Oppo Finance, Investing, Liiiiife. Calling all experts

"AestheticsInMotion" (aestheticsinmotion)
12/22/2019 at 20:32 • Filed to: None

After a tumultuous year of 6(!) different jobs, 4 months without ANY job, and 6 weeks abroad living out my fantasies... I’m finally back to a reasonable spot with a healthy-ish savings and decent income. (knocks on every wooden surface in room). Oh and debt is low, and interest on said debt is negligible.

I’ve got my spending strategy nailed down, my savings/checking accounts are set up for maximum returns, I’m not going to buy stupid shit like I immediately would have five years ago (sorry Ducati Panigale V2)... I figure it’s time to wade into the murky-to-me depths of investing.

I opened a brokerage account through Charles Schwab.

Why not a retirement account with some form of tax benefit?

Two reasons.

One, I’m kind of banking on being in a better place career-wise within 5 years, the type of job where I can expect employer-matched contributions.

Two... I want a house. By all means correct me if I’m wrong, but a brokerage account sounds like the best place to build up a portfolio if you want to see some earnings and plan on withdrawing money in say... Ten years?

Anyhoo... That’s where I’m at. I’m going to try getting familiarized with Charles Schwab’s online and mobile platforms tonight, but... I’m going in blind. The plan is to invest a few hundred now-ish, about 90% of my Christmas bonus when that arrives, and $200 or so a month. Hopefully increase that number a bit in the near future, depending on how looming life choices go down.

I know there are some real financial gurus here—FACW, Wobbles the Mind, Eric, etc.—and I’ll happily accept any morsel of info that you have to offer!

Oh and because I know someone will ask, the 6 jobs were...

1. Regional Opps manager, cleaning company! (aka desk job where I got fat, so much for stripping smh)

2. Window washer (I helped my old company out for like two days, but I got paid so I’m counting it).

I financial advisor focusing on small business. I went with the piano-teacher school-of-thought here, where success is in knowing just a hair more than your students at any given time. (I worked from a laptop primarily, going to beaches and parks everyday. Truly a great two months. Only recommend in Seattle during the Summer)

4 cleaning company. I still get calls to the Google number I setup, mostly because for the life of me I can’t unlink it from my personal number. This was my 3rd window washing company, you all have read stories from the 2nd (we don’t talk about the 1st)

5. Tile Apprentice. I really wish I could have gotten another 6 months of experience here, but the Miata could not take 80 miles of stop-and-go freeway driving a day, and the pay sucked. Boss was amazing though.

6. Delivery driver. I’m the guy that parks in such a way as to block every other driver within a 5 mile radius, somehow.

DISCUSSION (30)

fintail > AestheticsInMotion
12/22/2019 at 20:40

You want a house, how far away from metro Seattle do you plan to move, and when? :)

CarsofFortLangley - Oppo Forever > AestheticsInMotion
12/22/2019 at 20:40

I am so broke right now. Worst christmas for a long time...

CarsofFortLangley - Oppo Forever > AestheticsInMotion
12/22/2019 at 20:40

I am so broke right now. Worst christmas for a long time...

ITA97, now with more Jag @ opposite-lock.com > AestheticsInMotion
12/22/2019 at 20:42

Paging Wobbles the Mind to the front desk...

AestheticsInMotion > fintail
12/22/2019 at 20:43

I like Maple Valley/S noqualmie/F all City/Monroe. Those.... Might still be affordable-ish in ten years! But yes, one way or another... I’m going to have to finagle myself into a career with pretty soon.

It’s too bad, I would have made a great trust-fund kid!

AestheticsInMotion > CarsofFortLangley - Oppo Forever
12/22/2019 at 20:45

Did work pick up at least?

Christmas can be rough. Hug your dog, go for a fun drive.

AestheticsInMotion > ITA97, now with more Jag @ opposite-lock.com
12/22/2019 at 20:45

He did promise me an investing post a while back...

CarsofFortLangley - Oppo Forever > AestheticsInMotion
12/22/2019 at 20:50

Yeah, work s picked up. I’ve taken a ton of on call work which nets me a ok bonus at times and extra files.

Everything with moving has really sucked up all our cash. And our washer just packed it in 2 weeks short of the move out

fintail > AestheticsInMotion
12/22/2019 at 20:54

I think the former and latter will see increasing spraw with time , but the two in the middle might be doable. Just think, at one time Woodinville or Issaquah were seen as too far out, and Kent cost nothing. I’ve resigned myself to the idea that if I want a detached house, I’ll need to leave the area.

I’d make a good trust funder (an amazing amount of my demographic peers I know/work with who own detached property in the area received significant family help) or lottery winner too.

Who is the Leader - 404 / Blog No Longer Available > CarsofFortLangley - Oppo Forever
12/22/2019 at 20:57

Scratch and Dent outlet. Find something that either fits or looks okay. Make it work and let the new owner say they'll replace it

MrDakka > AestheticsInMotion
12/22/2019 at 20:58

You want safe? Dump it all on an index fund or ETF.

