Investing 102

[toy71camaro]

Originally Posted by sokoloka

I've been following thing thread fairly closely, first time poster. First off let me say thank you for all the great information and perspective thus far!

My first question is: what proportion of your assets would you recommend investing vs. locking away in savings account? I'm 25 years old, been investing for ~4 years with mixed success, have ~80k in the bank and 55k in the market. Have a work related 401k but haven't really been paying attention to that besides picking the "extremely aggressive" setting 3 years ago.

About 30k of the market money is tied up in some long term DOWN money (namely CitiBank). I have 22ish in cash left in my Etrade after pulling 50k out of the market and putting 25k back in savings.

Currently living in London, most recently from San Diego and would like to return there within 365 days and purchase a house (will eventually need a downpayment).

Need to re-assess what to do with my DOWN Citi, as well as find some better long term plays to put my money into. I like the feeling of having a year of net salary in the bank - but is that the wisest thing to be doing with that chunk of change? I realistically won't be losing my job anytime soon (effectively on contract through October) and have 3+ months of vacation that they'll have to pay me out. What would you guys recommend? I've been reading a lot in here about this dividend investing scheme and I'm quite interested. Seems like a good long term play for me to get into.

Second question: What to do with a 4 year+ 90% loser? I put $700 or so into some oil speculation penny stock and it's currently worth about $40 and hasn't moved in a year. Should I just pay the $9 trade fee and pull clean out that terribly depressing line in my account?

Thanks. Look forward to participating more. Keep this thread alive!

My *personal, non professional* opinion would be:
1. Calculate your monthly bills, whats necessary to survive, and multiply it by 8 for 8 months of an "emergency" fund. put the rest of the money to "work". -- Reason being, IF something were to happen, you got 8 months to "fix it" (find a job, or whatever), and then if you dont, you can start pulling that money out that was working for you.
2. Put the extra money to work:
a. Max out your ROTH IRA each year with Investing 102 stocks (dividend champions that YOU are comfortable with).
b. Put the rest of the money to work in a brokerage account, again with dividend champions. - in case of emergency, you got 8 months backup above to work with, before you have to touch this account.
3. Keep some as an "extra" or normal savings. for those purchases that you dont have cash for in your sock drawer. because we NEVER touch the emergency fund. Not unless you lose your job or some catastrophic event happes. -- that money dont exist.

On a side note, find a bank that gives a decent interest rate. ING Direct has 0.80% interest on all their free accounts. Its not "great" but its still "working for me" while it sits in there.



As for the down stocks, I have a couple in my portfolio that are like that too. Some "bad choices"... I figured, i'd leave them there. They arent worth much of anything at this point, so why spend more money to sell them. and who knows, maybe in 10 years they'll be worth something again. What am i going to gain from selling them at this point? nothing. i've got time on my side (32 yrs old), maybe they'll eventually make a comeback. Im not out any more money to hold them, so its not costing me anything to play the wait and see game.

Just my 2 cents...

by the way, you got a good start for your age!!!!