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Need some financial advice

Discussion in 'Stocks & Investments' started by Tuck91, Jan 26, 2014.

  1. Jan 26, 2014 at 6:11 PM
    #1
    Tuck91

    Tuck91 [OP] Well-Known Member

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    I figured I would post this up here on TW. Mostly everyone here seems to give good advice.

    I am trying to figure out where I need to be financially right now, as well as in the decades to come and then into retirement.

    I am 22 years old, single, no kids, self employed, earning approximately 50k per year. Each year for the past several years that has gone up by about 6-8k. The only debt I have is 10k for my business startup ( $400 per month until end of 2015). And my newly purchased Tacoma (13k at 2.5% - $242 per month 5 yr loan). I have a little over 50 grand in the bank and whatever my small business might be worth.

    The 10k I owe for my equipment I plan to pay off by the middle to end of next year. And the Tacoma I plan on paying off within the next 2.5 to 3yrs. Other than that I do not have any student loans since I never went to college and only have a HS education. Also no credit card debt or mortgage/rent, I still live with my folks.


    In the meantime I wanted to start putting money into an IRA ( Roth I am thinking? not sure?) to save for retirement. Then once my Tacoma & equipment are paid off I can contribute to that to the maximum. By then I will be earning at least 60 to 65k per year.

    Also wanted to maybe buy a little house for myself in the next five to six years. I figure by then I will be able to put down about 40% on an $130-$150k home. I could go a little cheaper but want a garage for my Taco. Dont really plan on ever getting married or having kids so by no means will it need to be a big house.

    What do you guys think? Any advice would be helpful such as where or what to invest in, and what type of mortgage & interest rate for a house ( 15yr, 30yr?) I figured I would ask since I do not really know too much about this stuff and wanted to make sure I am on the right track.

    Anyways, any advice would be great.
     
  2. Jan 26, 2014 at 7:34 PM
    #2
    jguns2002

    jguns2002 Well-Known Member

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    Start early & add often!!!! As a business owner, I'm pretty sure you also can setup an sep IRA.
     
  3. Jan 26, 2014 at 7:54 PM
    #3
    Ham N Egger

    Ham N Egger Well-Known Member

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    Tuck,

    I started investing around the same age as you are. My advice is to see a certified financial planner in your area. I did most of the investing and research myself for many years, but my financial guy of 15 years has made me considerably more than I could have. My CFP made me about 18% on investments last year and for the minimal amount I paid for the advice I feel that I got an excellent return on that investment.

    Most of those guys know how to make money for their clients because they have plenty of research to rely upon and see trends. Go with someone that does not push a specific product. You are looking for some sort of retirement planning package maybe tied into an annuity or IRA, but the CFP can fit something to your specific situation and needs. They know the tax advantages also and how to get the most for your investment.

    Great idea to get started early. By the time you are ready to retire early you will be able to light your cigars on a tropical beach with $100 bills.

    Good luck in your investing future.
     
  4. Jan 26, 2014 at 8:03 PM
    #4
    G17GUY

    G17GUY Well-Known Member

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  5. Jan 27, 2014 at 6:55 PM
    #5
    Sido

    Sido Well-Known Member

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    I prefer DIY investing. It isn't hard. The financial planners always seem to have an angle or put you in inappropriate funds (really all you need is a 3-fund portfolio, total stock market index, total bond index, and total international index). If you can't handle this go see a financial planner. They will be more than happy to take your money.

    Your main goal for the long term should be to get as much of your income in tax sheltered accounts. You can set up the IRA, and you can also do an individual 401k. Subject to certain requirements, you can put in around $52k a year. You have heard the statistic that "half of all businesses fail" right? Well not what it seems. A big part of that is rich people make a company where they are the only employee, usually hobby related, for the sole purpose of contributing to a solo 401k plan. It is a great thing for the self employed. I have heard of people walking dogs, tutoring, music lessons, and yard service just to be self employed to contribute to these plans.

    http://www.irs.gov/Retirement-Plans/One-Participant-401(k)-Plans

    https://investor.vanguard.com/what-we-offer/small-business/individual-401k

    And as posted above, you should go to bogleheads and post on there. You will get great advice.
     
  6. Feb 9, 2014 at 6:26 PM
    #6
    jerretxx

    jerretxx Some do, others talk

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    I am I'm the sane shoes as you, except I'm not self employed and I have 0 debt.

