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I used to sell annuities as a broker, yes this is the main reason. You are better off investing in a Roth IRA or some other retirement account first, then - if possible when you retire - obtain a variable annuity with a principle/income protection (just in case the market crashes, but you get more dough when it goes up, than fixed).
Long story short, read Bogleheads Guide to Investing or Bogleheads Guide to Retirement; sources:
The Bogleheads' Guide to Investing https://www.amazon.com/dp/1118921283/ref=cm_sw_r_cp_api_d006Bb505YNH1
The Bogleheads' Guide to Retirement Planning https://www.amazon.com/dp/0470919019/ref=cm_sw_r_cp_api_z006Bb4QAZKBM
These two books are more than enough to give anyone the knowledge in terms of investing and retirement planning. Or just hit me up with questions, please note that I haven’t been licensed in almost a decade, because I had chosen not to renew my series 6 and 63. Anyway, I hope my post helps.
Edit: damn autocorrect.
I recommend reading "The Millionaire Next Door", it goes it to more detail about the spending/saving/investing habits of the ~~average~~ most millionaires in America. Living in a culture that prioritizes spending it's not surprising those who do the best financially go against the grain, and are also frowned upon.
I've followed Dave Ramsey's teachings for over 10 years, so I started there. Which I know he can be pretty controversial on Reddit, but I think the general idea of his teachings are very sound and a great starting off point. Also currently reading the book The Simple Path to Wealth: Your road map to financial independence and a rich, free life. It is a great book and breaks everything down into stuff a "normal" person can understand. He also touches on real estate, although I disagree slightly with him on that but that's my personal opinion as I do invest in property. Investing isn't really as difficult as people try to make it seem. I think it can be overwhelming because there are all these different types of stocks and different avenues you can take to invest, but it is all actually relatively simple once you learn the terminology. I think that's what always intimidated me was the words I didn't know and was too afraid to ask what they meant.
>>The jets and all that other crap seem like a better value renting. > >Huh? $3 million in total wealth isn't much, especially for that. Please, don't do that. I strongly recommend that you read The Millionaire Next Door: The Surprising Secrets of America's Wealthy.
Yeah, that bit made me laugh. $3m isn't even remotely close to private jet territory. Try $300m. Lol
Most people that receive a large windfall like this do not fare well OP. At all. Be extremely careful with this money and do not tell anybody. Check out the "Windfall" section in the /r/personalfinance wiki. Also check out /r/fire and /r/fatFIRE.
The last Willey "for dummies" series I got was the how to land an IT job one and most of them were easy to read and had some decent pointers. That being said I'm always skeptical on getting stock market books. I own The intelligent investor and also have listened to Money Management Skills on the great courses audible series and I can say that phrase I keep hearing the most is that "you can't beat the market".
The average person who goes on etrade or Robin hood doesn't have the same resources as those higher up do with computers that can process hundreds of trades in the blink of an eye or potential insider sources . We also get emotional over stocks and find it hard to disassociate ourselves from our losses and boast about our gains. Getting someone else to manage your portfolio is also costly and you can most likely get better gains as long as you diversify your stocks in a mutual index fund. That's just a bit of what I learned and I suggest getting those 2 books/audiobooks that I recommend. I still believe the dummies books will be good, but from what I read, you'll have much more stress trying to maximize gains individually actively rather than take a backseat in a well diversified portfolio
Couple quotes from The Psychology of Money:
"Like everything else worthwhile, successful investing demands a price. But its currency is not dollars and cents. It’s volatility, fear, doubt, uncertainty, and regret—all of which are easy to overlook until you’re dealing with them in real time."
"It sounds trivial, but thinking of market volatility as a fee rather than a fine is an important part of developing the kind of mindset that lets you stick around long enough for investing gains to work in your favor."
Highly recommend this book. Managing your own psychology is critical to successful investing.
Provided you've got an emergency fund / buffer, holding (or buying if you can) is the right thing.
