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Investing Advice 1/?


I am a talking cat on the internet. Why are you listening to what I have to say?

From time to time, people ask me investing advice. And really, I kind of hate it. Because most people don't invest for the reasons why investing originally existed - to raise capital and partake in the partial ownership of businesses. Instead, it's to make money. And that's fine and all. But then asking me for advice puts pressure on me. "I know you made money on investment A, so not knowing investment B lost money/was a wash/took forever to pan out, make me rich." Unneeded pressure.

So let's start with the easy stuff. If you're working and your employer matches a 401k/IRA/etc., at a minimum put as much in as they match. That's free money. SeriousCat just doubled your money.

Now let's get into my personal info. I'm in my mid 30s, have a solid income stream from an above average paying job, and can afford to take on risk. Most people are not lucky/hard working enough in that situation, so - again, don't take my advice - but if you do, adjust accordingly.

My company is lucky enough to have a partnership with Fidelity where they pay the expense fees on target age retirement funds. So personally, my retirement account is a mix of a target age fund, and, because I'm young enough to not need to worry about withdrawing funds anytime soon, a mixture of zero cost (to me - if I change jobs this will be revisited) S&P500 and total market index funds.

401k and Roth IRAs/401ks are tax advantaged. This is huge as far as compounding wealth over a long period of time goes. With 401ks, you are taxed when you make withdraws, allowing you to build wealth. With Roth IRAs/401ks, you pay your taxes upfront, but all of the wealth you build is tax free. Since no one knows what the tax rate will be in the future, I try to do a 50/50 allocation with respect to my contributions, with my 401k being more growth oriented and my Roth being more income oriented. The long term goal here is that I can slowly sell my 401k when needed to provide income in retirement, whereas my Roth should provide a steady base income.

This approach is safe, and if I knew what I was talking about, would be what I would recommend that everyone should do. With the rate technology - particularly biotechnology - is advancing, you might live longer than you expect. And a declining growth rate in the world means that the concept of social security might fail someday. So saving for the future might be much more important than people realize, especially if they are basing their savings belief off of how the world works in 2018.

So start with that.

Disclosure: I am/we are long FNSBX, FFFGX.