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Young Ag asking for investing advise

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ChucoAg
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2:03p, 2/28/24
AG
Thought I would come to this forum to gain some knowledge.

I am a recent grad who currently has a decent amount in my savings. But it's just in a basic savings account gaining basically nothing.

My family really never taught me all that much in investing and stuff.

I maxed out my 401k percentage and am looking into starting up my Roth IRA.

I've been told by knowledgeable friends to start a high-yield account.

My friends (this is obvious and I knew already) have also told me to start a stock portfolio and start investing an amount I'm comfortable in stocks like S&P and Berkshire.

Just looking for advice that you would tell your younger self. Don't be too harsh on me
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ChucoAg
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2:04p, 2/28/24
AG
Advice* jeez I hate auto correct
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Charismatic Megafauna
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In reply to ChucoAg • 2:44p, 2/28/24
AG
ChucoAg said:


I maxed out my 401k percentage and am looking into starting up my Roth IRA.

401k percentage matching or actually maxed out (23k)?

Max 401k matching
Max roth
6mo expenses in high yield savings
Actually max 401k
Max hsa
20% of your first house in high yield savings



Then start a brokerage account if you want to start playing with your money
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MyNameIsJeff
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2:54p, 2/28/24
AG
Somewhat of a young ag here that wishes I had known what I know now 10 years ago when I graduated. Having children was the catalyst that got me on the right track financially.

Look up the Money Guys Financial Order of Operations and Dave Ramsey's (yeah, I know) Baby Steps 1-4 (I don't agree beyond this.). What I suggest is somewhat of a blend of these. I thin Ramit Sethi's I Will Teach You to be Rich is also a great starting point.

1. Build you a budget that is detailed enough to be useful but not so detailed that it's cumbersome or you don't track it.

2. Use a site that allows you to view all your finances in one spot. I use Empower/Personal Capital. It just makes it easy to see the big picture.

3. Get rid of any debt other than real estate and a reasonable vehicle, if necessary. Don't go out and buy a loaded 3/4 ton diesel right after graduation like I did.

4. Create an emergency fund. 3-6 months of expenses. I've used this to pay for vehicle repairs and HVAC repairs in my house. This needs to be in a HYSA. I use Ally, which is currently paying 4.35%. Sure, there are some higher now, but this has worked well for me.

6. Max out employer match to your 401k.

7. Work on maxing Roth IRA, HSA, and then 401k.

8. Open a taxable brokerage account for anything you have left.

I'm big on index funds/ETFs rather than individual stocks. The stock trading thread here is exciting to read, but I just don't have the time to track individual stocks at this point.

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I bleed maroon
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In reply to MyNameIsJeff • 3:02p, 2/28/24
AG
MyNameIsJeff said:
I'm big on index funds/ETFs rather than individual stocks. The stock trading thread here is exciting to read, but I just don't have the time to track individual stocks at this point.
This. That thread should have been named "Active Traders", and it would be much more helpful and useful (the original poster has refused to change it). It is NOT how to invest in stock markets. Some good advice was given above - - do ALL of that, using broad index ETFs, and then come back and learn how to trade.
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NoahAg
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3:51p, 2/28/24
Buy a duplex or triplex and rent out the other units. Wish I had done this prior to getting married and having kids.
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MyNameIsJeff
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In reply to NoahAg • 3:55p, 2/28/24
AG
NoahAg said:
Buy a duplex or triplex and rent out the other units. Wish I had done this prior to getting married and having kids.
Ah, the "House Hack". Absolutely.

I'd also suggest the Bigger Pockets Money podcast. Some of the people on there go ultra-frugal and retire at like 30yo.
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saturn135
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4:15p, 2/28/24
Check out The Money Guys Show on YouTube and follow the Financial Order of Operations they talk about. Their method is also on their website. It is on point in my opinion.
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Chipotlemonger
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4:47p, 2/28/24
AG
Can't remember why I read this book, when I was recommended it, or by who. It may have been from a thread on TexAgs! Anyways, it was a great read that has clear messaging and information.

The Simple Path to Wealth: Your road map to financial independence and a rich, free life - JL Collins

I probably should re-read it sometime.

Good on you OP for posting this thread on here. That in and of itself speaks well to where your head is at. One side word of advise: Be weary of what you are apt to blow money on in your 20s. Someone else mentioned a vehicle. I'll add too that there was a period of time where I spent above my means while dating someone that came from some old money. Fortunately that did not last long! Be weary of who you are spending time with and who you are trying to impress.
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Ragoo
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In reply to Charismatic Megafauna • 4:47p, 2/28/24
AG
Charismatic Megafauna said:
ChucoAg said:


I maxed out my 401k percentage and am looking into starting up my Roth IRA.

401k percentage matching or actually maxed out (23k)?

