28yro, no wife, no kids, looking for FIRE help!

[FIREguy]

Hello All!

I am a 28 year old living in Sunny FL . I recently sold a jointly owned property and came into a little bit of cash. I've also taken on a new job working remotely as a 1099 contractor. Both of these events have catapulted my life towards reaching the FIRE lifestyle that I desire. Even if retiring early does not occur soon, I am content with working remote, this job I have taken is what I have been looking for all along, I do not have a boss/supervisor breathing down my neck, nor do I have any clock to punch. I work when and where I want.

I have read many financial books, listened to podcasts, and done some research on my own. Right now, I am in the beginning stages of planning for retirement. This is what has led me to this site. The only assets I have right now is the 35k that I have received from selling the home. I have been calling tons of CFP's to seek help on getting me started, but it seems the majority of them are going to tell me what I can do myself and find out on my own.

I am reaching out to ask you all for some guidance. Where should I go with this 35k, should I speak to a CFP to get a bit of guidance on the planning side and do the money management myself? I wanted the CFP to do both planning and asset management, but I don't want to get hit with fees that I can avoid. Additionally I want to make sure I open the correct investment vehicle whether it may be a Roth, Traditional, or SEPP. Am I thinking too hard about this? I know it's not a significant amount, but I want to make that plan according to my goals and attain that goal. That is to eventually get my portfolio to pay for my expenses, while I continue to invest money.

Please, any help would be greatly appreciated!

[Oz investor]

welcome to posting ,

regardless of the windfall size , making that windfall GROW is the important bit

( and the hard bit )

since you are 'out and about with the new employment , what do the properties for sale look like ( residential and commercial )

you will find abundant views on ETFs and index funds here but i do suggest you research them carefully .. they are all different in important ways

bonds are edging upwards ( but also might lower if we have a major crash )

probably spending your next couple of months reading , learning and THINKING would be a good next move

[trumpeting_angel]

It’s a very significant amount, and a good start!

The IRA or Roth IRA question relates to your tax situation - read up on how much you can contribute. The SEP is a wonderful vehicle for an independent contractor - at the end of the year you can calculate how much you can contribute. Don’t forget estimated taxes and self-employment taxes. A CPA can help with the details on taxes.

I’m a die-hard index fund investor. If you feel like it would be good for someone else to manage your assets, consider a target-retirement fund such as those at Vanguard, Fidelity, and other investment firms. If you don’t understand all this, put the money in a savings account for a couple more months and keep reading! I won’t pay someone to manage my assets. Why should I when index funds are available for so much less?

Check out Bogleheads.org if you want to learn about very cheap, solid investing.

[ab620]

You should have an emergency fund first. 3-6 months of expenses should do it. Then after that, I would open a retirement or brokerage account, depending on how early you want to retire.

[FIREguy]

At this time I do not want to purchase real estate. I had it set in mind that I was going to move forward with putting the money away into index funds. My risk tolerance is very high. I've been dabbling in the market on the side with RobinHood, and I'm up 44% since I started back in Dec.

I feel that I've done all my research and I just need to take action. My goal is to go FI and have my portfolio pay for my expenses which are very low, $1200 right now, and while I continue to work I'll continue to invest majority of the income. I'd like to put at least 2k away every month. My new job is in consulting and I'll be making lump sums of 7k-30k with no cap on one placement.

I keep hearing Vanguard is the route to go. Should I take it to Vanguard and invest in Index Funds? Of course while keeping a solid emergency fund.

Thank you guys for all recommendations.

[FIREguy]

Also I had Bogleheads.org web browser pulled up before I wrote this thread. I see the first few steps to getting started and Bogleheads investment philosophy which is kind of where my head was at initially.

[exnavynuke]

Quote:

Originally Posted by FIREguy Also I had Bogleheads.org web browser pulled up before I wrote this thread. I see the first few steps to getting started and Bogleheads investment philosophy which is kind of where my head was at initially.

I'm a strong proponent of the Boglehead philosophy. Get your EF. Then continue to follow the investment priority list as best you can while utilizing low cost index funds and avoiding FA fees.

