Stock Investing

[ramssuperbowl99]

18 minutes ago, twslhs20 said:

 I figured I'd reply to this one. Still need to comb through this thread.

rams knows I'm a scientist and still in school. Last 2 semesters thank god. I have had 1, 401K Savings plan from my previous job, Its around 85K. Return rate the last 3 years at 10% last 8 at 8%

I met with the my new company finance guy. The run a 401K pretax through principal. My portfolio is set up as Moderate aggressive and its some kind of diverse group of mutual funds and equities. I kind of want to leave my other account where it is if the returns are decent. But the Blackrock index fund was pulling like 14%.

But this is my conundrum. I feel like I know just enough to be a detriment to myself. I need more inf on how everything works before I start making moves.

Your company is providing a financial advisor to meet with you directly? Or is this someone that you have?

 

EDIT:

2 minutes ago, twslhs20 said:

Also going to walk away with 40K in student debt when its all said and done

What's the interest rate, like 6ish%? And are you okay with renting, or are you looking to buy a house.

Edited August 7, 2019 by ramssuperbowl99

[twslhs20]

Just now, ramssuperbowl99 said:

Your company is providing a financial advisor to meet with you directly? Or is this someone that you have?

Its weird. He is company provided but doesn't work for Principle. He has his won firm. I don't fully understand it. He was running the pc via remote talking me through election percentages. I had to give him my user name and password so he could sign in for me. The whole thing was done in an open room in HR with other people around. It was sketchy af.

[ramssuperbowl99]

1 minute ago, twslhs20 said:

Its weird. He is company provided but doesn't work for Principle. He has his won firm. I don't fully understand it. He was running the pc via remote talking me through election percentages. I had to give him my user name and password so he could sign in for me. The whole thing was done in an open room in HR with other people around. It was sketchy af.

Okay, so right away change that password immediately.

But this was done on a PC, so there's a website where you can pick different funds. Could you let us know what funds are available (name/abbreviation would be fine), as well as the expense ratio? We can provide some recommendations based on that.

That guy is getting paid by the company, not by you. He doesn't owe you anything, so either your company dropped some cash for him to come out, or (and this is the one I'm going to guess), they brought him out for free so that he could peddle funds that have very high expense ratios. 

[twslhs20]

20 minutes ago, ramssuperbowl99 said:

Okay, so right away change that password immediately.

But this was done on a PC, so there's a website where you can pick different funds. Could you let us know what funds are available (name/abbreviation would be fine), as well as the expense ratio? We can provide some recommendations based on that.

That guy is getting paid by the company, not by you. He doesn't owe you anything, so either your company dropped some cash for him to come out, or (and this is the one I'm going to guess), they brought him out for free so that he could peddle funds that have very high expense ratios. 

This is going to take a minute to go through everything I have. Most of exp ratios are .5 or lower. I did see a .92 from a JP Morgan fund. I'll have to build a spreadsheet.

Also my fund was complied based off answers I took from a shoddy quiz. He was rather unnecessary to the whole process.

Edited August 7, 2019 by twslhs20

[ramssuperbowl99]

2 minutes ago, twslhs20 said:

This is going to take a minute to go through everything I have. Most of exp ratios are .5 or lower. I did see a .92 from a JP Morgan fund. I'll have to build a spreadsheet.

If it makes life easier, see if you can block out any identifying info and take a screenshot?

Edited August 7, 2019 by ramssuperbowl99

[twslhs20]

6 minutes ago, ramssuperbowl99 said:

If it makes life easier, see if you can block out any identifying info and take a screenshot?

I pmed you. Didn't want anyone else to suffer that format hell.

[ramssuperbowl99]

1 minute ago, twslhs20 said:

I pmed you. Didn't want anyone else to suffer that format hell.

Yeah no kidding.

Okay, so we can start working this down. First off, the guy who presented this is trying way, way too hard. No human being's 401k ever needs 23 different fund types. That's insanity. Fortunately, you've got some good options.

 

General background on mutual funds, is that they are combinations of many different entities, which is useful for average people who are throwing a few hundred bucks in their 401k every check and don't want to have to bet it all on a few companies. The end result is reduced risk, without a loss of reasonable upside. And you can stick basically anything in there : stocks for individual companies, shares of different government bonds, gold, Bitcoin, whatever. 

