Investing 102

[jkp41]

I am changing jobs in September, and I am using this as an opportunity to step up my skills with my investing. I have been investing in a few relatively small posotions over the last few years with a Schwab brokerage account, but nothing near the money that is in my 401k that I will be moving into my rollover account. For simplicity's sake, lets round out numbers and say that I have $10k in my Schwab account right now, and will be moving $100k into a rollover.

My new job will have a 403b with a 3% match, and I will utilize that match. I filed for taxes for the first time since being married and found out that I can now utilize a roth rather than being over the income limit. I will max that out yearly. I'm 32, and would like to retire around 55

In my Schwab account, I currently have postions in:
MO - biggest position
PEP
XOM
F
T
MCD
EXR - very small position

So I have several questions about the best way to utilize the 401k money:

1. At this point should I be looking into bonds at all or is that something that should wait until I am closer to retirement and looking for stability rather than growth?

2. Should I be concerned with scaling into positions with this, or should I buy new/expand current positions with the majority of the money?

3. If I scale in, what strategy do you guys use in parking the money until you put it into a more permanent position?

4. After the Roth and 3% match for the 403b, I will have roughly $1000/month that I am designating to retirement. Should I max out the 403b or put that money into my brokerage account. I'm assuming the 403b will be mostly mutual funds, and I would have more control with the brokerage account.


Edit: I just realized that this was my first post here. I have been lurking too long!

[GregWeld]

Originally Posted by jkp41

I am changing jobs in September, and I am using this as an opportunity to step up my skills with my investing. I have been investing in a few relatively small posotions over the last few years with a Schwab brokerage account, but nothing near the money that is in my 401k that I will be moving into my rollover account. For simplicity's sake, lets round out numbers and say that I have $10k in my Schwab account right now, and will be moving $100k into a rollover.

My new job will have a 403b with a 3% match, and I will utilize that match. I filed for taxes for the first time since being married and found out that I can now utilize a roth rather than being over the income limit. I will max that out yearly. I'm 32, and would like to retire around 55

In my Schwab account, I currently have postions in:
MO - biggest position
PEP
XOM
F
T
MCD
EXR - very small position

So I have several questions about the best way to utilize the 401k money:

1. At this point should I be looking into bonds at all or is that something that should wait until I am closer to retirement and looking for stability rather than growth?

2. Should I be concerned with scaling into positions with this, or should I buy new/expand current positions with the majority of the money?

3. If I scale in, what strategy do you guys use in parking the money until you put it into a more permanent position?

4. After the Roth and 3% match for the 403b, I will have roughly $1000/month that I am designating to retirement. Should I max out the 403b or put that money into my brokerage account. I'm assuming the 403b will be mostly mutual funds, and I would have more control with the brokerage account.


Edit: I just realized that this was my first post here. I have been lurking too long!

Kenny - WELCOME!

I'm on a road trip and posting is difficult and I want to be able to give thought to a response... so give me a few days to whip something up. In the meantime - hopefully others will see your post.

[ErikLS2]

Originally Posted by jkp41

I am changing jobs in September, and I am using this as an opportunity to step up my skills with my investing. I have been investing in a few relatively small posotions over the last few years with a Schwab brokerage account, but nothing near the money that is in my 401k that I will be moving into my rollover account. For simplicity's sake, lets round out numbers and say that I have $10k in my Schwab account right now, and will be moving $100k into a rollover.

My new job will have a 403b with a 3% match, and I will utilize that match. I filed for taxes for the first time since being married and found out that I can now utilize a roth rather than being over the income limit. I will max that out yearly. I'm 32, and would like to retire around 55

In my Schwab account, I currently have postions in:
MO - biggest position
PEP
XOM
F
T
MCD
EXR - very small position

So I have several questions about the best way to utilize the 401k money:

1. At this point should I be looking into bonds at all or is that something that should wait until I am closer to retirement and looking for stability rather than growth?

2. Should I be concerned with scaling into positions with this, or should I buy new/expand current positions with the majority of the money?

3. If I scale in, what strategy do you guys use in parking the money until you put it into a more permanent position?

4. After the Roth and 3% match for the 403b, I will have roughly $1000/month that I am designating to retirement. Should I max out the 403b or put that money into my brokerage account. I'm assuming the 403b will be mostly mutual funds, and I would have more control with the brokerage account.


Edit: I just realized that this was my first post here. I have been lurking too long!

Here's my 2 cents worth, but remember it's free and you get what you pay for

1) Personally I think you're too young and 23 yrs out at least is too long to even worry about bonds in my opinion. T pays more than most bonds just in it's dividend.

2) See answer 1 but I would favor strong companies you are comfortable with that have taken a dip based more on overall market conditions than their own individual fundamentals. Scaling in, or "dollar cost averaging" is never a bad idea. Also, read this article: http://www.marketwatch.com/story/how...rly-2016-01-25

3) Personally, I've learned to always have some cash on hand for when we have these sudden dips that really aren't based on much of anything concrete. I don't use it but HYG is a popular bond ETF for storing cash, it's not the most conservative though nor without risk. On the conservative side, T-Bills may or may not do much for you, depending on how much cash you are parking, to even be worth the trouble, but they are safe.

4) Max out any free money company match 1st, then max out Roth contributions, then go back to 403b and max that out (like most plans, it probably doesn't have very many or very good choices).

