How do you all set up your investing?

[ViShawn]

Obviously the #1 thing to do in order to increase your investing power is to increase your income. I work in technology and as of last year I've been in the low six figures salary.

The next step I'd like to take is to do better investing. I put about 12% of my income into my 401K last year and set my investment allocations aggressively and I got a high return.

I'm wondering how much money I should keep liquid right now. I max out my HSA (I believe the limit is $3500 for individuals) each year and will do it this year. This year I will contribute 5-6% towards 401K since I took an income hit. The kicker is I will have an opportunity to get a lot of equity in my current employer if I stay there four years.

I'm at the $10000 mark with savings but thinking I should put $5500 of that into a ROTH IRA. I'm holding on to a lot of money since I got a severance during my last role.

I think I keep too money into my checking account so I'm thinking I need to reallocate things. Thoughts?

 

[MR. SNIFLES]

PROBABLY MAKE 6 MONTHS LIVING LIQUID OR AT LEAST EASILY ACCESSIBLE.

EDIT: THIS IS JUST ME THINKING OFF THE TOP OF MY HEAD. I DON'T HAVE A LOT OF KNOWLEDGE ABOUT FINANCIAL STUFF.

 

[ViShawn]

PROBABLY MAKE 6 MONTHS LIVING LIQUID OR AT LEAST EASILY ACCESSIBLE.

EDIT: THIS IS JUST ME THINKING OFF THE TOP OF MY HEAD. I DON'T HAVE A LOT OF KNOWLEDGE ABOUT FINANCIAL STUFF.

If I put money into a ROTH IRA I can access it, but I believe I face a penalty if I withdraw early.

Of course I may just get a good return by just letting it sit there.

 

[ViShawn]

Investing some of my HSA money

 

[KillerB88]

Brother how are you making low six figures with only 10k in savings? Not questioning your salary, but those are meager savings. I'm inclined to believe youre a pink slip away from financial ruin.

 

[无名的]

Brother how are you making low six figures with only 10k in savings? Not questioning your salary, but those are meager savings. I'm inclined to believe youre a pink slip away from financial ruin.

I'm assuming the money is in the checking. Assuming the money is in the checking, you sound like you're on the right path.

 

[KillerB88]

I'm assuming the money is in the checking. Assuming the money is in the checking, you sound like you're on the right path.

If it's sitting in a checking account then no, he's not on the right path. He should know his fixed expenses and have funds allocated for entertainment and frivolities. The rest should be working for him in some manner.

 

[dark_magic]

Obviously the #1 thing to do in order to increase your investing power is to increase your income. I work in technology and as of last year I've been in the low six figures salary.

The next step I'd like to take is to do better investing. I put about 12% of my income into my 401K last year and set my investment allocations aggressively and I got a high return.

I'm wondering how much money I should keep liquid right now. I max out my HSA (I believe the limit is $3500 for individuals) each year and will do it this year. This year I will contribute 5-6% towards 401K since I took an income hit. The kicker is I will have an opportunity to get a lot of equity in my current employer if I stay there four years.

I'm at the $10000 mark with savings but thinking I should put $5500 of that into a ROTH IRA. I'm holding on to a lot of money since I got a severance during my last role.

I think I keep too money into my checking account so I'm thinking I need to reallocate things. Thoughts?

I like to keep 2 years+ of a cash runway for yearly expenses.

You definitely should do (and seek to increase the 401(k) deposits.

If you like to do active investing, use a discount brokerage. The 401(k) is your passive investment fund for ETFs (Exchange Traded Funds) and index funds.

If you have some risk appetite, you could do derivatives (options, futures, and/or FOREX). Only do this if you study, have a plan, and a well developed risk management strategy (more along the lines of if the SHTF).

 

[ViShawn]

Brother how are you making low six figures with only 10k in savings? Not questioning your salary, but those are meager savings. I'm inclined to believe youre a pink slip away from financial ruin.

I had a jump of income from mid 60K to low six figures last year so 2016 was new to me. I wasn't able to save like I did. I was also allocating in my last role 12% in investing (6/6 401K and ROTH 401K) and I max out my HSA which I can use for only health expenses but also save. So I figured as long as I have a few months income in savings I'd be OK.

I actually did have a layoff due to an acquisition but had severance and got an offer within six weeks. It's in the six figures area too but not a bonus or anything like my last role, but I can get a large amount of RSUs over a few years of service with my role.

I like to keep 2 years+ of a cash runway for yearly expenses.

You definitely should do (and seek to increase the 401(k) deposits.

If you like to do active investing, use a discount brokerage. The 401(k) is your passive investment fund for ETFs (Exchange Traded Funds) and index funds.

If you have some risk appetite, you could do derivatives (options, futures, and/or FOREX). Only do this if you study, have a plan, and well developed risk management strategy.

I was reading this book called Boglehead's Guide to Investing on EFT and Index Funds too. Still learning.

I'm assuming the money is in the checking. Assuming the money is in the checking, you sound like you're on the right path.

I probably keep too much in Checking tbh, but I explained above that I had a jump in income and started saving more. Also I'm not including the couple thousand I put into my HSA.

 

[dark_magic]

I had a jump of income from mid 60K to low six figures last year so 2016 was new to me. I wasn't able to save like I did. I was also allocating in my last role 12% in investing (6/6 401K and ROTH 401K) and I max out my HSA which I can use for only health expenses but also save. So I figured as long as I have a few months income in savings I'd be OK.

