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Old 07-23-2011, 06:23 PM   #1
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Oh hello there, forums. I've been lurking for a couple weeks now. Its nice to meet all of you.

I found ER a few weeks ago searching financial terms on Google. I'm normally an introvert but this seems like too good of an opportunity for advice to pass up. I don't really have anyone to talk to about money in real life.

I am a scientist at a pharmaceutical company. I keep people from killing other people. I enjoy good SciFi and bad High Fantasy. I'm married to a software guy and we have successfully passed on our selfish genes. We're currently watching Star Trek: The Next Generation from start to finish on Netflix, hence the screen name.

The money situation:

We are 31 and 33. We have 450k or so. (A dotcom job in one's early twenties plus a poor girlfriend who believes in going Dutch = big savings). I currently bring in 60K. DH is a stay-at-home-parent and he brings in about 10K through side projects. Based on our costs for the last 6 months and including taxes I think we'll spend 52k this year so that leaves us with 18K to add to our nest egg.

We're not at all organized with investing, so my first goal was to figure out what our assets are. That's done and I have a list in Excel. I've also done a bunch of reading about Asset Allocation and Portfolio theory. Step two will be to figure out Asset Allocation and choose ETFs.

The toddler is up from his nap but I have some questions:

1) Is there a single International ETF that will give me exposure to everything? (Developed and Emerging Markets, Value and Growth, at least some exposure to small-caps and maybe even micro-caps)? I'll read up on your suggestions.

2) Given that only one of us has a um, thing that starts with a j and ends with a b, how much would you keep in an emergency fund? Rent, bills and groceries for 12 months? Where would you keep it? Savings account?

3) How do I add a profile picture?

4) I have a whole life policy that my parents bought when I was born. I think it is worth 25K in cash. Would you sell it and invest it in something better?

5) How do you feel about REITs in general and for people that don't own a home in particular?

Sorry to post and run and thanks for reading! Hopefully I can pop back in tomorrow to talk assets and numbers. Where should I post about our Portfolio?
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Old 07-23-2011, 07:18 PM   #2
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Welcome, lots of us introverts here.
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Old 07-23-2011, 07:24 PM   #3
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Originally Posted by Dr.Crusher View Post
1) Is there a single International ETF that will give me exposure to everything? (Developed and Emerging Markets, Value and Growth, at least some exposure to small-caps and maybe even micro-caps)? I'll read up on your suggestions.
Yes, VXUS or ACWX. Neither have any US. Did you want US in there?
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Old 07-23-2011, 07:33 PM   #4
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3) How do I add a profile picture?
Click on the "User CP" link located in the row of links near the top of the page, then click "Edit Profile Picture" in the left column.
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Old 07-23-2011, 07:45 PM   #5
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Welcome. Sounds like you have done your homework and are asking the right questions. We have short attention spans, so breaking up complex questions into bite size pieces will get you better answers.
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Old 07-23-2011, 08:18 PM   #6
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Welcome to the board!
Quote:
Originally Posted by Dr.Crusher View Post
2) Given that only one of us has a um, thing that starts with a j and ends with a b, how much would you keep in an emergency fund? Rent, bills and groceries for 12 months? Where would you keep it? Savings account?
I think it depends on how secure your job is, and how easy it would be for you to find another one at the same pay. Since you've got assets you could use in an emergency (you can tap your 401Ks and IRAs for a penalty), I think 6 months in an emergency fund is sufficient if your situation is "average". I'd keep 30-60 days in a savings or checking account (it hardly makes a difference these days), the rest in a one year CD (which you can get at any time, you just give up some interest).
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4) I have a whole life policy that my parents bought when I was born. I think it is worth 25K in cash. Would you sell it and invest it in something better?
You probably need a lot of insurance to help hubby get junior all raised up and out of the house if something should happen to you. If you don't have any health problems, you probably need a solid term life policy lasting 25 years or so (Jr's college) with a payout sufficient to cover a lot of years of childcare, health insurance, etc. Your folks would probably be happy to see you convert that (probably terribly high-cost Whole Life) policy into $$ that will cover these inexpensive term life premiums for a long time. Don't cash the policy out until you get new insurance in hand.
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5) How do you feel about REITs in general and for people that don't own a home in particular?
I'm not as enthusiastic about REITs as an asset class as I used to be. We had a discussion about this subject, but I haven't found it yet. Basically, REITs appear to have a fairly high correlation to other asset classes these days, not behaving independently as one would like. Overall, if you want some real estate exposure it's probably not a bad idea, but I wouldn't go above about 10% of your portfolio. Owning your house can be a good move--not so much because of the expected appreciation, but instead for the very low present mortgage rates and the protection this provides to your monthly balance sheet if interest rates and/or inflation takes off.
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Old 07-24-2011, 08:22 AM   #7
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Welcome Crusher. I agree with Sam on the insurance whether it involves keeping the whole life buying a term policy or both. I don't have any ETFs, just index funds, but someone will jump in with info on them.
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Old 07-24-2011, 09:16 AM   #8
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5) How do you feel about REITs in general and for people that don't own a home in particular?
Hi Crusher, welcome to the forum.

REITS are tax inefficient, so ownership needs to be limited to tax deferred accounts. Being a renter and not an owner has little to do with investing in REITS. Commercial and residential real estate are not highly correlated.
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