Investment Advice- $30K per year for 20 years
Hi, I'm 25 years old and will be receiving $30,000 on the 1st of every year for the next 20 years or so. I plan to invest this whole amount each and every year as I am employed and have a healthy buffer in my savings. I was wondering if you all have any investment advice.
Currently, I am working with a money manager and have a $100K portfolio split among these various Equity Funds:
1.) Dodge & Cox Intl DODFX
2.) Harbor Cp Ap Inv HCAIX
3.) Van Index Extend VEXMX
4.) Van Intl Total VGTSX
5.) Sound Shore SSHFX
6.) TRPrice Equ Inc PRFDX
7.) Van 500 Idx Inv VFINX
8.) Van Mid Val Idx Inv VMVIX
I see this portfolio as my longer term/conservative portfolio. I'll admit that my knowledge is limited but I have a pretty good background in finance. As of right now, I've just been continually throwing the $30K every year into this portfolio because 1.) I want to put the money to work right away and 2.) I haven't found any individual stock picks extremely attractive (mainly due to my lack of knowledge) and the fact that I started investing last year in the bull market (difficult to find undervalued stocks).
As of right now, I ''think' I want to continually invest in equities as I'm young and can afford to take on the risk as I can ride out the market in the long run. I have my eyes set on the long run here and want to grow the money as much as possible. I don't plan to cash out on any of these investments within the next 10 years.
Does anybody have any suggestions on how they would handle this money on a yearly basis with the aim at long term growth? I've also considered setting aside a small portion each year to 'play' with so that I can get some experience trading and investing in my own individual stocks.
Thanks in advance!
Can we just take a step back and know why you're getting $30K every year for 20 years?
Probably won the lottery or someone really close to him died but that's none of our business.
This comment made me LOL....
What is your risk appetite? I would suggest putting a large chunk of your payments into index funds (like you have been doing) and have the 'play' money like you suggested. Maybe something like a 25/5 split to start off. Everyone generally either loses money at the start or has beginners luck--then their book blows up in their face. You need to account for things like trading costs and random market hiccups. A lot of people starting out say they'll "start small" and it ends up biting them in the ass because the costs associating with making trades eats away a large portion of the account since their book is so small (however, this also depends on how often you plan on making trades). You also need to make sure you won't get wiped out if there is a random hiccup in the market for a day, but it sounds like you have more than enough capital to account for things like these. As you get better, you might want to think about increasing the size of your book (depending on your investment horizon...i.e. if your thesis is a 1 yr play and the stock dropped 5% last month it's not exactly a barometer of your skills quite yet)
Thanks for the advice @nkhanlegend! Given my long term time horizon, my age and liquidity needs, I'd say that my risk tolerance is Moderately Aggressive/Aggressive. As you can tell, my portfolio above is composed of 100% equity funds. While equities are generally seen as more risky given their volatile returns, I see this as my 'conservative' investment. If the stock market hits a bump, I still have decades to recover and as we know, bonds are generally more stable than stocks but in the long term, however, bonds have posted lower returns.
As such, I'm wondering if I should deviate in strictly investing in these types of equity index funds on a yearly basis as I personally see them as conservitive investments given my risk profile. I think that I'll always allocate a significant portion of my funds to these longer term equity funds as a safety net but I'm willing to allocate a portion of my cash each year and invest in riskier assets in the hopes of making larger gains. Now, it's just a matter of me figuring out 'where to start' when looking for riskier assets with higher potential returns....
Any recommendations on where I can start in terms of learning trade strategies and looking into 'riskier' assets? Any recommendations for online trade brokers?
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