EJ.

Current retirement assets

Wife’s Roth through Edward Jones / Low 6 figures
I’m sure it's a type of diversified mutual fund

It's probably 15-20 funds.

Contributions

New annual Contributions
Max out Roth IRA

Do you also have access to a 403b or other retirement account? Are you also maxing an IRA or Roth?

Available funds
50k initial investment
3k a month

What kind of account is the above?


Questions:
1. I need to get set up for the long term. I’m not a major risk-taker either.

This is why I suggest you stay with 65% stock, at least until you gain knowledge and experience.

I can retire from teaching in 14 years, and if I invest correctly possibly sooner. I have several rental properties that I expect to help supplement my pension income to what I make now. My goal is 6k a month for the rest of my life to live in my market comfortably and hopefully have compounding money to give my kids when I’m gone and other ventures I may take.

The "safe" withdrawal rate is 4% of total assets.

2. Obviously I would like to move away from Edward Jones, it was a mother-in-law thing but fees are ridiculous. What is the best way or best platform for moving my wife's current Edward Jones Roth IRA along with starting my own? All this in addition to my 50k initial investment and 3k per month?

As for the 50k and 3k/month, are you referring to your current assets? You can start your own Roth at any time, just use the new investment company, NOT EJ. Does you company also offer a 403b or other retirement option?

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.
billfromct
Posts: 2057
Joined: Tue Dec 03, 2013 8:05 am

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by billfromct »

I didn’t see any mention of college savings for your children. If you don’t have any college savings, you may want to consider starting to fund a 529 college savings account for each child.

The 529 college savings plan is funded with after tax (Federal) money; the money grows tax free & taken out Federal & state tax free if used for college expenses. I think 529 money can also be used for pre-college education.

The 529 college savings plans are sponsored by each state through brokerage companies like Vanguard, Fidelity, etc. Some states give tax deductions for the amount invested in the state 529 plan. Some state tax deductions are limited, so you need to check the SC rules.

Some states have high cost plans & some states have low cost 529 plans.

I believe that SC allows state income tax deductions for SC 529 contributions. It appears the SC 529 plan also has index funds with reasonable expense ratios (.20%-.50%?).

After fully maxing out your Roth IRAs, you may want to contribute to SC 529 plans for your kids.

bill
Joey Jo Jo Jr
Posts: 553
Joined: Mon Jun 21, 2021 11:38 pm

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by Joey Jo Jo Jr »

SC public school product myself. Thanks for your service! Most important question: Tiger or Gamecock?

I use Ally invest and have liked it just fine. They have a hub center in Charlotte so probably many SC residents working there if that makes any difference to you.

Personally, at this time I would not shift to 100% equities unless maybe there was a major correction first. Your 65/35 seems perfectly fine to me as you get a better sense of how aggressive you want to be.

International at 1/5 to 1/3 of your equities seems to be the most common range. Different pros and cons to that which others can better express or you can look up in old threads.

As you know, prioritize those Roth IRAs first. If you have leftover cash, consider I bonds, which are indexed for inflation (7.12% now) and after a one year lock up can be moved to a 529 tax free at if you are below a certain AGI right near where you seem to be and still get the state tax deduction.
nordsteve
Posts: 1104
Joined: Sun Oct 05, 2008 9:23 am

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by nordsteve »

Agree on the suggestion that Schwab, Vanguard, or Fidelity are all reasonable choices for having your accounts.

A lot of people think that hiring an advisor is going to solve their problems. But what they don’t realize is that the question of "which advisor should I select" is basically the same question as "how should I invest my money".
Topic Author
mstr4j0525
Posts: 10
Joined: Fri Dec 03, 2021 3:10 pm

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by mstr4j0525 »

Joey Jo Jo Jr wrote: Fri Dec 03, 2021 9:34 pm SC public school product myself. Thanks for your service! Most important question: Tiger or Gamecock?

I use Ally invest and have liked it just fine. They have a hub center in Charlotte so probably many SC residents working there if that makes any difference to you.

Personally, at this time I would not shift to 100% equities unless maybe there was a major correction first. Your 65/35 seems perfectly fine to me as you get a better sense of how aggressive you want to be.

International at 1/5 to 1/3 of your equities seems to be the most common range. Different pros and cons to that which others can better express or you can look up in old threads.

As you know, prioritize those Roth IRAs first. If you have leftover cash, consider I bonds, which are indexed for inflation (7.12% now) and after a one year lock up can be moved to a 529 tax free at if you are below a certain AGI right near where you seem to be and still get the state tax deduction.
I have to admit that I am a Gamecock, even after that beat down last week! :D

I really need both help on knowledge of how, what, where, and more importantly why I invest the 65% equities. I would personally rather learn from people like me versus advisors at large firms.