    I did what the post above says, I consulted with my local financial advisor. For $40 per year and small amount of commission he tells me everything I need.

    I have a 401k through work, and I also have a Roth IRA.

    I use the 401k for my retirement, I have it set up tax free so that I can build the most money possible to increase what I can make on compound interest. Also, b setting it up tax free, I receive the tax break where get more money in my pocket now, yet still contribute a good percentage.

    I use my Roth IRA for my extra "cash". It's a great benefit being tax free because you could withdrawal cash from it if you were in a bind, and wouldn't be penalized (as long as it is money you deposited, not interest or gains).
     
  7. Feb 18, 2014 at 10:18 PM
    #7
    BlindingWhiteTac.

    BlindingWhiteTac. Well-Known Member

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    Just the essentials and no extra fluff.
    Max out a Roth IRA now while you're in a relatively low tax bracket. Invest more in a taxable account. ETF's are a good way to go in a taxable account since they're very tax efficient. Vanguard or Fidelity would be a good place to start. Don't spend money on fees when you don't have to.

    Also, invest regularly. When the stock market dips, buy more. When it tanks, buy much more. What you're doing is buying when stocks are on sale. Either they are going to go back up, or the market will go to zero. If it does money becomes irrelevant.

    Live within your means. Don't pay interest to other people. If you have to, borrow bellow the rate of inflation.
     
  8. Feb 19, 2014 at 6:07 PM
    #8
    jerretxx

    jerretxx Some do, others talk

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    Which funds do you suggest through Vanguard?
     
  9. Feb 20, 2014 at 12:47 AM
    #9
    tensecondchevelle

    tensecondchevelle Well-Known Member

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    Considering you have 50k in the bank I would be debt free tomorrow, pay off the equipment and truck now.

    If you pay off your equipment and truck tomorrow that's an extra $400 ish you will have at the end of each month. Dump it back into your business so it makes you more money.

    I just finished paying off my truck early this month, it's awesome owning your own truck (not having the bank own it).

    While you're at or listen to Dave Ramsey.... It's great for listening whole driving to work or when you're at work doing stuff you don't have to think much about. You won't regret listening to his radio show TRUST ME.


    PS: congrats on having a successful business!
     
  10. Feb 20, 2014 at 1:26 AM
    #10
    robssol

    robssol If it ain't broke, leave it the eff alone!

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    X2 be debt free tomorrow! Listen to Dave Ramsey!
    Load up a Roth IRA ($5500/yr), up to 15% toward retirement. Save for a house and buy one 100% down!
     
  11. Apr 2, 2014 at 6:58 PM
    #11
    BlindingWhiteTac.

    BlindingWhiteTac. Well-Known Member

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    Just the essentials and no extra fluff.
    Depends on your goals and risk tolerance. I use mostly broad index funds like their S&P500 and total stock market index. But I also have money in a global equity fund (developing countries), real estate investment trust, and emerging markets fund (Brazil, Russia, India, China).
     
  12. Aug 14, 2014 at 2:17 PM
    #12
    Chopper678

    Chopper678 Professional Threadjacker

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    A bit overwhelming reading all of this... Making me start to think I have already made wrong choices and I am only 19 :eek:
     
  13. Aug 14, 2014 at 2:19 PM
    #13
    T4RFTMFW

    T4RFTMFW Well-Known Member

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    Best time to make wrong choices, brother. Highly suggest reading/listening/watching Dave Ramsey stuff, and/or contacting one of his ELPs via his website.

    Congratulations on being 19 and already financially aware, even after you weren't. Most 50 year olds aren't in your shoes.
     
  14. Aug 14, 2014 at 2:25 PM
    #14
    Chopper678

    Chopper678 Professional Threadjacker

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    Yes I believe I will take yours and others' advice on the Dave Ramsey stuff.

    I would say I am financially aware.... To an extent. Moreso than most my age I believe, if I can say that without sounding big-headed. I owned a lawn care company all through high school so managing money was never hard, also always had multiple jobs.

    Never neglected high school though, I am on a full ride to a good engineering school which allows me to use my excess scholarship funds to invest with Edward Jones. In hindsight that was a bad idea. I did not realize how big of a chunk 5.75% fee was. Once I make my money back/a little more I will be withdrawing from EJ and continuing my investments elsewhere.

    And then of course, 6 mos. living expenses in the bank. Luckily my parents paid for my truck. May one day buy it from them if they would like me to.
     

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