Hi, this is is my first post and need some guidance on where to start. My wife and I are fairly new investors, only 2 years and are trying our best to be aggressive because of our age 45. We both have a brokerage account and Roth IRA that are maxed. So I am managing 4 accounts. Can you have more than one Roth IRA? We tried to find a financial planner, but they want a percentage I am not willing to give. The points I have been spending are on research subscriptions-fool and Curzio. We are up to 10k a month in savings to invest trying our best to live modestly. 30% is index following the s&p and 70% in stocks and etfs. I guess like everyone if they have a plan and sticking to it have seen major declines over the last couple months. I am allocating to new ideas, index, and adding on to my best ideas/winners/sentiment. I feel like I am stuck in one place the last 6 months. I have invested in growth, value, index, dividend,and energy and still can not move an inch forward. I realize the fool ways and understand I need to hold. I also invest very small amounts to start 2% and gradually add in over time trying not to go over 5%. We collectively have 53 stocks spread across the accounts, meaning that I am at the point that we have 25 well diversified stocks + in each of our portfolios. I have ran portfolio performance summary for each account to cross reference it against target asset allocation scenarios for aggressive portfolios on Schwab. Every sector is covered.
What can I do? I am 13.5% down. For me this is huge. Every time I add another 10k it gets swallowed up my the market. I realize the risk and wondering if there is something I can look at to allocate our monies to stop the bleeding.
Other, more knowledgeable people will provide more detailed information; but the first and most important thing to bring to investing is “Patience”. Calm down, don’t panic, relax . . . take a deep breath.
The market goes up and the market goes down; if you can’t sleep at night because of this either look at your portfolio once a year or put your money in the bank.
Perhaps ask some specific questions about your portfolio.
JimA
Some of the most successful investors here invest in Index mutual funds. S&P 500, or if you want to get fancy try one of the Couch Potato portfolios. (All available from Vanguard.) Set it and forget it. You have plenty of time.
CNC
The first thing to remember is that the ability to save $10k a month is huge. That savings rate allows you to be patient through the ups and downs of the market.
The next thing to do is take a hard look at what you are investing in. Why did you pick that investment? Is it still a good investment, or did you make a mistake? Are you taking too much risk? Clearly that is some part of the problem. The market has only been going down for 3 months or so. That’s nothing in the long run.
Assuming you are making good investments, perhaps changing your point of view is in order. With your monthly additions, you are buying stocks on sale. Think of buying other items. Perhaps you usually buy toilet paper for $10. That’s what you usually pay, and you’re happy with that. It’s a fair price for the product. But one day it goes on sale for $8. So you stock up a bit. Then a couple of weeks later, you see it at $7, so you buy some more. Does that mean your purchases at $10 were wrong? No. They were fair. But now you’re buying the same thing on sale.
There are only two days the price of an investment really matters. The day you buy and the day you sell. The price going up and down in between those two days doesn’t matter, as long as you still believe the price will continue to go up over time. It does happen that sometimes you may no longer believe it will go up over time. When that happens, it’s time to sell no matter the price and get the money into something you reasonably believe WILL go up over time.
–Peter
Hi, this is is my first post and need some guidance on where to start. My wife and I are fairly new investors, only 2 years and are trying our best to be aggressive because of our age 45. We both have a brokerage account and Roth IRA that are maxed. So I am managing 4 accounts. Can you have more than one Roth IRA? - ChefRob96.
Only 45 still gives you enough time to avoid taking excessive risks. If you are adding $10K a month, your portfolio will be quite large by avoiding losses rather than hitting home runs.
And yes, each of you can have more than one Roth account, but that will not after the overall cap on amount that can be contributed.
We tried to find a financial planner, but they want a percentage I am not willing to give. The points I have been spending are on research subscriptions-fool and Curzio. We are up to 10k a month in savings to invest trying our best to live modestly. 30% is index following the s&p and 70% in stocks and etfs.
Financial planners are generally shunned here and for good reason. Chasing their advice is probably what led you to be in 53 stocks, more than an expert can reasonably keep an eye on. You have built basically your own mutual fund, so why not use the real thing. Put more in the S&P500 or other index funds and cut back to 10 or 12 of your favorite stocks, ones that you will have enough time to pay close attention to. Be aware if and wary of high expense ratio’s hiding in your funds and ETF’s. Check out the Couch Potato portfolio that someone mentioned for ideas.
You have found a good board, lots of savvy and successful investors here. Hang around, read, learn, and ask questions. Good luck.
Minimize the “Skim”.
Minimizing the “Skim” – the Key to Retiring Early
https://retireearlyhomepage.com/minimizing_the_skim.html
intercst
Welcome to the boards. FYI, this particular board is populated mostly by those already retired, so you’ll probably get some “here’s what worked for us” type answers.