I am definitely going to max my own IRA before the end of the year! Thanks for the reminder. We have a 529 for both children, so you are saying with my 3k a month, invest 35% of that in I-Bonds and then move that money over to the 529 and everything is tax-free and a deduction? Is that what you are saying?

Thanks for the help!
Topic Author
mstr4j0525
Posts: 10
Joined: Fri Dec 03, 2021 3:10 pm

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by mstr4j0525 »

billfromct wrote: Fri Dec 03, 2021 8:19 pm I didn’t see any mention of college savings for your children. If you don’t have any college savings, you may want to consider starting to fund a 529 college savings account for each child.

The 529 college savings plan is funded with after tax (Federal) money; the money grows tax free & taken out Federal & state tax free if used for college expenses. I think 529 money can also be used for pre-college education.

The 529 college savings plans are sponsored by each state through brokerage companies like Vanguard, Fidelity, etc. Some states give tax deductions for the amount invested in the state 529 plan. Some state tax deductions are limited, so you need to check the SC rules.

Some states have high cost plans & some states have low cost 529 plans.

I believe that SC allows state income tax deductions for SC 529 contributions. It appears the SC 529 plan also has index funds with reasonable expense ratios (.20%-.50%?).

After fully maxing out your Roth IRAs, you may want to contribute to SC 529 plans for your kids.

bill
Thank you Bill, yes we currently have 529's set up for each child, I should have mentioned that! I need to do more research on those however, thanks Bill
Topic Author
mstr4j0525
Posts: 10
Joined: Fri Dec 03, 2021 3:10 pm

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by mstr4j0525 »

pkcrafter wrote: Fri Dec 03, 2021 8:14 pm
mstr4j0525 wrote: Fri Dec 03, 2021 3:17 pm My wife and I are currently teachers with 2 young and beautiful children. We live very comfortable in our market, even as teacher because we have acquired very little debt over the years. We make around 10k a month from our jobs and another 3k a month in rental properties. My wife is very comfortable with her life and her future retirement plan but I am looking for a little more. Below is my information and questions, thanks!

Emergency funds: Yes

Debt: Certificate of Sale Mortgage with no Interest, 60k left with 260k equity / RV 20k left @ 5.25

Tax Filing Status: Married Filing Jointly with 2 dependents

Tax Rate: 24% Federal, 7% State

State of Residence: SC

Age: 36

Desired Asset allocation: 65% stocks / x35% bonds - I really dont know if I should be this safe at my age

I'm going to suggest you stay at 65% stock until you've experienced a market crash. Many inexperienced investors actually panic and sell at or near the bottom of a crash.

Ramp up on the learning curve--

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

Risk and Return


https://www.bogleheads.org/wiki/Risk_an ... troduction

Desired International allocation: xx% of stocks - I am looking for 100% thoughts and recommendations here because I have no idea.

Most investors here hold between 20% and 40% international

I am on SC Retirement Pension Plan / So is my Wife. We also have a ROTH IRA, well it’s really hers that we max out. It is through Edward Jones but looking for advice on where to move it as fees are ridiculous and how to do this. I would like to begin maxing out contributions for me in a ROTH, any direction is appreciated.

Leaving EJ--contact the new company (Fidelity, Schwab, or Vanguard?), and they will initiate the transfer. Be sure the new company carries all the funds you now hold because if they don't, those funds won't transfer and the move won't complete. Work with the new company, not EJ.

Current retirement assets

Wife’s Roth through Edward Jones / Low 6 figures
I’m sure it's a type of diversified mutual fund

It's probably 15-20 funds.

Contributions

New annual Contributions
Max out Roth IRA

Do you also have access to a 403b or other retirement account? Are you also maxing an IRA or Roth?

Available funds
50k initial investment
3k a month

What kind of account is the above?


Questions:
1. I need to get set up for the long term. I’m not a major risk-taker either.

This is why I suggest you stay with 65% stock, at least until you gain knowledge and experience.

I can retire from teaching in 14 years, and if I invest correctly possibly sooner. I have several rental properties that I expect to help supplement my pension income to what I make now. My goal is 6k a month for the rest of my life to live in my market comfortably and hopefully have compounding money to give my kids when I’m gone and other ventures I may take.

The "safe" withdrawal rate is 4% of total assets.

2. Obviously I would like to move away from Edward Jones, it was a mother-in-law thing but fees are ridiculous. What is the best way or best platform for moving my wife's current Edward Jones Roth IRA along with starting my own? All this in addition to my 50k initial investment and 3k per month?

As for the 50k and 3k/month, are you referring to your current assets? You can start your own Roth at any time, just use the new investment company, NOT EJ. Does you company also offer a 403b or other retirement option?