H ave balls of steel? YOLO on a biopharma stock. If you’re lucky, you could have something like $AXSM which jumped + 4000% over a year. 100k could become 4 million or be utterly gone.

https://www.marketwatch.com/investing/stock/axsm

But do your due diligence on whatever you decide to go with.

CarsofFortLangley - Oppo Forever > Who is the Leader - 404 / Blog No Longer Available
12/22/2019 at 20:58

Yeah, or used.

Or, if ok with the buyer. We just bring in the units from our new house, and buy ourselves brand new ones.

Who is the Leader - 404 / Blog No Longer Available > CarsofFortLangley - Oppo Forever
12/22/2019 at 21:03

The second plan is good, if they fit in the space

glemon > AestheticsInMotion
12/22/2019 at 21:12

I am not a financial or investment wizard, but I think buying a house relatively young is a good idea, there are lots of temptations to spend money, house is a big fat forced savings plan which also appreciates in value over time.

As far as stocks go, don't listen to me, I bought some Berkshire Hathaway B several years ago, and though it did well, for the first time the overall market outperformed it pretty much starting as soon as I bought it.

VincentMalamute-Kim > AestheticsInMotion
12/22/2019 at 21:27

You’re very smart to be thinking about this stuff as early in life as you can.

1. I think you should be throwing as much money as you can into a retirement account now. You’re saving money due to the tax break now. Even without employer match. Waiting five years makes a huge dent in your final amounts due to the miracle of compounding interest.

https://lifehacker.com/the-fastest-way-to-save-1-million-1829372702

2. Brokerage account is fine for saving for a defined reason. It can be as aggressive or safe as you want. Keep in mind that aggressive portfolios involves risk i.e. losing money ( loss of principal) . For the safest portfolios, brokerage accounts likely can’t beat online bank savings acct interest rates (currently around 1.85% or so) or CDs.

Nibby > AestheticsInMotion
12/22/2019 at 21:30

invest by giving me all your money

WilliamsSW > Nibby
12/22/2019 at 21:43

You’ll just spend it all buying up 1993 Ford Tempos.

someassemblyrequired > AestheticsInMotion
12/22/2019 at 21:57

Rank amateur, but a couple of good things that people have told me over the years :

1. It’s hard to beat people who do this full-time every day, and it’s hard to outperform the S&P. Trying will generally lead to you going bust. It’s also hard to diversify with a small portfolio, so you need to figure out how to do that for cheap (this is not such an issue now that stock commissions are a thing of the past).

2. Mutual funds suck - they’re expensive in terms of fees, and hard to buy/sell. You can usually find an equivalent ETF (exchange traded fund) that’s fully liquid and cheaper in terms of fees and still gives diversification . Always check management f ees with ETFs - they tend to be low but there are some bad outliers .

3. Closed end funds often trade at a significant discount, especially after the market wobbles. These are like mutual funds/ETFs but they have a fixed number of shares. You can often buy $10 worth of underlying stock for $8-9 . Always check the premium/discount to net asset value - if there’s a big premium it’s usually not a good thing. Discount means it’s in the bargain bin.

4. REITs are a good way to get diversified RE exposure with a small investment and the dividends are significant.

5. Dollar cost averaging is your friend. Timing the market is tough - so instead of buying 1000 shares in a single trade, break it up and buy in over several weeks. Similar idea when you exit a position (though see 6) .

6. Sell the news to the positive side. Especially if it’s a takeover type offer. Take the money and walk away. Don’t be afraid to walk away on the downside either. You can usually buy it cheaper a month from now if the news is really bad. I’ve gotten burned by takeover offers and it sucks to lose 50% trying to make an extra 10%. Conversely it’s no good trying to chase a falling knife even if you know the stock is solid - wait a few weeks and re-enter. I got badly burned on a stock I knew was rock solid but the market hated - I later made a killing but it would have life changing if I had held off scaling in.

7. Pay attention to tax consequences of your trades - trading in and out of positions can increase your taxes and also affect the tax rates on your dividends.

8. As you get into larger shareholdings, options can be a great way to generate income from long positions or reduce your purchase cost.

9. There’s only one trade at the lowest price, and only one at the best. That’s not going to be you - don’t beat yourself up if you miss out on a few pennies.

Highlander-Datsuns are Forever > fintail
12/22/2019 at 22:04

Spokane!

fintail > Highlander-Datsuns are Forever
12/22/2019 at 22:15

I have family there and would have no problem relocating if I found the right job. That city gets a bad rap. Looks like the housing market there has heated up, but still affordable. If a few major employers relocate there, that might change, and upset the locals kind of like what happened here to those who grew up when housing was affordable, then saw things change once they hit adulthood.

