So, I’m probably the greenest guy in here. Finally wised up and decided I need to be a better steward with my money. My question is, where do I start? I know this sounds Elementary, but is 401k a good starting point? Ira? Mutual Funds? Buying individual stocks? I apologize for the Elementary question, but wanted to ask folks with some wisdom in this field. Thanks in advance.
David Scott: Yes, start with your 401k as long as you get a match contribute up to the max. Then open a Roth IRA and that is where you should put solid dividend paying stocks. If you hit the limit on the IRA ($5,500 if you are under 50) then go back contribute more to your 401k and try to raise your contribution every year or at least with every raise you get. Try to choose low cost funds in your 401k and diversify if you can within the plan.
David Sanderson: What are solid dividend paying stocks?
David Scott: Dividend paying stocks that have a long history of increasing their dividends. Google “dividend aristocrats.”
David Sanderson: A guy at work said invest in index funds, what are those?
David Scott: Index funds are mutual funds that allow you to purchase a group of stocks rather than buying just one stock. They give you instant diversity and help to eliminate single stock risk.
Sue Weed: David Sanderson he meant Electronically Traded Funds (ETFs) which are similar to Mutual Funds (MFs) but are lower cost and trade at any time stocks are trading. They follow an Index or specific grouping like Large Cap U.S, Mid Cap Russell 1000, Small Cap, Municipal Bond, Emerging Markets, etc… http://etfdb.com/etfs/
Complete list of Exchange Traded Funds.
Kevin Cronin: Age? Risk tolerance and a bit more info?
David Sanderson: 37, I don’t mind some risk. Wife has about $100k in her 401k. Me, not so much.
Kevin Cronin: David Sanderson my opinion if company match at least take advantage of that. Start with a S&P fund, a target Year and a international fund. Then if you can afford to, do a Roth IRA as well. Capital One Investing isn’t bad for those starting off. Can also talk to fidelity. However you will learn a lot on this group. Just don’t chase high dividend yields.
David Sanderson: Thank you, so I take it don’t put it all in one stock lol?
Kevin Cronin: David Sanderson I wouldn’t.
Millicent Ivy: This teaches all the basics and need to know http://bottomupwealth.com/retire-wealthy-open-new…
David Sanderson: If I pay for this service what do I get?
Millicent Ivy: Well it’s a class. The instructor is an investment educator and I started with her stock investing class that taught me how to get started in buying profitable companies. I have built a successful portfolio since taking it as well as fixing my 401k to …See more
Millicent Ivy: Me personally though I would invest in my 401k to get the match and any additional put in a Roth IRA. Max that then move on to taxable accounts
David Sanderson: What are taxable accounts? For example?
Millicent Ivy: Like a regular brokerage account. Or Robinhood for example.
David Scott: A taxable account or brokerage account are non tax deferred accounts where you can buy anything in the market but will pay taxes on your gains unlike a 401k or IRA where pay taxes later when you withdraw the money.
Ashton Hensley: Good question. I’m curious about the same issues
David Scott: If you have questions on the basics I suggest you head over to doughroller.net and start listening to the podcasts. Rob is a really nice guy and has a facebook page.
Steven Cook: If you have a 401 k the minimum you should do is whatever they match up to. I personally would hit that at 10% of pay to start. Get rid or credit card debt and pay only cash for purchases.Then start off with, which I know will be unpopular here, a passively managed index fund.Then you can start picking some nice dividend producing stocks
Preston Wilson: Start with what you know….and since you know very little, start reading; voraciously. For my own; I’ve chosen a Roth (my company does not yet offer an IRA), an equities and bond 95/5 portfolio, and a dividend only account, full drip. Start reading; everything. Remember some of the things you listed (etf and mutuals) have fees associated. Some stocks have a higher commission than others. Some dividend paying stocks are tax exempt. A penny saved is a few pennies earned when reinvested and compounding…. GL
Dave Sieling: 401K get your match. Invest in mutual funds/etfs with low expenses ratios ( that’s the money they charge you). Then Roth IRA if you can afford it. You never pay tax on it again (unless our elected numbskulls try some shenanigans). Wait to invest in individual stocks until you have the answers to most of your questions above and really grasp their ramifications. Especially the tax implications.
Ashton Hensley: Everyone says go with a 401k or ira. I have both actually, just never do anything with them. Best of my knowledge I couldn’t do anything with them until I was older anyways..? Am I missing something lol?
Dave Sieling: Check the expense ratios. Type in your mutual fund ticker at Morningstar.com. Then click the expense fee tab. If the ratio is 0.5 to 1% it’s an expensive fund to own. If it’s over 1%, basically, in my opinion, you are getting gouged. Because some 401…See more
Morningstar – Independent Investment Research
Steven Cook: Nothing to do but pick a few passive index funds and keep depositing money!