Former broker here. I would recommend the Bogleheads Guide to Investing, source:
The Bogleheads' Guide to Investing https://www.amazon.com/dp/1118921283/ref=cm_sw_r_cp_api_jmpkBbZ332GVC
Overall, I would highly recommend putting in as much of your portfolio in a Roth IRA - if you haven’t done so already. Taxes within the US will have to go up by a lot at some point to cover the lack of infrastructure funding and other critical services that are underfunded. Either that or we go for complete third world infrastructure.
Once you maxed out your Roth contributions each year, depending upon your short term goals and tax liability, you may want to checkout Tax-exempt bond funds or target funds to meet a near term goal.
Overall, you want to keep your strategy simple. Don’t try to game the market or day trade, very few people can beat the S&P500 over the course of 5-30 year period.
Please remember that past performance does not equal future results.
Overall, I am proud of your ambition. I wish I was like that at your age, I would have 7 figures saved much sooner with less investment required to reach it (I am still working on it, despite a ton of set backs). Compounding interest is just pure awesome sauce when it works for you.
OP, probably not a popular opinion in this sub, but if you want to beat the majority of investors and have the most likely path to a healthy retirement, look into index funds. This book by Jack Bogle, the founder of Vanguard, lays out incredible evidence on top of evidence on top of evidence that the way to make the most money in investing is via index funds. My comment may get downvoted in this sub, but do some reading and decide for yourself :)
Sounds like you're doing great. For investing, before going to a financial advisor (some have high fees and not exactly your best interests at heart), I would highly recommend reading a book or 2. It's vastly easier than one would think to understand the principles and be your own FA. The common recommended ones are:
My friend recommended me this when I first started, but the truth is all the reading in the world isn't going to give you real-world experience. Start small, do your research, thorough research. Learn about greeks, IV, when to take profit, ect. Study the stocks you're interested in and know about, don't worry about trying to follow someone else's trades on a company you know nothing about.
Personally, I started small with 250 and made smart choices to bump it up to 2400 in three weeks, but I got cocky and didn't fully research an investment so I lost 1000 in one trade. If I had kept a level head I would have noticed that there was a significant short interest trying to drive the stock down and the low volume added fuel to the fire. Undervalued or not, hedge funds with billions to throw around can influence the stock price of most companies quite a bit, always be aware of that.
Once you gain some experience and understanding, day trading with the current level of volatility is pretty easy albeit risky at times. Just remember to not gamble with money you can't afford to lose. It may be boring but I keep about 5/6ths of my portfolio in equity that I rarely touch. For every one person you see on this sub that turns 40k into 250k on a MU yolo, there are ten others that turned their 40k into 0k. Be smart and goodluck!
Take 5% of your money and try something else but I advise you to read the Intelligent Investor first. Benjamin Graham has been right for the past century and will be right for this one too. I add individual stocks during market downturns but keep 90% of my money in index funds.
https://www.amazon.com/Intelligent-Investor-Definitive-Investing-Essentials/dp/0060555661
Read this book. it's a great starting point and covers a lot of good info!!
Exactly! "Terry Odean and Brad Barber, two professors at the University of California, did a study of 66,400 investors between the years 1991 and 1997 to learn how trading affected those investors' returns. They found that buy-and-hold investors outperformed the most active traders by a whopping 7.1% a year (before taxes)." (source)
Will also add that this book is a great help in understanding how to invest:
https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/1118921283
Updated version for Kindle through Amazon
It's a solid starting point. At times it feels like a sales pitch for Vanguard, but it's still not bad advice. It does have good info on the basics though.
Read the Bogleheads guide to investing. This honestly should be required reading for all Americans. The Bogleheads' Guide to Investing https://www.amazon.com/dp/0470067365/ref=cm_sw_r_cp_api_i_6tBgDbZ99RCSR
Translation: Researchers read Jack Bogle's The Little Book of Common Sense Investing which already contained decades of research on this topic. Next they wrote a paper and put this year's date on it. 😄
Athletes constitute a extreme minority, especially superstars like LeBron. While his example was a little extreme in how lucky the beginnings was, the story is by no means rare. The is a popular book called The Millionaire Next Door which goes to explain how most millionaires in the US got their wealth.