Paul
PKCrafter, thank you for the detailed response.

Leaving EJ--contact the new company (Fidelity, Schwab, or Vanguard?), and they will initiate the transfer. Be sure the new company carries all the funds you now hold because if they don't, those funds won't transfer and the move won't complete. Work with the new company, not EJ.
Thanks for the info! This may be a crazy question, but with the amount in there is it worth moving?

Do you also have access to a 403b or other retirement account? Are you also maxing an IRA or Roth?

Yes I have access to one through employer - I may not have the right info here, but we max out 6,000 annually to our Roth, which I thought was a ROTH IRA

Available funds
50k initial investment
3k a month

What kind of account is the above?

All Cash, looking into how to invest this nest egg considering as another Boglehead stated with my pension I am very "Bond-like" heavy. Granted I have never experienced a crash, but being a history teacher at one point, I understand the value of just leaving your money in and riding the wave.
Topic Author
mstr4j0525
Posts: 10
Joined: Fri Dec 03, 2021 3:10 pm

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by mstr4j0525 »

alex_686 wrote: Fri Dec 03, 2021 6:37 pm
mstr4j0525 wrote: Fri Dec 03, 2021 4:59 pm I’m assume you are saying that due to teaching and rental properties owned outright that I have a high number of “bond-like” investments? That actually makes a lot of sense. So how would you invest a lump sum of 50k, well I guess 44 after IRA initial contribution? Thanks man
Yes, that is what I am saying.

I would go 100% equities except for 3 things.

1. You say you are risk adverse.
2. You and your wife are teachers, who tend to be risk adverse.
3. Your a newbie who has never lived through a bone crunching market crash.

I kid, somewhat.

Trying to figure out a person's risk tolerance is more art than anything else.

Technically speaking I think you have the ability to go 100% equities in large part becuase you are significant "bond like" assets.

I would go 100% equites because I have skills and experience. But you are not I. I know lots of people who panic during a crash and do the wrong things. You need to figure out what number you can sleep sound at night.
Can you explain examples of what skills look like in a market crash. My first thought is to do what I have heard from so many people over the years / Just ride it out or ride the wave. Grass isnt always greener, no need to jump ship / you get the picture? Either way, thanks for the tips and honest experienced opinion,
User avatar
GMCZ71
Posts: 559
Joined: Sat Oct 13, 2018 8:05 am
Location: McMinnville, Or

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by GMCZ71 »

alex_686 wrote: Fri Dec 03, 2021 6:37 pm
mstr4j0525 wrote: Fri Dec 03, 2021 4:59 pm
2. You and your wife are teachers, who tend to be risk adverse.
3. Your a newbie who has never lived through a bone crunching market crash.


Trying to figure out a person's risk tolerance is more art than anything else.

You need to figure out what number you can sleep sound at night.

A good read would be Sheepdogs thread
viewtopic.php?t=25126
Today did it. I am just starting to be scared so that I won't tell my wife what happened today...stocks down...bonds down...I'm down.
John | * Friends and family and money | * What you recommend will have periods of underperformance. You will be blamed. | * You avoid the suspicion of "self-serving." by Taylor Larimore
User avatar
Shackleton
Posts: 947
Joined: Mon Dec 29, 2014 5:20 pm

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by Shackleton »

David Jay wrote: Fri Dec 03, 2021 7:23 pm
jebmke wrote: Fri Dec 03, 2021 4:20 pmIf I were leaving EJ or another similar broker, I'd look at Vanguard, Fidelity or Schwab.
Additionally, work with the brokerage receiving the funds (i.e. no need to contact EJ), as they have the incentive to see that things go smoothly.
And I just want to make it clear to the OP, an advisor at Vanguard, Schwab or Fidelity is NOT required, and often (usually?) not recommended. A great place to start your education on how to handle your own portfolio is the wiki here (Getting Started section) or the excellent book “Boglehead Guide to Investing”.
“Superhuman effort isn't worth a damn unless it achieves results.” ~Ernest Shackleton
alex_686
Posts: 13320
Joined: Mon Feb 09, 2015 1:39 pm

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by alex_686 »

mstr4j0525 wrote: Sat Dec 04, 2021 8:00 am Can you explain examples of what skills look like in a market crash. My first thought is to do what I have heard from so many people over the years / Just ride it out or ride the wave. Grass isnt always greener, no need to jump ship / you get the picture? Either way, thanks for the tips and honest experienced opinion,
The common story is the client coming in right before a crisis and loading up on equities and risk, swearing that they will hold the position through thick and thin. Then at the slightest sign of a cloud dumps all of their positions for cash.