Max 401k matching
Max roth
6mo expenses in high yield savings
Actually max 401k
Max hsa
20% of your first house in high yield savings



Then start a brokerage account if you want to start playing with your money
could be argued to flip the HSA and 401k max order. HSA is triple tax advantaged.
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MRB10
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5:10p, 2/28/24
AG
Put it all on Bitcoin
“There is no red.
There is no blue.
There is the state.
And there is you.”

“As government expands, Liberty contracts” - R. Reagan
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jamey
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6:13p, 2/28/24
AG
The more you put in early the better obviously but it's such a huge factor.

I was telling someone earlier today that I'll offer my daughter to live at home for a few years when she first graduates. I'm sure nobody in their early 20s wants to do that but you could max out the current 23K in 401K contribution and another 7K in a Roth IRA, or 30K in year 1, and another 30K in year 2 and by year 3 she'd already be over 100K in all likelihood.

Like Munger says in this video, that first 100K is a ***** but yiu can let off the gas a little after that




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Hoyt Ag
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In reply to NoahAg • 6:45p, 2/28/24
AG
NoahAg said:
Buy a duplex or triplex and rent out the other units. Wish I had done this prior to getting married and having kids.
Funny you say that. I rent out 2-4 rooms in my house to seasonal workers. At first, I was hesitant because I didnt want my house F'ed up and I dont like most people. But, after 2.5 years of renting out rooms, I have not paid a mortgage note in 2.3 years. Now it is second nature and an absolute cash cow.
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Yukon Cornelius
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8:12p, 2/28/24
AG
People will recommend 401k. They are a scam. They lock you out of YOUR money. Better investments with higher returns at your age. Your future earnings is an asset to be leveraged.

My goal if I were you is try to find the quickest path to becoming an accredited investor and then potentially find Limited partnerships to be involved in.
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Fins Up!
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In reply to Yukon Cornelius • 8:40p, 2/28/24
AG
Yukon Cornelius said:
People will recommend 401k. They are a scam. They lock you out of YOUR money. Better investments with higher returns at your age. Your future earnings is an asset to be leveraged.

My goal if I were you is try to find the quickest path to becoming an accredited investor and then potentially find Limited partnerships to be involved in.


Don't listen to this guy. If you are earning enough to max out your 401k and then max out an IRA, you probably need the tax savings. Plus you get the company matching and/or any profit sharing contribution they make.

If you are making enough to be an accredited investor, you can do that too - once you become advanced in your knowledge.
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chris1515
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9:14p, 2/28/24
AG
Limit your investing to s&p index funds or a handful of good mutual funds that have a long and attractive track record after fees. Don't worry about finding a "hot stock".

401Ks and IRAs are nice and everyone can tell you about those, but the HSA is under appreciated. And invest the funds in it.

Don't worry about buying a house, rent is not a bad idea especially during the stage of your career where location flexibility is nice to have.

Keep a few months cash on hand in a savings account. But after that, your emergencies can be covered by credit cards, or pulling from other savings if needed, and maybe severance or unemployment benefits if it's a job loss. You leave a lot of money on the table if you hold too much in cash.

Make a conscious effort to grow in your career and make more money.
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JSKolache
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In reply to MRB10 • 10:44p, 2/28/24
AG
Pepper Brooks said:
Put it all on Bitcoin
But wait until under 30k, then ya all in.
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BTHOtrolls
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11:51p, 2/28/24
AG
One piece of unconventional advice, that I wish I had perspective on sooner….

Focus on investing in yourself and boosting your income before getting worked up about maxing out a 401K, jumping into real estate, or anything else besides having an emergency fund.

If you drop $10K on training, kicking off a side hustle, or solid networking opportunities, and then make an extra $10K the next year... congrats, you've got a 100% return.

It usually takes a while before self-investments don't beat the returns from "cookie-cutter" financial tips. A lot of people are too scared of making a bet on themselves to increase their earnings potential,
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Todd 02
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8:18a, 2/29/24
AG
Lots of good advice here: JL Collins Stock Series

But as as young man, I really needed to read these first:

JL Collins - My Short Attention Span
JL Collins - Why You Need F-You Money
JL Collins - F-You Money

ETA:
1500 Days to Freedom
This blog was really my wakeup call. I was having a rough stretch at work back in 2013 and found myself searching Google for "how to escape the rat race?" The tagline for that blog is "Think different and escape the rat race." From there I discovered many different personal finance bloggers. I was inspired enough that my wife and I even ran our own for a short while. It turns out that blogging isn't really our passion, but I'm forever grateful for what I learned from them.
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Charismatic Megafauna
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In reply to chris1515 • 8:21a, 2/29/24
AG
chris1515 said:


Don't worry about buying a house, rent is not a bad idea especially during the stage of your career where location flexibility is nice to have.


