▼

Wednesday, 4 March 2020

What is the Ideal Long Term Investment Strategy for a 21 year old?

Ideal Long Term Investment Strategy for Myself? (self.personalfinance)
submitted  by leapgoose​
21 year old who will start working next week, and will have after-tax monthly income of around $4,200.
Currently have $10,000 saved up that I'd like to use to start investing (15-20 year investment horizon).
I will be living at home for the next year, and plan to add $1,600 - $2,000 per month to this investment account.
I additionally have $10,000 in emergency savings as well -- if anyone was going to comment about that.
​
I would really like to hear everyone's feedback on my potential plans.
I am planning to invest:
  • $3,000 in VTI
  • $3,000 in VIG
  • $4,000 in individual stocks (Amazon / Chegg / Disney / Coca-Cola being some of the stocks I am considering)
My question for you guys is, would it just be smarted to invest $5,000 into VTI and VIG each instead of also having some focused individual stock picking? My idea for this is that I am young, can tolerate some more risk right now, and will genuinely be looking for 3 key companies to invest in that I really believe will exist far into the future. Furthermore, should I setup my Roth IRA (since I haven't yet) first and then include these investments within my Roth IRA? Or should I just put them in any ordinary taxable investment account?
​
I would also really like to hear if you guys have any advice or recommendations on ETFs to buy or individual stocks to check out. The plan I laid out above was based upon the idea that I should go with one Total Market Growth ETF and one Dividend Appreciation ETF after all my research. Please tell me if I am wrong or could go about this a better way! Thank you all!!!

[–]AutoModerator​[M] 1 point  
You may find these links helpful:
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.
[–]molten_dragon​ 1 point  
What are you investing for? Retirement or something else?
[–]leapgoose​[S] 2 points  
I want to build a retirement fund early on to reap as much compound interest as possible. But, I would also like the option to withdraw from this account 20 years down the line if need be for a down payment on a mortgage for my family or if I want to invest in a real estate property. I also plan to create some medium / short range savings accounts as well.
[–]EvertonFury19​ 1 point  
  1. Yes, smart to invest in index funds. Up to you what funds those are but you're better off for long-term investments in passive index funds.
  2. Yes, set up Roth IRA and put as much as you can and/or a traditional IRA
  3. Dividend Appreciation ETF is a way to diversify but for a 20-30+ year window, you can go for more aggressive ETFs.
[–]leapgoose​[S] 1 point  
Can you recommend some more aggressive ETFs to look into please? and maybe any quick tips you have on analyzing different ETFs? Thanks!!
[–]EvertonFury19​ 1 point  
Take a look at the rest of Vanguard's ETF. You might want one of the ETFs that tracks the S&P 500 (VTI is much broader but compare VTI to S&P500 performance)
Of course there's no guarantee that any will do better so go with the ETFs that you feel most comfortable and knowledgeable.
[–]leapgoose​[S] 1 point  
I see that there is a marginal difference in performance over the last 10 years and a marginal difference in fees -- correct me if I am wrong. I went with VTI for more exposure.
[–]EvertonFury19​ 1 point  
don't worry about the fees, vanguard is as close to zero as you're going to get compared to most ETFs.
VTI will give you more exposure in the US stock market but everyone compares to the S&P 500 and if you had picked VTI over S&P 500 exclusively would have missed on better returns over the past few years.
[–]penguinise​ [score hidden]  
My question for you guys is, would it just be smarted to invest $5,000 into VTI and VIG each instead of also having some focused individual stock picking?
It would be smartest to just put all $10,000 into VTI since it is by far the most broadly diversified among those options.
If you desperately need to scratch a stock-picking itch, $4,000 into single names in your position is probably the best time to do it, but what you'll learn sooner or later is that it's quite risky and more importantly in the long run you're not going to beat VTI.
Furthermore, should I setup my Roth IRA (since I haven't yet) first and then include these investments within my Roth IRA? Or should I just put them in any ordinary taxable investment account?
You should contribute the maximum each year to your Roth IRA before doing any taxable-account investing. Worst comes to worst you can always withdraw your original contributions from the Roth IRA without penalty - this is a really bad thing to do, but still much better than never contributing in the first place. Putting money in a Roth IRA is roughly equivalent to a ~17% one-time boost at your age from the taxes you will never pay on the growth.




at

No comments:

Post a Comment