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Old 08-01-2010, 02:12 AM   #1
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New to site - LOVE IT! - Question!

Hi all! I am 30, Married with 2 kiddos. Net worth is around 230k including home equity & savings. I am really wanting to get to a place where I can retire. We probably live off of 3000 a month or so, and the house is paid off. As I own my own business, I don't have a high pressured situation as it is, but I am always constantly worrying about what if business comes in or not, so I would like to just be done with it, and be ok financially if nothing comes in again. Ideally, I'd like to *be able* to retire by 40 or sooner! I have a life insurance deal I kick $100/mo in with NWM, but that is about all the investing I do, aside from having a high yield checking account which brings in $200 a month.

What do you all recommend I do to get to my goal of retirement? I would like to invest to get my money to a point where it grows as quickly as possible on its own. Thanks!
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Old 08-01-2010, 02:24 AM   #2
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Welcome!

Kind of hard to give advice, with the info provided. Besides the hundred bucks a month you are putting into life insurance, do you have monthly excess income that is just accumulating in checking? If so, you should open an acct with a brokerage such as Vanguard or Schwab (I use Schwab) where you can add money every month to a Roth IRA and a regular taxable account with funds beyond the limit for the Roth. Buy into schwab or Vanguard ETFs that you can buy without trading fees. I suggest index ETFs like VTI or SCHB for the broad market and/or VTV/SCHV if you prefer a value fund with a slightly higher yield.

Most of all, I suggest you educate yourself on investing, pay attention to fees, figure out your ideal asset allocation, and stick with it by rebalancing from time to time.

Good luck, stick around, learn a few things, and enjoy the fun!

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Old 08-01-2010, 02:26 AM   #3
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I dunno if it is because I'm illiterate or because it is 2:30 am, but that sounds greek to me - ha! Yes, my checking accounts are bringing me $200 a month basically in interest.
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Old 08-01-2010, 02:26 AM   #4
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oh, and yes - I put all my money basically in our checking that gives us 5% up to 25k (I have 2 accounts like this)
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Old 08-01-2010, 02:56 AM   #5
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So this means you have about 48k that could be invested. Based on your second post, I suggest you don't do anything YET. Someone can come along and suggest a couple of good books on investing that you will need to read and understand before you begin trying to invest. You are certainly not illiterate! Just (as of yet) not educated on investing. You'll do fine! Just hang around and learn.

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Old 08-01-2010, 03:08 AM   #6
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oh, and yes - I put all my money basically in our checking that gives us 5% up to 25k (I have 2 accounts like this)
Where do you get a checking account that pays 5%. If I could get a guaranteed 5% I wouldn't invest in the market at all. My checking pays .05%.
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Old 08-01-2010, 07:59 AM   #7
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Someone can come along and suggest a couple of good books on investing that you will need to read and understand before you begin trying to invest.
Here is a comprehensive list put together by one of our esteemed members


An updated FIRE recommended reading list (with a military twist)
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Old 08-01-2010, 11:08 AM   #8
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I found them on checkingfinder.com - pretty slick! Only 5% up to 25k per account though, and you need to qualify by having 12 debits each month, and other things.

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Where do you get a checking account that pays 5%. If I could get a guaranteed 5% I wouldn't invest in the market at all. My checking pays .05%.
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Old 08-01-2010, 11:14 AM   #9
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I am 30, Married with 2 kiddos.

... I have a life insurance deal I kick $100/mo in with NWM, but that is about all the investing I do...
Welcome, but this insurance 'investing' is a Red flag. At $100/month, not a huge one, but still.

Life insurance is not an 'investment'. With two kids (and it looks like you are the wage earner), you need enough life insurance to help your family if you are gone. It would depend on what your wife's earning prospects would be if you were gone, but something like 25x your current expenses to fully replace you (economically).

What that normally means is buy term insurance, not any sort of 'investment' insurance. The 'investment' types are usually so expensive, that the person is under-insured. So the insurance goal is not fulfilled, and the 'investment' is very likely to be a poor one. You lose twice. Think term insurance.

-ERD50
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Old 08-03-2010, 08:32 AM   #10
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Welcome. I guess the first question is, how active do you want to be?

Pick out a suitable broker(s). You will need a taxable account and one or more for the tax free/deferred accounts. i.e. SEP, IRA, roth.

Educate yourself on rules for SEP, IRA and roth. Try to max out the yearly limits each year for you and your spouse and kids. Put the contributions in a very conservative asset (i.e. stable fund, cd) until you are educated about the other areas of investing. Spending the time to search and reading this forum will go a long way to helping you manage your own assets.
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Old 08-03-2010, 11:56 AM   #11
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Originally Posted by mouschi View Post
Hi all! I am 30, Married with 2 kiddos. Net worth is around 230k including home equity & savings. I am really wanting to get to a place where I can retire. We probably live off of 3000 a month or so, and the house is paid off. As I own my own business, I don't have a high pressured situation as it is, but I am always constantly worrying about what if business comes in or not, so I would like to just be done with it, and be ok financially if nothing comes in again. Ideally, I'd like to *be able* to retire by 40 or sooner! I have a life insurance deal I kick $100/mo in with NWM, but that is about all the investing I do, aside from having a high yield checking account which brings in $200 a month.

What do you all recommend I do to get to my goal of retirement? I would like to invest to get my money to a point where it grows as quickly as possible on its own. Thanks!

You live off of 3000/mo
but how much do you gross per month?

the difference between those two numbers will help you find your way.

Here are some basic tips for starters

1) Spend less than you earn.
2) save at least 20% of gross pay every paycheck and every month
2a) put at least 15% of the gross pay into an account marked for retirement
2b) put 5% of gross pay into short term savings (savings means pay down debt or find others ways to save- for next car, for next vacation, for next XXX so large expenses are not a burden)
3) The earlier you want to retire, the more you want to focus and increase #2 (retiring at 40 means save 50% and not 20% for example)


The single most important factors (in order) to success will be

1) spend less than you earn
2) the percentage you save
3) the risks you take investing
4) the expenses and fees incurred from saving and investing

Focus on the risks associated with investing. NOTHING is risk free- if someone says it is risk free, ask yourself what they don't know or are not telling you.

Risks takes many forms. There is market risk (the market moves up and down), there is inflation risk (cost of good goes up), interest rate risk (interest rates change value of investments and the return you get) and business risk (your liability in your business, the fact the economy tanking might change your income etc).

Nothing is risk free... so when you analyze an investment, you want to look at the risk it gives you vs the rewards it provides. Everyone's tolerance for a given risk is different, and never (EVER!) let anyone tell you how much risk to take.

Educate yourself so you know the risks and are comfortable with every risk you take.
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Old 08-03-2010, 05:38 PM   #12
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Many people like David Chilton's book The Wealthy Barber, which is an easy read and a good basic introduction to key concepts such as "pay yourself first". While it is far from the last word on personal financial management, it is a decent starting point.

On the Internet, see 13 Steps to Investing Foolishly.

Rambler has suggested ETFs, which is short for exchange-traded funds. They are essentially similar to mutual funds, but typically have lower fees. They are an attractive option for people who do not want to hold individual stocks or bonds.
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Old 08-04-2010, 12:33 AM   #13
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If you want to retire at 40 that means your investments will have to generate income for 50+ years and keep up with inflation... that is a tall order if you want to generate 3K per month.

I think your best bet is investing in dividend stocks that have a record of growing their dividends each year. For the next 10 years re-invest all dividends into more shares. Focus on high dividend growers, and don't get caught up in chasing high dividend yield as you won't get the power of magnified compound growth.
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