how does investors really invest a lot of capital , and getting money the next month?

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geshiro
Posts: 104
Joined: Thu Sep 09, 2021 4:50 pm

how does investors really invest a lot of capital , and getting money the next month?

Post by geshiro »

I spend the a few weeks - 3 months learning about: how our money works, how our economy works, and how the global stock market works, but I have a problem about investing , but that's the main problem I cant invest currently beside (certificates of deposit) . I will take an example of "investors" big ones or today's named like sharks or killer whales. how do they invest a real big capital , and getting money the next month in their wallet or bank account? I want to invest my paycheck as soon as possible I could figure out this , but I don't want to live as beggar since I invested 90% of my salary into market stock ( nyse, nasdaq TSX ) monthly, and I also need to eat , buy some food , go to casual parties , and live the life normally even if I have money invested


note: emergency fund is already covered , no kids, no wife , just a 25 young guy with a lot of energy , and health.
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Brianmcg321
Posts: 1875
Joined: Mon Jul 15, 2019 8:23 am

Re: how does investors really invest a lot of capital , and getting money the next month?

Post by Brianmcg321 »

Pay yourself first. As soon as I could I started investing 25% of my income. I treated it like a bill.

If you can't do 25%, do 20%. If you can't do 20% then do 15. Whatever you can spare. But make it a habit.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.
HomeStretch
Posts: 11418
Joined: Thu Dec 27, 2018 2:06 pm

Re: how does investors really invest a lot of capital , and getting money the next month?

Post by HomeStretch »

Don’t invest money you needs for living expenses and taxes. In your case, it sounds like trying to save and invest 90% of your paycheck isn’t realistic as it doesn’t leave you enough money to pay for living expenses.

Come up with a plan for your paycheck (which I assume is net of sufficient income tax withholding):

1) save a portion in a high yield savings account (HYSA) as an emergency fund until you have 3+ months of living expenses covered in case of job loss, etc.

2) save a portion for shorter-term non-retirement goals, if any, such as your next car, house purchase, etc. The sooner you need the money, the more conservatively you should invest it. Funds needed in < 3 years shouldn’t be invested in equity. Keep the funds in a HYSA, CDs, etc.

3) save a portion for retirement (try for at least 15-20%). Use a low-cost brokerage to invest according to your asset allocation in equity and bonds. The higher the % saved, the sooner you will be financially independent.

4) put a portion in a checking account to spend for necessary expenses (rent, debt repayments, food, gas, etc.) and for reasonable discretionary expenses (restaurants, entertainment, vacation, etc). Avoid most types of debt. Keep your expenses reasonably low in order to have enough money to save for (1) - (3), above.

Now look at how your paycheck is being used - what % is being used towards (2), (3) and (4), above? I excluded (1) as you posted you already have an adequate emergency fund.

Leave (3) untouched. Withdraw from (1) and (2) when you have a true emergency or the time has come to buy the house, etc. Don’t save or invest money for (1) - (3) just to withdraw money the next month for (4).
econalex
Posts: 75
Joined: Fri Aug 31, 2018 9:44 am

Re: how does investors really invest a lot of capital , and getting money the next month?

Post by econalex »

As a youngish member on the forum ("only" 31), I do feel like I need to make some obvious advice. This is assuming you have an average job and no windfall.
  • Invest in yourself first. Learn more marketable skills. Or just any skills you find useful. Some basic knowledge in finance and math/stat would be helpful investment-wise, but I see ppl making/losing a lot of money either way.
  • Get a higher paying job, preferably with good healthcare and 401k.
  • Open a Roth. Max Roth and maybe 401k and invest in index funds.
  • Chill and have a life. Don't worry too much about the market, US/International etc..
StartedAt22
Posts: 112
Joined: Sat Mar 06, 2021 9:26 pm
Location: Over Yonder

Re: how does investors really invest a lot of capital , and getting money the next month?

Post by StartedAt22 »

Good advice so far.

Copy and pasted comment of mine below. Intervene / modify as needed for your personal situation.

Preface & background:

I am 26. I started investing heavily at your age. My income has never been above $80k base per annum. I graduated college with no debt. I'm interested in reaching FI as soon as possible without forgoing life's pleasures (as I deem them). I have amassed approx. $200k in investments in 4 years (LBYM, invest the rest, stay the course)

My advice on your Roth IRA Investments:

Consolidate your Roth IRA into one fund, SCHB. There is no evidence that (long term) any of the other choices will grant you downside protection, so your point about mitigating risk is a somewhat null.

Don't leave cash on the sidelines waiting for the right time to buy. Don't time the market. Invest when you can, as often as you can. Plain and simple.

FYI I have $36k in my Roth IRA (started maxing at 22) and it is entirely in SCHB.

My general advice:

Create an IPS (Investment Policy Statement). Use the boglehead wiki as needed if you need to understand anything. Basically, if you want to give yourself the highest chance statistically to outperform the vast majority of investors, you will buy only 3 funds in your entire life. Those would be a Total Stock Market Fund (domestic), Total Stock Market Fund (international), and a Total Bond Market fund. Common recommendation on here is VTI, VXUS, BND.

With this early of a start, contribute as much and as often as possible. Don't pay much mind to market gyrations, you're in it for the long haul. Pay attention to tax treatment of different accounts and the optimal placement of the aforementioned funds within those accounts. (I.e do not put your bond fund in a taxable brokerage)

Good luck. You will be rewarded handsomely for starting early and following the advice put forth on this forum.

Warm Regards
D
A task begun is nearly half complete | Enough is as good as a feast | Risk: Ensure your goals can be met even under worst case scenario and be realistic.
Tamalak
Posts: 1989
Joined: Fri May 06, 2016 2:29 pm

Re: how does investors really invest a lot of capital , and getting money the next month?

Post by Tamalak »

You need money to make money. Your time and capital is best spent first not trying to squeeze alpha out of the market, but getting a six-figure salary.

Then, live on half of it, invest the rest, be financially independent in 15 years :sharebeer
sailaway
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Joined: Fri May 12, 2017 1:11 pm

Re: how does investors really invest a lot of capital , and getting money the next month?

Post by sailaway »

You hear about this being ones because they are few and far between. For every one of them, there are more that tried the same thing and got burned. Even for the winners, taking your investments out next month means that you are losing out on the investor's best friend: compound interest.

That is why around here, slow and steady is the investing game. You want faster, earn more and spend less.

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