BTW, changing jobs is a perfect opportunity to swap out of a limited set of poor choices in a 401k and into a Rollover IRA with unlimited choices without paying a penalty. That was a great move and most people don't even know they can do this. My company was sold and I didn't change jobs but it allowed me to do this too!

You're just fine tuning at this point so don't lose any sleep, you're doing it right! Good luck!

[YAMATHUMP]

I am a long time lurker on this thread, and I just wanted to take the time to say thank you to all who have posted. It is funny how some of the most solid investing advice I have seen has been on a "car forum". LOL Another thing that's funny is how you go from "gambling" to "investing" and you feel so much more secure.
You know I wish I knew at 20 what I know now.......and I have always saved money, just sometimes made bad investment decisions (some good too!) Any how, I hope everyone who reads this thread gets out of it what I have! Thanks again and keep up the good work!
Brad

[WSSix]

Welcome Kenny. Erik pretty said everything I would have. You're smart to be doing this now. Keep up the good work. The only thing I would recommend is to further diversify. If you can continue to purchase more shares of what you own and diversify at the same time, great! If not, I'd lean towards diversifying as a priority over expanding current selections. Keep your eyes on your current selections though for any dips. Jumping in during dips isn't necessary but it's great when you can.

Glad you're getting a lot out of this thread, Brad. Good luck to you.

[jkp41]

Originally Posted by WSSix

Welcome Kenny. Erik pretty said everything I would have. You're smart to be doing this now. Keep up the good work. The only thing I would recommend is to further diversify. If you can continue to purchase more shares of what you own and diversify at the same time, great! If not, I'd lean towards diversifying as a priority over expanding current selections. Keep your eyes on your current selections though for any dips. Jumping in during dips isn't necessary but it's great when you can.

Thanks, Trey! I'm planning on using this as a chance to reevaluate several of the positions that I have. Some will be expanded and others may be eliminated completely. And as for dips, I am curious as to how the election will affect the market. That has been on my mind as well since it will probably happen around the time that the account transfer finalizes.

[GregWeld]

Originally Posted by YAMATHUMP

I am a long time lurker on this thread, and I just wanted to take the time to say thank you to all who have posted. It is funny how some of the most solid investing advice I have seen has been on a "car forum". LOL Another thing that's funny is how you go from "gambling" to "investing" and you feel so much more secure.
You know I wish I knew at 20 what I know now.......and I have always saved money, just sometimes made bad investment decisions (some good too!) Any how, I hope everyone who reads this thread gets out of it what I have! Thanks again and keep up the good work!
Brad

Brad! So easy a five year old can do it! In fact -- we should all START by putting money away for our five year olds! College is coming!


So happy you've gotten some nuggets you can use to help yourself to a better life! Yippppppeeeeeeeeeee

[captainofiron]

I have a pretty significant chunk of my portfolio in Lowes, and today they missed so they are down ~$5

I have a reasonable chunk of cash sitting (from being an idiot and not using the dividends reinvestment option), but I am really nervous about putting money into them on a dip, given that it has kicked me down hard when I did this the past couple years with COP and STX

Any thoughts?

[GregWeld]

Originally Posted by captainofiron

I have a pretty significant chunk of my portfolio in Lowes, and today they missed so they are down ~$5

I have a reasonable chunk of cash sitting (from being an idiot and not using the dividends reinvestment option), but I am really nervous about putting money into them on a dip, given that it has kicked me down hard when I did this the past couple years with COP and STX

Any thoughts?

The very best time to buy is when the market is DOWN not UP.


Having said that --- even when you have a bucket of money --- it's hard to follow this simple advice. I get it.


Whenever you get nervous..... GO TO THE CHARTS!!! Stretch 'em out ---- DO YOU NOT SEE THAT THEY'RE LOWER ON THE LEFT SIDE AND HIGHER ON THE RIGHT??


Now -- be a smart guy and pull up a comparo chart of Home Depot (HD) and Lowe's (LOW).... Personally I've always liked HD better. Lowe's - to me - is too "Chinese imports for the housewife" kind of a store.


How many years do you have before you actually retire --- and then --- wait for it --- how many years do you plan to live after retirement?? My guess is - no matter how many dips the market takes - it'll be higher in the long run.

[captainofiron]

Originally Posted by GregWeld

The very best time to buy is when the market is DOWN not UP.


Having said that --- even when you have a bucket of money --- it's hard to follow this simple advice. I get it.


Whenever you get nervous..... GO TO THE CHARTS!!! Stretch 'em out ---- DO YOU NOT SEE THAT THEY'RE LOWER ON THE LEFT SIDE AND HIGHER ON THE RIGHT??


Now -- be a smart guy and pull up a comparo chart of Home Depot (HD) and Lowe's (LOW).... Personally I've always liked HD better. Lowe's - to me - is too "Chinese imports for the housewife" kind of a store.


How many years do you have before you actually retire --- and then --- wait for it --- how many years do you plan to live after retirement?? My guess is - no matter how many dips the market takes - it'll be higher in the long run.

Greg you are the man.

I bought lowes at the time because it was worth half of what HD was, and it has really paid off. I have shopped at both, and I understand exactly what you say about contractor style of Home Depot vs housewife faux-renovation style of Lowes, BUT both are always packed everytime I go into one, PLUS the Lowes is easier to get to for me, haha

Im gonna take a look at the comparison, last time I looked they were pretty neck and neck for the past few years.