My own example, and what I advise my children (who are about your age): Index funds. Personally, DH’s and my assets are currently in VBIAX, VFIAX, and FLPSX. They’re down now, of course (you can google their graphs), but the balances are still way higher than if the money had been in cash for the last few years. I’m still putting money into them (“buy low”), confident they’ll recover at some point. I do keep enough in FDIC-insured accounts to sleep at night.
I also manage my dad’s finances. He’s 96, and I keep enough in his checking account to cover the next two years of his assisted living. The rest is in his brokerage account, in equities. That’s up about 12% from this time last year, down 13% YTD. His broker selects individual companies, about a dozen at any one time, and knows them pretty well. He’s done very well for Dad over the decades, and if he were younger I’d hire him to manage my own portfolio, but he’s in his 70’s and nearing retirement, so I think I’ll stick with index funds.
Meanwhile, for Dad, even if his brokerage account drops by half, it’ll still be enough for five years, so I figure there’s no harm in letting it ride.
We tried to find a financial planner
Try https://www.napfa.org/ if you haven’t already.
We collectively have 53 stocks spread across the accounts
That’s a lot.
Good luck!
I have invested in growth, value, index, dividend,and energy and still can not move an inch forward. I realize the fool ways and understand I need to hold. I also invest very small amounts to start 2% and gradually add in over time trying not to go over 5%. We collectively have 53 stocks spread across the accounts meaning that I am at the point that we have 25 well diversified stocks + in each of our portfolios. I have ran portfolio performance summary for each account to cross reference it against target asset allocation scenarios for aggressive portfolios on Schwab. Every sector is covered.
You’re doing it wrong. If you trust your stock picking skills and are going to invest in individual stocks then you want no more than about 20, because above about that number your portfolio begins to act like the broader market and you might as well buy an index fund. And do you really understand all 53 stocks? That’s a ton of stocks to evaluate and own. If you really understand them, then probably 10 or 15 of those will rise to the top as the best picks. In which case, you should only own the best ones. If you don’t really understand all the picks then you should sell all of them.
You said it yourself. You have every sector covered. So your performance will be about the same as the broader market. How could it not be? So why make it hard on yourself? Buy a nice index fund and forget it. That’s a proven way to outperform most investors.
But even at 45, you don’t need to swing for the fences. Savings rate trumps investment returns. At $10K/month you should be pushing $3 million in 15 years.
…are trying our best to be aggressive because of our age 45…What can I do? I am 13.5% down…
to allocate our monies to stop the bleeding.
Everyone has a plan until they get hit in the mouth. - Mike Tyson
You’ve already received good advice about index funds, etc., I’ll go more towards your mind set. Sounds like you just got hit in the mouth.
Way back in the day, I thought I could handle some volatility too and then I lived through a market down turn. In hindsight, I didn’t loose much money, but because it was when I was getting started, it was a lot of money (at the time) and it took me forever to save it, the event became a little nerve racking. Couple years later, more established in work and life, I could put away $10k/month or more. Quickly realized market goes up and down, down times are “sales events” (especially when dealing with index funds) and I’d back up the truck and load up. Those sales events turned into my biggest gains.
If you’re saving/investing $10k/month, you are making a good living. Your bigger problem and your easiest solution is to LBYM (Live Below Your Means). It becomes too easy to spend what you make, treat yourself and your family because you work hard and deserve it. Luxuries soon become necessities and harder to eliminate once established. Had a friend/co-worker that lived paycheck to paycheck, one day at lunch he said, if I could just make $20k more per year I’d be good. Told him with his habits if he made $20k more he would find a way to spend $30k more.
JLC
…are going to invest in individual stocks then you want no more than about 20…
I would suggest closer to 10. Any more than that and it is difficult to understand what you own. I believe I have 8 right now, including company ESPP.
1poorguy
Continuing to invest when markets are down is good practice. You will accumulate shares at low prices over time. If the contributions are all equal, you will buy more shares when prices are down and fewer when prices rise. The result is known as dollar cost averaging. It gives you low average cost. This is a major advantage of a down market.
Buy quality. An S&P 500 Index fund or a total market fund is a good way to start.
Don’t worry about it. Quality issues will recover.
Yes, you can have more than one IRA and more than one Roth IRA. For various legal reasons my wife has 2 and I have 4.
With good reason folks here generally consider it a good idea to avoid the “skim” of financial advisors. I’ll give a counter reason, skill, interest, ability.