It is easy to make these types of declarations during times of calm. Another during a storm. Have you written a "Investment Policy Statement"? If not, you should prior to investing. Refer to that document during times of crisis. It lays out your thinking and plan developed during your thoughtful phase.

Now my perspective may be a little bias. I am kind of like your firefighter friend who has all those great stories about people burning things down as they try to deep fry a turkey for the first time on Thanksgiving. They never tell you about the times when the turkey came out fine.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Topic Author
mstr4j0525
Posts: 10
Joined: Fri Dec 03, 2021 3:10 pm

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by mstr4j0525 »

alex_686 wrote: Sat Dec 04, 2021 2:32 pm
mstr4j0525 wrote: Sat Dec 04, 2021 8:00 am Can you explain examples of what skills look like in a market crash. My first thought is to do what I have heard from so many people over the years / Just ride it out or ride the wave. Grass isnt always greener, no need to jump ship / you get the picture? Either way, thanks for the tips and honest experienced opinion,
The common story is the client coming in right before a crisis and loading up on equities and risk, swearing that they will hold the position through thick and thin. Then at the slightest sign of a cloud dumps all of their positions for cash.

It is easy to make these types of declarations during times of calm. Another during a storm. Have you written a "Investment Policy Statement"? If not, you should prior to investing. Refer to that document during times of crisis. It lays out your thinking and plan developed during your thoughtful phase.

Now my perspective may be a little bias. I am kind of like your firefighter friend who has all those great stories about people burning things down as they try to deep fry a turkey for the first time on Thanksgiving. They never tell you about the times when the turkey came out fine.
I hear ya, thanks for the perspective
krow36
Posts: 2470
Joined: Fri Jan 30, 2015 5:05 pm
Location: WA

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by krow36 »

School districts offer their employees a supplemental retirement account called a 403b. It allows pretax contributions or Roth contributions. For 2022 the contribution limit is $20,500. You can find out the vendors that your district allows you to use by asking your payroll office for the list. Many districts also offer their employees a 457b account. It allows a further 20.5k/yr contribution. All these contributions are made by salary reduction. Ask for the 457b vendor list also. Hopefully the lists will include at least 1 low-cost vendor such as Vanguard, Fidelity or Aspire.
Luckywon
Posts: 2406
Joined: Tue Mar 28, 2017 10:33 am

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by Luckywon »

mstr4j0525 wrote: Sat Dec 04, 2021 7:56 am Leaving EJ......
Thanks for the info! This may be a crazy question, but with the amount in there is it worth moving?
Yes it is. Best to have a cancer removed when it's small, not wait till it gets large.
Joey Jo Jo Jr
Posts: 553
Joined: Mon Jun 21, 2021 11:38 pm

Re: NEWBIE HERE! I really look forward to learning so much from this site

Post by Joey Jo Jo Jr »

[/quote]

I have to admit that I am a Gamecock, even after that beat down last week! :D

I really need both help on knowledge of how, what, where, and more importantly why I invest the 65% equities. I would personally rather learn from people like me versus advisors at large firms.

I am definitely going to max my own IRA before the end of the year! Thanks for the reminder. We have a 529 for both children, so you are saying with my 3k a month, invest 35% of that in I-Bonds and then move that money over to the 529 and everything is tax-free and a deduction? Is that what you are saying?

Thanks for the help!
[/quote]

Gamecock here too…better days ahead!

For equities, you should consider a broad low cost index fund, such as VOO (S&P 500) or VTI (even broader) for the US and VXUS for international. For bonds many will say just use a broad fund like BND, but I prefer a mix of intermediate and long term US treasuries (VGIT and VGLT) because they tend to go up when there is a negative shock to equities, reducing the portfolio damage and giving you a chance to rebalance at an opportune time, whereas corporate bonds tend to also go down with equities.

I bonds are a unique animal that are trendy right now because inflation is higher. They don’t go up when equities go down either, so I don’t like them as part of a general bond allocation that I use for that purpose, but right now they do make sense as replacing any cash to would have on hand anyway (such as an emergency fund), or perhaps a temporary holding place while you decide what to do after inflation comes back down (such as funding future IRA and 529 contributions). Or just skip the I bonds if it’s a little esoteric at this point as it’s really not that big of a deal.

You’ll want to decide what to prioritize in terms of available cash for investing. Your pension allocation and Roth IRAs seem like a no brainer as the first priorities, but I’m actually not 100% sure after that. Are you also eligible for a 403(b)? If so maybe that, or maybe 529s regardless given the state tax deduction and because the gains will be tax free. In deciding your asset allocation, you might also want to spend some time playing around on Portfolio Visualizer to get a sense of how different investment combinations have done in the past through different market conditions, although the past is obviously no guarantee of future results.
Post Reply