I actually did have a layoff due to an acquisition but had severance and got an offer within six weeks. It's in the six figures area too but not a bonus or anything like my last role, but I can get a large amount of RSUs over a few years of service with my role.

Your situation is similar to mine.

Hence, why you want the fairly long cash runway.

As to personal savings, you should gun for saving 50%+ of your take home pay.
You'll have lots of investment capital at that point.

 

[ViShawn]

Your situation is similar to mine.

Hence, why you want the fairly long cash runway.

As to personal savings, you should gun for saving 50%+ of your take home pay.
You'll have lots of investment capital at that point.

I thought I was doing good by putting 25% of my income towards savings and investing

I got more to learn.

I am proud of myself in the fact that I grew my 401K a lot last year. Not only with amount I put into it but basically working on blending my investments well. I've been using mint.com to track my net worth. I paid off my car last year too.

I will be relocating to a new area with a higher COL but that's no excuse to not save correctly.

 

[dark_magic]

I thought I was doing good by putting 25% of my income towards savings and investing

I got more to learn.

I am proud of myself in the fact that I grew my 401K a lot last year. Not only with amount I put into it but basically working on blending my investments well. I've been using mint.com to track my net worth. I paid off my car last year too.

I will be relocating to a new area with a higher COL but that's no excuse to not save correctly.

My personal best was 75%+ (working to get back here) .
There are others who do 80%+.

Your lifestyle, finance, and investing/trading goals are important.
I'd say just as important as how much you save are your objectives.

 

[Rymas]

Put as much as you can in your Roth IRA, I think the most is $5500

You've already paid taxes on that so any growth is 100% tax free. Only use your companies 401k if they match, max out until the point they match

Then start putting a safe amount into a low yield stock, it won't be a stud, but it is always good to keep money in a sure thing like this.

 

[KillerB88]

Put as much as you can in your Roth IRA, I think the most is $5500

You've already paid taxes on that so any growth is 100% tax free. Only use your companies 401k if they match, max out until the point they match

Then start putting a safe amount into a low yield stock, it won't be a stud, but it is always good to keep money in a sure thing like this.

I'm self employed, so my investment strategy is a bit different. But 401ks, buying and holding stock, etc. is not real investing. When you do this kind of "investing" your money is at the mercy of other people's decision making. How many people saw their 401ks wiped out in 2008? You should always have some modicum of real control over your money.

Just remember, every time you use one of these financial instruments someone somewhere is collecting a fee or seeing their coffers bolstered so some white man can make millions more. Even "buying stocks" is a waste. Unless you're buying blocks of shares in the thousands you're not seeing any real growth.

You're "investing" but you're taxed the minute you need access to these funds, and that money in the grand scheme of things will be meager. Compounding interest be damned. Real investing means assuming risk. Get out in your city and mingle with people STARTING companies. Determine how much exposure you're willing to endure and learn how to get in on the ground floor. The real money is made before you've even heard of a company's name.

And finally, REAL ESTATE. Buy some. My company has a SaaS structure with little overhead. My liquidity is high. I'm in LA but I linked up with my best friend back home in Atlanta. We're starting a property development outfit. Buying up older apartment buildings in midtown, jazzing them up to something the average man can afford and renting them. Nice potential source of passive income. We plan to hire someone to manage the properties so we can focus on our passions. Eventually we'd like to move to larger scale developments in the downtown area. The pending sale of Underground Atlanta will lead to a boom in DTATL and I want to get in before these white people snatch up the prime properties near the train station.

 

[Rymas]

I'm self employed, so my investment strategy is a bit different. But 401ks, buying and holding stock, etc. is not real investing. When you do this kind of "investing" you're money is at the mercy of other people's decision making. How many people saw their 401ks wiped out in 2008? You should always have some modicum of real control over your money.

Just remember, every time you use one of these financial instruments someone somewhere is collecting a fee or seeing their coffers bolstered so some white man can make millions more. Even "buying stocks" is a waste. Unless you're buying blocks of shares in the thousands you're not seeing any real growth.

You're "investing" but you're taxed the minute the you need access to these funds, and the money is the grand scheme of things will be meager. Compounding interest be damned. Real investing means assuming risk. Get out in your city and mingle with people STARTING companies. Determine how much exposure you're willing to endure and learn how to get in on the ground floor. The real money is made before you've even heard of a company's name.

And finally, REAL ESTATE. Buy some. My company has a SaaS structure with little overhead. There really isn't a whole lot for me to reinvest in my company at the end of the day, so my liquidity is high. I'm in LA but I linked up with my best friend back home in Atlanta. We're starting a property development outfit. Buying up older apartment buildings in midtown, jazzing them up to something the average man can afford and renting. Nice passive income. We plan to hire someone to manage the properties so we can focus on our passions. Eventually we'd like to move to larger scale developments in the downtown area. The pending sale of Underground Atlanta will lead to a boom in DTATL and I want to get in before these white people snatch up the prime properties near the train station.

I was answering OP's question about his IRAs I really have no clue why you quoted me with all this nonsense about high risk investment

Smart investors minimize risk, I work at a major financial institution and player in the housing market and the entire company is based around it's ability to minimize risk. You can talk about high risk investments as much as you want but that's a fools game, startups fail all the time. You're not gonna stumble across the next Uber without a lifetimes worth of luck.

You remember 2008, I'm sure you know what that did to real estate. Great time to buy but if you were invested you probably are only just now recovering after many years.