[cathy63]

You have a nice nest egg there, but you may not get much interest from CFPs in managing it for you because it's still less than the minimum for most of those types of programs. I'm not sure it's worth paying for a fee-only planner at this point either. As a young single person, your situation is relatively simple and you probably won't get much out of it that you can't figure out on your own.

My advice would be to separate your money into a few buckets:
- 6 to 12 months of living expenses in a savings account; as a consultant you need this to tide you over the dry spells so it should be more than a W-2 employee would keep
- low risk money - this goes at Vanguard. Pick one of the Bogleheads portfolios, invest it and forget it except for rebalancing once a year.
- high risk money - this is your RobinHood account where you can play with whatever stocks or ideas your heart desires. This is at most x% of your total or $x, where you pick an x you're comfortable with, and if it gets above that amount, move the excess into the low risk account.
- retirement money - put some in an account where it can grow tax free. You'll need to do some research on whether it's better to setup a solo 401K or use a SEP IRA or Roth IRA, but even though you hope to retire way before you can access retirement accounts, you'll also have many years of life after age 59 1/2. Whatever you pick, invest this along the same lines as the low risk money.

Taxes - Working as a consultant, your income is likely to be lumpy, and you also have to deal with self-employment taxes so get very familiar with calculating estimated taxes and filling out schedule C. You might try picking up a cheap copy of last year's TurboTax or H&R Block program and working through them just to learn. Take a look at the forms and try different scenarios with contributing to IRAs, solo 401K, etc.

Last bit of personal advice -- stay open to all kinds of opportunities and don't get so hung up on reaching FI that you let life pass you by. At 28, you have a lot of years left to work and a lot of years to be retired. Sometimes the things that bring you the most joy in life do cost money, and it's worth working a little longer to have them.

[FIREguy]

Quote:

Originally Posted by exnavynuke Get your EF.

What do you mean by EF? Thank you.

[braumeister]

He means Emergency Fund.

[FIREguy]

Thanks Baumeister.

Thank you Cathy, very informative! Personal advice was taken serious.

[Bryan Barnfellow]

FIREguy,

Congrats on discovering the FIRE mentality and tapping into it. I was 37 when I did so and am now comfortably FIRE'd.

One thing to remember: you are investing for a long term goal; that is, accumulating enough assets such as can sustain you without significant other annual income. Even if you retire in 5 years you will still be needing the long-term approach throughout your lifetime. So, start with that in mind and evolve it over time as your situation changes and you learn more and more. Most important, create a plan and trust it, even when things look dark. I've seen the darkness a few times over my investing lifetime and there was always light afterwards. But man, it does test your resolve!

Keep in mind too that you may meet someone whose attraction is so strong that it will pull you off your being single track. I did when I was 27 and was married at 30. Still married, btw, after 33 years. Or, you will discover the travel bug, which can become expensive. So, stay flexible mentally.

Great start. Best of luck going forward on the FIRE journey!

-BB

[DrRoy]

I have been with Fidelity for 35 years. Recommend them. Put the limit in a Roth IRA every year. Invest the balance after the EF. FSTVX or another total market ETF would be a reasonable option for equities.

[HI Bill]

This is what I would do if I were you.

Make sure you have a 6-month emergency fund. Pay down any debt you may have.

If anything's left over, I'd open a Vanguard ROTH IRA account, and fund it to the max. The money can grow tax-free, and return of capital is not subject to any penalties or taxes (only gains, if they're withdrawn prior to 59.5). I'd fund it with just one exchange traded fund: VTI (Vanguard total stock market index). The expense ratio is super low (0.04%), so fees won't add up to much ($14/annum, initially). And let it sit. Then, if there's anything left over, open a brokerage account, and do the same (VTI).

Since market valuations area high right now, I would wait until the market drops 5-10% to drop the money in. You're a ways out from withdrawing the $, both in years, and $, so as long as you don't panic and sell at a loss, I'd just let it ride.

Good luck!

[jackl]

If you're pretty healthy, I'd recommend also enrolling into a HDHP (High Deductible Health Plan) so you can start an HSA. That, with the IRA, you can basically double-down your tax-deferred savings.