This is great advice, but i still think once you are using all the tax advantaged savings vehicles, putting a stockpile of cash together equivalent to 6 months expenses and a downpayment on your first house (note: you don't have to buy the house, just put yourself in a position to) is a position of freedom that not many people have, and the difference in yield on that 100k or so between a hysa and what you *might* make in the market is negligible compared to the freedom it grants you.
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MyNameIsJeff
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In reply to Yukon Cornelius • 11:01a, 2/29/24
AG
Yukon Cornelius said:
People will recommend 401k. They are a scam. They lock you out of YOUR money. Better investments with higher returns at your age. Your future earnings is an asset to be leveraged.

My goal if I were you is try to find the quickest path to becoming an accredited investor and then potentially find Limited partnerships to be involved in.
Tax savings are a scam? Ok...
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Mike Hancho
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In reply to Yukon Cornelius • 11:11a, 2/29/24
Yukon Cornelius said:
People will recommend 401k. They are a scam. They lock you out of YOUR money. Better investments with higher returns at your age. Your future earnings is an asset to be leveraged.

My goal if I were you is try to find the quickest path to becoming an accredited investor and then potentially find Limited partnerships to be involved in.
Quit watching Grant Cardone
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SquareOne07
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In reply to MyNameIsJeff • 11:42a, 2/29/24
AG
MyNameIsJeff said:
Somewhat of a young ag here that wishes I had known what I know now 10 years ago when I graduated. Having children was the catalyst that got me on the right track financially.

Look up the Money Guys Financial Order of Operations and Dave Ramsey's (yeah, I know) Baby Steps 1-4 (I don't agree beyond this.). What I suggest is somewhat of a blend of these. I thin Ramit Sethi's I Will Teach You to be Rich is also a great starting point.

1. Build you a budget that is detailed enough to be useful but not so detailed that it's cumbersome or you don't track it.

2. Use a site that allows you to view all your finances in one spot. I use Empower/Personal Capital. It just makes it easy to see the big picture.

3. Get rid of any debt other than real estate and a reasonable vehicle, if necessary. Don't go out and buy a loaded 3/4 ton diesel right after graduation like I did.

4. Create an emergency fund. 3-6 months of expenses. I've used this to pay for vehicle repairs and HVAC repairs in my house. This needs to be in a HYSA. I use Ally, which is currently paying 4.35%. Sure, there are some higher now, but this has worked well for me.

6. Max out employer match to your 401k.

7. Work on maxing Roth IRA, HSA, and then 401k.

8. Open a taxable brokerage account for anything you have left.

I'm big on index funds/ETFs rather than individual stocks. The stock trading thread here is exciting to read, but I just don't have the time to track individual stocks at this point.



All of this. And from a financial planning perspective, buy some term life insurance while you're young and insurable. Check that box off. Even if you don't need it now, you'll need it eventually, and getting something now for $30/mo makes a lot more sense than getting it later @ $60/mo (and that's assuming something crappy didn't happen to you like it did me - seizures starting at 29 for some reason)
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2012Ag
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In reply to Charismatic Megafauna • 12:18p, 2/29/24
AG
Charismatic Megafauna said:
ChucoAg said:


I maxed out my 401k percentage and am looking into starting up my Roth IRA.

401k percentage matching or actually maxed out (23k)?

Max 401k matching
Max roth
6mo expenses in high yield savings
Actually max 401k
Max hsa
20% of your first house in high yield savings



Then start a brokerage account if you want to start playing with your money


Dumb question, but you need a HDHP for the HSA action right?
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Chipotlemonger
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In reply to 2012Ag • 12:20p, 2/29/24
AG
2012Ag said:
Charismatic Megafauna said:
ChucoAg said:


I maxed out my 401k percentage and am looking into starting up my Roth IRA.

401k percentage matching or actually maxed out (23k)?

Max 401k matching
Max roth
6mo expenses in high yield savings
Actually max 401k
Max hsa
20% of your first house in high yield savings



Then start a brokerage account if you want to start playing with your money


Dumb question, but you need a HDHP for the HSA action right?
Not dumb. Yes you do need a qualified health plan to be able to contribute to an HSA.
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SquareOne07
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In reply to Yukon Cornelius • 12:22p, 2/29/24
AG
Yukon Cornelius said:
People will recommend 401k. They are a scam. They lock you out of YOUR money. Better investments with higher returns at your age. Your future earnings is an asset to be leveraged.

My goal if I were you is try to find the quickest path to becoming an accredited investor and then potentially find Limited partnerships to be involved in.


Yeah, because 3% raises, tax deductions, and tax deferred growth are such a scam…
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Charismatic Megafauna
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In reply to 2012Ag • 12:25p, 2/29/24
AG
2012Ag said:
Charismatic Megafauna said:
ChucoAg said:


I maxed out my 401k percentage and am looking into starting up my Roth IRA.