There are 2 types of mutual funds, and it has to do with the process of how the people who manage the fund decide which companies to include. The first is an actively managed fund. So you have American Funds as an option, for example. They will send people to different companies that American Funds is thinking about investing in, and look at the company's expected performance. In other words, it's being actively managed, which sounds nice. The downside to that is that the fund managers need to increase the cost of the fund to pay for all that work, so in the case of American Funds, they charge about a 5% load when you buy any shares. Put another way, you buy $100 in American Funds, they take $5, and you get $95 worth of the fund. They also have higher expense ratios (usually around 1%). That means every year you own the stock, they take 1% of the value out. So let's say your $100 initial investment, which went down to $95, made 10% in a year (which is an average return). So you're up to $104.50. American funds is going to take $1.41 in the expense ratio. So over that first year you made 10%, but only went from $100 to $103. The point being, things like loads or expense ratios which look like small percentage become exceedingly large sums of money with time.

 

The second type of fund, and this is the one I'd recommend, is called a passively managed or indexed fund. So for example, the S&P is a list of 500 high performing large cap companies (Google, Apple, Amazon, General Motors, etc.), and an S&P 500 Index Fund is just those 500 companies in the ratios of the individual company value, versus the total S&P 500 value. As a result, it take no effect at all to maintain, and the fund is able to be offered for a lot less expense. In the same example above, you're probably ending up with something like $109.45 of the $109.50 total investment.

What we want to do is find as many of those types of funds as we can to limit the expenses. 

 

In addition, since you're going to be leaving that job fairly soon, you definitely want to rollover your 401k to an IRA. Here's an article that goes through this:

https://www.investopedia.com/articles/personal-finance/071715/8-reasons-roll-over-your-401k-ira.asp

 

Basically, you can open an IRA with whoever you want, and you'll get your pick of super low fee funds. That's going to be the best option in your case. I'd recommend Fidelty or Vanguard. 

[twslhs20]

Solid information. Thanks!

Do you listen to any financial podcasts? He suggested Charles Payne as a resource for additional info

[ramssuperbowl99]

1 hour ago, twslhs20 said:

Solid information. Thanks!

Do you listen to any financial podcasts? He suggested Charles Payne as a resource for additional info

I don't. Seems like a tough subject to podcast since there are so many people who need visual aids to get stuff. For resources, reddit's personalfinance is good for paying down debt, budgeting, and the basics. The Millionaire Next Door is the proof that the math works eventually.

Since I invest in indexed funds, I don't really have to track the market at all. It's a set it and forget it approach.

[MKnight82]

1 hour ago, ramssuperbowl99 said:

indexed funds, I don't really have to track the market at all. It's a set it and forget it approach.

@twslhs20 if you're not going to be researching and on top of it every day, honestly this is the best way to go.  

[theJ]

12 minutes ago, MKnight82 said:

@twslhs20 if you're not going to be researching and on top of it every day, honestly this is the best way to go.  

It's what i do.  Without sharing much in the way of personal info, it's working very well for me.  Let's just say, after 7 years of avoiding debt like a madman, and doing detailed budgets, i can now see the bottom of the hockey stick in my personal wealth.

[twslhs20]

I've got 2500 from a previous job I forgot about. its just floating collecting interest so I may start there and roll it into an IRA.

Appreciate all the advice.

[TVScout]

On 8/7/2019 at 8:03 AM, ramssuperbowl99 said:

That guy is getting paid by the company, not by you.

Never take advice from anybody who is paid by someone else.

[MWil23]

I take the approach that I’m never going to touch my funds, so the next 28 years I am going to continually invest $400 per month into an 80/20 aggressive/conservative mutual fund portfolio. I’m taking a year break to set aside money for our new house and rebound my regular savings account, but at 60 I’ll roll it into a conservative account and draw a nice interest each year without touching the principle, all while collecting my pension and not having a mortgage. @ramssuperbowl99 Thanks again man!!!

[twslhs20]

On 8/7/2019 at 9:52 AM, ramssuperbowl99 said:

Your company is providing a financial advisor to meet with you directly? Or is this someone that you have?

 

EDIT:

What's the interest rate, like 6ish%? And are you okay with renting, or are you looking to buy a house.

Didn't see this edit. My loans range from 3.5-6% The total principal is around 33K currently so its looking more like 40K when its said and done. I currently rent, but plan on getting a house when I find the career I want.