In the vast majority of cases, it's quite straightforward: spend less than you earn, and maximize tax-advantaged investing. Don't waste money on expensive cars or other forms of wasteful spending. Keep doing that for a couple of decades, and you'll be a millionaire.
Of course, the above path does come with assumptions. First is that you need to have an employable degree, and not be crippled by student debt in a way that makes you lose a big chunk of your early earnings. Second is that you need to be not unlucky and e.g. not have an expensive medical emergency. Having a spouse definitely helps (but is not required), and not having kids also helps (but they won't make anything impossible).
Bottom line is that the most millionaires in the US are not sportsmen, nor are they born to immense privilege.
As a noob this book is highly recommended for a Bogglehead view on investment. It’s really all you need to know. Once you’ve read it you can make up your own mind on your own investment style.
Making money doesn’t need to be difficult. It just takes both time and emotional strength. Best of luck my friend.
You don't need passive income right now, you are going to be a pilot or something similar making a bunch of money soon. You need to focus on getting that fancy job right now, once you have said fancy job you need to maximize all tax advantaged accounts (HSA,401k/403b, ira/Roth IRA, etc) once all of them are maximized then start putting money in a taxable brokerage.
Risk tolerance can be adjusted for based on what you actually hold in your tax advantaged accounts.
You can access all of your retirement accounts early, if you retire early (link). I recommend reading all the madfientist posts, and bunch of Mr money mustache and ask questions once you've educated yourself there. If you want to read a book this one should be a good start.
Option Volatility and Pricing: Advanced Trading Strategies and Techniques, 2nd Edition https://www.amazon.com/dp/0071818774/ref=cm_sw_r_cp_api_glt_fabc_06VNJSD6Y5PX7GKD0SF8
Can’t recommend this one enough. I’ve read it multiple times and always come back to it if i have questions.
You can invest in riskier mutual funds. Here is the one I am using. https://personal.vanguard.com/us/funds/snapshot?FundId=0585&FundIntExt=INT
Getting 10k in funds that have admiral shares (like this one) will lower your expense ratio. This will cause heavier fluctuations in overall value week to week.
If you want to get into a little higher risk, investing in stocks/ETF's is the next step. This is riskier since you won't have a fund manager, and buying stock in a risky company can cause a large value drop. Mutual funds are diversified in order to mitigate this risk.
May be better to use another broker for stock trades as commissions will be charged on sell/buy transactions. Robinhood and other brokers (TD Ameritrade, Fidelity) may provide X amount of commission free trades when you first sign up.
ETF's are essentially mutual fund shares that trade like stocks, which means you can buy/sell them throughout the trading day at high/low prices. These require commissions. However, I believe Vanguard does not charge commissions on ETF's that invest in their own funds. (I have mutual fund shares only, can guarantee Vanguard funds have no additional cost other than the share price).
Admittedly, I am new to this myself. I have 20k in my Vanguard Taxable account split between VTSAX and VBIAX (sweet admiral shares) and 11k in my Roth IRA account (in VTTSX). I have not delved into ETF/Stock trading due to inexperience. I also have not set up a 3 fund portfolio as of yet, I am still debating if I invest the next 10k I save up into a bond mutual fund.
I recently bought this book off amazon to try and increase my knowledge and get to the track to FI.
You are probably old enough to read this book
The Psychology of Money: Timeless lessons on wealth, greed, and happiness https://www.amazon.com/dp/0857197681/ref=cm_sw_r_cp_api_glt_fabc_GEGATR7JAMGR84MYBJNW
I found it very informative when I started learning about all this stuff
> Nun habe ich es lange hinausgezögert mich wirklich intensiv mit meinen Finanzen auseinander zusetzen.
Nachholen. Zack Zack!
Lesen: https://www.amazon.de/Simple-Path-Wealth-financial-independence/dp/1533667926 und dann auf D anwenden (US Abschnitte überfliegen), auf den Cost-Average-Effekt pfeiffen, und ab in den Gral.