401k percentage matching or actually maxed out (23k)?

Max 401k matching
Max roth
6mo expenses in high yield savings
Actually max 401k
Max hsa
20% of your first house in high yield savings



Then start a brokerage account if you want to start playing with your money


Dumb question, but you need a HDHP for the HSA action right?

Correct, but if you're a 20something single male in good health hdhp should be a no-brainer
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Mr Gigem
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In reply to SquareOne07 • 12:59p, 2/29/24
AG
SquareOne07 said:
Yukon Cornelius said:
People will recommend 401k. They are a scam. They lock you out of YOUR money. Better investments with higher returns at your age. Your future earnings is an asset to be leveraged.

My goal if I were you is try to find the quickest path to becoming an accredited investor and then potentially find Limited partnerships to be involved in.


Yeah, because 3% raises, tax deductions, and tax deferred growth are such a scam…
I think this is a bit. A tagged sponsor on the millionaires thread said 401k's are a scam, and it caused a lot of uproar.
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SquareOne07
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In reply to Mr Gigem • 1:04p, 2/29/24
AG
Mr Gigem said:
SquareOne07 said:
Yukon Cornelius said:
People will recommend 401k. They are a scam. They lock you out of YOUR money. Better investments with higher returns at your age. Your future earnings is an asset to be leveraged.

My goal if I were you is try to find the quickest path to becoming an accredited investor and then potentially find Limited partnerships to be involved in.


Yeah, because 3% raises, tax deductions, and tax deferred growth are such a scam…
I think this is a bit. A tagged sponsor on the millionaires thread said 401k's are a scam, and it caused a lot of uproar.


Phew!
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MyNameIsJeff
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In reply to SquareOne07 • 1:38p, 2/29/24
AG
Another great suggestion! I'm in process of pricing this for me and my wife right now. I have a health condition (ulcerative colitis) that is making it tricky, though.
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Brian Earl Spilner
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In reply to Ragoo • 1:42p, 2/29/24
AG
Ragoo said:
Charismatic Megafauna said:
ChucoAg said:


I maxed out my 401k percentage and am looking into starting up my Roth IRA.

401k percentage matching or actually maxed out (23k)?

Max 401k matching
Max roth
6mo expenses in high yield savings
Actually max 401k
Max hsa
20% of your first house in high yield savings



Then start a brokerage account if you want to start playing with your money
could be argued to flip the HSA and 401k max order. HSA is triple tax advantaged.


This, and I'd subsequently add mega backdoor Roth contributions if available.
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Brian Earl Spilner
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In reply to Yukon Cornelius • 1:43p, 2/29/24
AG
Yukon Cornelius said:
People will recommend 401k. They are a scam. They lock you out of YOUR money. Better investments with higher returns at your age. Your future earnings is an asset to be leveraged.

My goal if I were you is try to find the quickest path to becoming an accredited investor and then potentially find Limited partnerships to be involved in.


You should probably get better educated on personal finance before trying to hand out advice.

Edit: Glad this is a bit I missed. I worry for people who actually believe this.
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LMCane
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1:53p, 2/29/24
"Look up the Money Guys Financial Order of Operations and Dave Ramsey's (yeah, I know) Baby Steps 1-4 (I don't agree beyond this.). What I suggest is somewhat of a blend of these. I thin Ramit Sethi's I Will Teach You to be Rich is also a great starting point."

I have watched hours of these guys and read Ramsey's book.

the Money Guys are far superior, and even they talk their book and are not overly sophisticated in their advice.
you offered three sources all of who disagree with each other!!

Sethi literally stated it was idiotic to worry about the price of the cappucino you buy and you should fly business or first class or stay at nice hotels if that is what you want to do.

the money guys LITERALLY have a beer coozie that admonishes people not to buy drinks because over 40 years it will cost you $156.

and both groups make fun of Ramsey.
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MyNameIsJeff
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In reply to LMCane • 2:00p, 2/29/24
AG
I listen to/read a wide variety and apply what I think best relates to my life and goals. I don't know of a single source that I follow 100%.
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Yukon Cornelius
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2:02p, 2/29/24
AG
The most important goal is to become an accredited investor.
Next is to associate with other accredited investors.

If y'all think the best method to that goal is maxing 401ks more power to you.

But there are different approaches. One must consider if at such a young age you max 401k you are committed to working for your 401k the rest of your life. Maybe an earlier retirement or entrepreneurial life style is your end goal. The 401k will bind you.

You're also betting on the tax rate between now and anytime you pull it out early if you do so to be equal or less than your current tax rate.

You're also betting on the federal government not to extend the penalty free age on withdrawing from your 401k.

Just things to think about.
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