Both DW & I being involved in tech did real well in the stock market. Around 2000 I was 1) running a side business, 2) newly married, 3) raising a kid, 4) full-time employed, 5) managing our investments. The stock market went up 22%, my portfolio wend down 2%, a 24% underperformance. I took stock of what was happening and offloaded, the job I didn’t have to do personally, managing our investments. Haven’t underperformed the market by that much since. After retiring from the full-time job, no longer a newly wed, kid on their own, I tried managing a little bit of stock, bought Amazon at $250, planning to hold for a decade, ran up to $400, dropped to $300 and I sold.
When I’m fully responsible I tend to over react to market changes, so I continue to pay someone else good money to manage my money. The goal isn’t beating the market, the goal isn’t to pay as little as possible to get a good ROI. The goal is to make money and live your life.
All that said, for a few years I went with a broker from a big name brand investment company who promoted a diverse portfolio of mutual funds designed to capture much of the upside and avoid the downside. Big mistake, didn’t lose my shirt unless you consider inflation. The guy I used before the big name broker and have since gone back to, buys a selection of US stocks at around 15 P/E and sells when they are overvalued. Makes a percentage of my profit so churning isn’t an issues and pretty much aligns our interests.
Sometimes he out performs the market, sometimes doesn’t, never underperformed by 24%, I travel, he works.
I travel, he works.
No reason you can’t do both without much more effort than you put in now just keeping up with the broker. Has “your guy” beaten the market? I am guessing that if you took the time to determine what asset allocation is right for you, a simple 2 or 3 fund portfolio, with minimal rebalancing, would be way worth it. Especially in today’s world of puny returns, giving an advisor even half a percent is huge.
If you’re smart enough to find this bulletin board and converse intelligently as you do, you’re smart enough to realize that you’re probably paying way too much for way too little. You might even be paying too much for negative performance versus a simple 2 or 3 fund portfolio.
With good reason folks here generally consider it a good idea to avoid the “skim” of financial advisors. I’ll give a counter reason, skill, interest, ability.
I used my dad’s broker as a counter example. He not only manages Dad’s stocks, he also gives me good advice from time to time. Examples:
- When Dad went into assisted living, and I faced spending $60k to prep his house for sale, broker advised using Dad’s line of credit (instead of selling stocks), and pay that off after the house sale. At the time, the market was rising at a pretty good clip, so that worked out very well.
- When I wanted to distribute Dad’s inherited (from Mom) IRA to his investment account, broker calculated the taxes that would be due and advised against it. We discussed my reasons for wanting to do it anyway (long story regarding beneficiaries), and went ahead, but it was nice he made sure I was fully informed. (As it happens, I was already aware of the tax consequences, but he didn’t know that.)
I never calculated whether Dad’s accounts are doing better with the broker than they would’ve with an index fund, but they’re doing well enough.
And, clearly, the broker is a better stock picker than I am. I dipped my toe into the market last year, buying CRWD at $200. It went up to $290, is now down to $180. I figured that cybersecurity is mission-critical for all companies, and CRWD is one of the best at it, so a very good candidate for LTBH, which I still think it is. But stock price doesn’t always align with a company’s strength. So, I learned my lesson, which is that I don’t know enough about how to evaluate individual companies to buy individual stocks. (Luckily, I sold at $260 during the slide, so it wasn’t an expensive lesson.)
Dad’s broker does this as his full-time job, and has decades of experience.
I don’t, and I have other things to do.
Speaking of “other things,” OP is entering his peak earning years. IMO it would behoove him to spend time maintaining/improving his professional skills and networks. His biggest asset now is not what he has in his brokerage account, it’s his ability to work.
Your bigger problem and your easiest solution is to LBYM (Live Below Your Means)
I think OP already LBHM. He and his wife are maxing out their Roth IRA’s, which means their modified AGI is under $204K. So, to max out Roth IRA contributions, plus put $120k/yr into their brokerage account, they’re living pretty frugally.
of our age 45.
I’m also turning 45 this year…
We collectively have 53 stocks spread across the accounts
I’ve been investing for a good 20 years, and in that time I’ve held… 5 individual stocks. 6 if I count company stock (which I never hold once shares become available). The rest has all been index funds.
We are up to 10k a month in savings to invest trying our best to live modestly…
What can I do? I am 13.5% down. For me this is huge. Every time I add another 10k it gets swallowed up my the market.
If you are plowing 10K a month into stocks, why aren’t you THRILLED that you are “buying on sale?” Why aren’t you excited over buying the S&P500 index at 4200 instead of 4800, and in fact hoping for an even lower swing to be able to buy more shares for your 10K?