Kostolany über Geld nachdenken ist auch super! Mindset.
Oder wie es /u/xaomaw/ geschrieben hat, doch mit Cost-Average-Effekt in den Markt (wenn du dich wohler fühlst).
Oder nimm nur 1/3 und ab ins Depot.
> das Geld aber immer auf dem Girokonto liegen lassen
Warum nicht? Alles fein. Dafür kannst du jetzt mit Kawuuum vieles nachholen und auch überholen. Lass auf jeden Fall noch einen Teil übrig als Puffer.
> Meint ihr es wäre sinnvoll sich jetzt "schon" ...
Ja.
> wäre es sinnvoller zu warten bis ich mit dem Studium fertig
Weil? Wenn du natürlich mit dem Geld noch fett Party machen willst, so tue es. Du bist schneller 40 als du denkst.
> Verliere ich irgendetwas wenn ich noch ein Jahr warte?
Ja. Lebenszeit.
Keine Anlageberatung.
The DCA or lump sum argument, IMO, is a pointless argument. You're trading one risk for another. DCA invites the risk of missing out on a rising bull market, lump sum invites the risk of investing everything right before a downturn. Since we cannot time the market, and any successful timing is just luck, I always opt for lump sum. Markets are constantly at an all-time high, that's what happens when markets are historically on the rise more than they're on the downturn. DCA won't really hurt you though. It's more important that you focus on saving as much as you can.
IMO the debate between VT and WTI/VXUS is also pretty negligible. At your age, it's far more important to focus on investing in the first place, meaning staying frugal and saving money to invest. Either the VT or VTI/VXUS combo will outperform the vast majority of people in the long run, as long as you can save money and invest in the first place.
The average 25 year-old isn't concerned whatsoever with investing or retirement. As long as you make a concentrated effort to invest 20-30% of every paycheck, you'll be very wealthy in the future, regardless of what strategy you take in regards to choosing between lump sum/DCA or between VT and VTI/VXUS.
At your age, I'd highly recommend this book. Saving 20-30% of any money that comes your way may seem daunting, but it's actually not all that challenging.
I’d also recommend the boglehead’s guide to investing. It’s the book I give or loan to people who want to learn more. And you’re way ahead of most of the people I work with: The Bogleheads' Guide to Investing https://www.amazon.com/dp/1118921283/ref=cm_sw_r_cp_api_glt_fabc_676V2N784ZPAXX8RJ4EK?_encoding=UTF8&psc=1
Here’s a good book to get you started in the link below.
Brokerage and Roth/IRAs are like buckets. Stocks and bonds are the things you put in them. Each bucket has rules that apply to them. Those rules make them advantageous based on certain situations. Index funds group stocks/bonds into one stock symbol for example VT, VOO, and so on. When you invest in an index fund you spread your investment across the companies in that index fund. Hope that helps a bit. I started just 2 years ago but still have a lot to learn. Good luck!!
The Simple Path to Wealth: Your road map to financial independence and a rich, free life https://www.amazon.com/dp/1533667926/ref=cm_sw_r_cp_api_glt_fabc_VN3VMCSHWDS0WRZMC1XF
Roth - Target date Fund 2045 Brokerage - VTSAX and VHYAX
The best thing you can do is read and then read some more! Find those articles about investing and start learning the language. You can probably find what you need from a couple of books at the library or you can find them on Amazon but if you need help understanding it, then get help. You can call an investment broker in your area and schedule a meeting. They will usually spend some time with you for free in hopes that you will invest with them in the future.
Option Volatility and Pricing - Sheldon Natenberg
Can be a little heavy but for anything you can find on YouTube acts as a good fill in the gaps.
Options as a strategic investment is also very good and covers so many different strategies. It’s 900 pages long, so I’d use it more as a reference for diving deeper into specific strategies rather than a sit down and read it all the way through kind of book. Options as a Strategic Investment: Fifth Edition https://www.amazon.com/dp/0735204659/ref=cm_sw_r_cp_api_glt_fabc_F2Z2R19YXVKYXCZCPARF