Under_Score > AestheticsInMotion
12/22/2019 at 22:43

https://www.zillow.com/homedetails/202-Everhill-Peachtree-City-GA-30269/14602715_zpid/

Do what the cool kids are doing and move to metro Atlanta. Peachtree City is cool and you could commute via golf cart. Schools are good, too.

One of my mom’s friends sold her beautiful place in an excellent neighborhood for $435,000 to some people from California. Their old place? A townhome listed for $800,000+.

Dr. Zoidberg - RIP Oppo > CarsofFortLangley - Oppo Forever
12/22/2019 at 22:51

Worst, or best because TWO CAR GARAGE

LastFirstMI is my name > AestheticsInMotion
12/22/2019 at 22:51

One house, one spouse. Spend less than you make. Everything is else is just details :)

Wobbles the Mind > AestheticsInMotion
12/22/2019 at 23:41

It sounds to me like you have done the research and made a plan. The most useful advice I have is to stick to your plan. Don’t change things suddenly and try to overachieve, that’s when things go wrong. Just achieve by doing enough to get you where you need to be and keep the rest in your own hands.

I’ll add that your monthly debt-to-income ratio, current gross monthly income, and past two years of income will have a huge impact on what you qualify for (whether car, house, personal loan, etc) and how much of a down payment you may need in order to progress forward. You could find that making $5 0,000 a year and being debt free qualifies you for a mortgage of just under $30 0,000 while making $100,000 a year with just $7 00 a month in car and student loan payments may qualify you for a mortgage of $350,000. This stuff varies wildly going place to place and person to person, and which ratios and rates are used and so on. But the one thing that is consistent is that you get opportunities by being low risk to lenders, not by being rich to lenders.

CarsofFortLangley - Oppo Forever > Dr. Zoidberg - RIP Oppo
12/22/2019 at 23:50

Yeah, I just came back from the new place in the ST. We really lucked out....

We bought a ton of her stuff and she’s throwing in some stuff too.

AestheticsInMotion > Nibby
12/23/2019 at 00:40

I thought you only dealt in souls..?

whatisthatsound > AestheticsInMotion
12/23/2019 at 01:34

Don't do any of those things. Buy a mountain bike and come ride Galbraith or Duthie with me and we won't need to retire because we'll go full send into our graves.

BigBlock440 > AestheticsInMotion
12/23/2019 at 07:02

Open a Roth if you want to use it as savings, you get tax-free earnings, and can withdraw your contributions any time. $200/month is much less than the $6k annual limit. You won’t be able to spend the earnings right now, but when you do they’ll be tax-free. 2nd the index fund, find one with the lowest fees and just use a total market. Don’t worry about a taxable account until you can max your tax-advantage accounts.

Nibby > AestheticsInMotion
12/23/2019 at 08:40

everyone will receive the mark of the beast

Eric @ opposite-lock.com > AestheticsInMotion
12/25/2019 at 03:37

I saw this yesterday and didn’t think it would be possibly to go over all of what you need to know in here, but my first and most important recommendation is to open a Roth IRA and throw as much money as you can in there prior to any other type of account. Until you’re maxing out your contributions there ($6000/year), unless you have a solid reason not to, that’s the first place you should be shoving money that you can save. You will pay no further taxes on the money or the gains unless you take a distribution of the earnings prior to a certain age, while you can tap your capital without penalties if you need to (but you shouldn’t unless you have no other choice). If it was your first home purchase (I don’t think it is, but I don’t know), you can also use earnings to help with a down payment. Once you see the potential of investment earnings, you might look at the value of a house differently. Housing is actually a really poor investment unless housing prices happen to rise substantially very quickly. The value is in being a place to live (because you’ll have costs for that regardless), being close to employment, and that it usually doesn’t have as much downside risk (but it’s also not liquid).

Almost all retirement accounts are brokerage accounts, so what you learn for one applies to the other . The upside is that, unlike some of the more mysterious things like credit, the investment industry is heavily regulated, so as long as you read the reams of documents/disclosures (and understand them), there should be nothing catching you off guard. Also, with a non-retirement account, you will add complexity to your tax filings, so be sure you have considered the ramifications.

I’ll also mention that 401(k) plans almost always suck. Generally, you’re getting booby prize choices in funds and the fees are high, but it’s offset by employer matches and it’s the only way to get substantial amounts into your IRAs due to the low annual contribution limits of those accounts (well, until you make too much to use them).

It would take a very long time to write up my methods for selecting funds, how to maximize returns, what to look out for, etc. I’m also not sure where to start, aside from looking at long-term returns and keeping an eye on expense ratios .

One last piece of advice: Don’t panic and don’t lock in your losses. When the financial crisis of 2007-2008 hit, a lot of people locked in losses out of fear. I disregarded my losses and increased my 401(k) contributions as all my coworkers were selling at a loss and letting their money rot in money market funds (or worse, liquidating the accounts entirely). It has been 12 years and my strategy has more than tripled the money my employer and I contributed from 2007-2013...