If you are in the investing/building mode, volatility is to your benefit…as long as the asset comes back. We expect the SP500 to do so, but maybe individual stocks won’t. The positive thing there is that an individual stock can go to zero (lose 100%) but your winners can go up a lot more 100%. If you don’t have confidence in your stock picks such that the portfolio’s winners will far more than cancel out the losers, stick with index funds.
I hung on through the crashes of 1990, 2000 and 2008, and was able to retire at age 60. But, that meant I had several periods of 40% and even 60% loss. But, I realized selling at a low just meant “locking in” the loss, and then you also have to outsmart all the other investors and know when the bottom is to get back in.
There are several reports of asset class returns, and astoundingly they show that individual investors underperform large/small growth/value US/foreign stocks and bonds/iBonds; that comes from panic selling (near lows) and buying the latest hot thing…after it has gotten most of its upside. The lesson–don’t trust emotions, and find a “method” you cans stick with. That is, in your 40s, having nearly all your investments in stocks can be OK since you can tolerate a full down/up cycle, but that may not be the case at age 58.
At a young age, most of your investment portfolio is in cash…kinda. You haven’t earned it yet, so it’s not invested yet, so it’s not subject to stock market volatility. Also, if you feel the market is irrationally and extremely undervalued, then it’s a good opportunity to recharacterize some IRA money as Roth.
I think OP already LBHM. He and his wife are maxing out their Roth IRA’s, which means their modified AGI is under $204K. So, to max out Roth IRA contributions, plus put $120k/yr into their brokerage account, they’re living pretty frugally.
Totally agree. If the past 2 years hasn’t taught anything, it’s that the goal of frugality down to living in a box by the river may not be a good one regardless of the posters here. At this point, saving the next raise but enjoying more than that will hold people in good stead.
I’m just piling on with advice you’ve already received, but here’s my additional advice: go outside on your lunch or coffee break today and take a walk. Maybe listen to some brown noise. The infrared from the sunlight will help your body make melatonin to sleep better tonight, the walk will give you a little endorphin boost, and the brown noise will help you relax and focus. Panic makes people do counterproductive things.
I’m guessing you landed here because you saw the board title and assumed it was investing for future retirement. That’s also why I landed here originally, but I quickly learned that this board is mostly populated by people already retired or who are planning to soon. Just keep that in mind when reading the posts.
Unless you had designs on retiring at 50, you do not need the market to go up right this minute. One of my siblings had a finance professor who would walk into the lecture hall and announce, “Everything’s on sale!” on days when the market was down. In the short term, the market can go down. It can stay down for years at a time. BUT OVER THE LONG RUN IT GOES UP! You’re in it for what will happen over the long run, not what it will do over the next 24 hours or even the next month. I’m an investor, not a trader. I could not stomach being a trader. A lot of traders can’t, either.
I’m 25-ish years ahead of you on the investing road, and I started with $1000 in a traditional IRA just before the dot-com bust. That original $1000 investment is in the ballpark of $10,000 of my portfolio now after holding through all the bumps and hiccups since. If you’ve got room in your budget to sock away 10k/month with 20 years of road ahead of you, you’re probably going to turn out okay. Yes, you need to be aggressive with your savings and your risk tolerance (CDs and I-bonds will not get you there). But don’t put money in the market that you anticipate needing within the next three years, either, because if the market happens to go down during that time, then you won’t have it. You also can’t afford to lose a lot to expenses, so for mutual funds if I were you, I’d stick with Vanguard.
If you’re new to investing, 53 individual stocks is too much. If you’re an experienced investor but also have a day job, 53 individual stocks is still way too much. You should be checking in on the health of each company you’ve invested in at least once a quarter to make sure you’re still happy with it as a long-term investment and are confident about continuing to be a shareholder. 53 companies x 4 earnings reports/year + keeping up with company news x 20 years = how much of your time? 10-15 is pushing my limit.
Whether up or down, if your investment choices are not consistently beating the S&P 500 index, you might as well be in the index instead. I had a mutual fund that had done well for me compared to the other funds in its class, but over 10 years it beat the S&P 500 index by about 0.5%. Plus the people who had been managing it when I had first selected it were starting to retire. I decided half a percent wasn’t worth the risk and extra expense of being in an actively-managed fund, so into VOO it went.
Best wishes to you. Make sure to get that walk in. Some chicken soup probably wouldn’t hurt, either.
As others have said…
Start by selling half your stocks in the next month or two or so.
Begin by making a list of stocks that you don’t remember why you bought them or that you don’t think that they have good prospects going forward based on the current world events.
Buy an index fund with the funds.
Then read this board and others to get a handle on what else you should do.
I would choose to have a mix of more stable funds/stocks, dividend payers and more risky stocks (in your Roth).
Mike