24 Year Old Looking for Investment Strategy!

[rkline90]

Hi there,

My name is Ryan and I am a 24 year old trying to prioritize my savings/investments. I recently purchased a home (Jan 2014) and reside with two roommates and my girlfriend (crazy, I know). Here is my current situation:

Savings account:
42K

Roth IRA (1 year):
5.5K

401K:
Non Existent(Work does not provide this benefit)

Debt:
123K owed on Mortgage at 4.625%
Current Home Value ~235-250K

I am currently earning 75K/year (pre-tax) working for a small, young software company with plenty of potential. I live with two roommates that contribute 450/ea + expenses per month. My current mortgage payment is $1500 (mortgage, property tax, insurance). On top of that, I currently pay $1000 to my principal balance each month. I have been saving $1000/mo into my short term savings and $460/mo to my Roth IRA investing in mutual funds.

I expect that my girlfriend and I will want to move to a new home in the next 1-2 years (taxes are $8200/yr ) leaving me with no additional rental income. I also intend to propose to her in the next year. With this, comes a ring, wedding, honeymoon, etc. (2-3 years). Unfortunately, she has been dreaming of a big, extravagant wedding since she was in grade school. I expect a 35K price tag and a 5-8K ring. She just graduated with a finance degree, has a job making 40K, but has student loans of about 60K. She has full intentions of paying down her loans and saving for the wedding with every dollar she makes considering she has no other financial obligations (Lucky her!).

Some possibilities that have crosses my mind:

-Open additional retirement accounts
-Open a taxable account for more mid-term savings
-Discontinue paying additional principal to my mortgage and relocate those funds
-Boot the Girlfriend (JK! )

A large part to moving in the next 1-2 years is to have access to the equity that I have in my home and re-evaluate where to place my funds. I anticipate having 180K once the home is sold including my savings. I am open minded with my next home purchase (Meaning, living below my means). I am contemplating only putting 10-20% down on a $150-200K dollar home. Another part of me tells me to put as much as possible down to avoid heavy interest in the future. I am struggling balancing this objective due to the the desire to retire somewhat early.

Any feedback or advice would be greatly appreciated.

Thank you in advance for taking the time to read my story!

 

[papadad111]

Take some time to evaluate if you and girlfriend are financially compatible

Get out of debt before getting married. Includes the student loans and house if you can get it fully paid off Remember her debt and your debt becomes your collective debt @ marriage

See if you can do the wedding and Ring for 15-20k. It's all just one part of one day ... It's a hell of a house payment you would be saving.

Set aside 6 months emergency fund. Small startups can fail. Be prepared. Room mates can move out. Be prepared. Cars can break be prepared.

Fund Roth and traditional IRA to its limit.

Evaluate the 42k in savings account. Invest a portion for the long term. Perhaps pay down the house. Sitting in cash that is losing value due to inflation. Get that money working for you (. After emergency fund is set)

Google ... Dave Ramsey - he gives some pretty good advice ( ignoring his religious angle which I find a little bit annoying)

 

[FIGuy]

The wife and I did a 11k wedding + reception with ~100 people and had a great time. Ring was a 1.5k deal through "etsy.com" with a fair trade gem of her choice, not a diamond. She adores it. Don't marry a person that doesn't share your financial priorities. I can't stress this enough. It won't last and you will pay pay pay. I'm 33 and happily married for 4 years.

Regarding investing, 3 real avenues are available to us little guys. Stocks / Bonds, rental properties, and investing in a semi-passive business opportunity (may not be available to you). Everything else at this point is "buying yourself a job". Example of that include flipping houses, starting up a business, and actively picking stocks / day trading.

I lost 30k day trading years ago and now I'm a happy "bogglehead" and rental real estate guy. I don't know anyone who actually made more than the S&P 500 trading over many years.

 

[heeyy_joe]

Three guys and one girl in a house is a recipe for disaster..or a sitcom.

 

[Meadbh]

Welcome, Ryan. You have done pretty well so far: great job on the saving! However, I see a few red flags, the most important of which is your GF's fixation on a lavish wedding. If this is how it's going to be in the future, all bets are off, financially. Having a degree in finance is no guarantee of LBYM. Before you propose, please, please ensure that you two are financially compatible. A speedy spouse is one of the major barriers to FI, and divorce is expensive and traumatic. Also, as an employee of a startup company, you cannot make any assumptions about job security. You need to stay flexible and have a contingency plan in place in case of job loss.

Good luck!