Stock Market

What is you guys opinion on the stock market as of now? I feel it was due for a correction but not sure how to handle it, as I just got my first job out of college and have been in my 401k for about 2 months now. I ramped up my contribution to 30% (from 6%) just now and diversified into different industries/markets. I am a finance major and currently working in financial crime at a bank, just curious what other people's thought are on the subject.

 

For where you are in your career, I think it’s a great opportunity, and good that you invest everything you don’t “need” for living expenses.

For anyone older, with real property and/ or significant debt, this is maybe not a time to go all in. I say this because, even though staying all in after 2008 brought me a 33% overall return, this time entire corporations— heck, entire industries— may not recover..., so some of us with a lot invested may need to delay retirement several years so investments in other industries that do well can eventually balance and make up for the expected related losses.

 

Thank you for your opinion. It is definitely harder on older people, my Dad is stressing out about his 401k. He has always been the type to invest all he can afford and he is not sure what to do as of now. He is still fairly young at 49 years old.
As for me, guess some of the tundra parts and other things may have to wait a couple months and I will eventually tune down the investing. I would just rather get a larger rock at the top of the mountain so one day it may turn into a boulder once I get to retirement age.

 

The beauty of compound interest and betting on America. Every financial advisor is going to tell you they can beat the market. But in all honesty, and I’ve followed this advice given by a sage investor years ago myself, find the lowest fee/load index fund you can and bet on the DJIA. There are plenty of charts around comparing analysts’ portfolio performance to the market, but once you deduct their fees and other costs... very few even equal the index funds much less beat them. Those guys and women drive Lexus and Mercedes for a reason... you’re paying for it. Remember, when you win, they win. When you lose, they win. They always get their cut. IMO anyway. No offense intended to any financial planners out there... and I’m sure there are differing opinions. Just saying what’s worked for me.

 

Compound interest is the 8th wonder of the world and TIME IN the market is better than TIMING the market. These are 2 things that one of my favorite finance professors said to us almost daily. He would also tell us we are idiots if we do not have at least 1 million dollars by the time we are retiring due to our knowledge base.

I am staying away from financial planners, I was an intern for a firm doing financial planning for about a year and was not a fan once I learned the backside of the business. They were crooks and were always looking to take advantage of the other interns and their own clients who did not know better. I feel like with knowledge I have learned in school and can learn from others, I am better off doing it myself. About 50% of my 401k options I made go to either the S&P and DJIA, the rest are just some small growth, foreign stuff, strategic equity funds, and like 5% bonds.

 

Throw in as much as you can now. Don't forget the Roth. If you have the ability to do a 403b or 457b take advantage.

 

No option for 403b or 457b, but do have the roth option. I have not contributed to it at all. I am not sure where the interest comes from on a roth.

 

I've got some cash sitting around that I am trying to decide when I want to jump in. I have a good pension and a small contribution to a Roth. I invest extra money into the market in hopes of one day using it buy land or something. It is definitely risky right now, but there is a huge reward possible too. I think that once this is over, most of the stocks are going to sky rocket fast, but I could be wrong.

 

Yup, throw in as much as you can Roth. Index it and sit back. You’ll be the next Warren Buffett in no time

 

Nice truck btw

 

if I had extra money I would look into real estate at some point in the future: prices going down, low interest rates, tax deductions, cash/roof available in case SHTF and rental property can bring a steady income.

 

Real estate is a goal of mine in the near future, but do not have the capital for that yet. Also with me just starting to work and the girlfriend either starting nurse practitioner or med school in the next year we should hold off for at least a few years. More renting it is.

 

Roth vs pre-tax contributions is one of the more important decisions you have to make. I’m sure you know this, but you’re basically betting on your tax rate now vs when you retire. The assumption is most people will be in a lower tax bracket when they retire. I’ve been betting on a good retirement.. and thus have more in my Roth than my existing 401K account. But I do some pre-tax deductions too... not a lot tho. You’re a genius to be thinking about this at your age. Save big now, retire early. Had I figured that out in my early to mid 20s I’d be retired already. My goal is to retire at 56 at this point. Time (and the market) will dictate some of that though. Either way, I’m planning to never NEED social security. It’ll be a nice bonus if I get it though. As others have said, save all you can now. Good luck!

 

You are doing it right. Regular and steady contributions are the key.

 

Thank you guys for the wisdom. Ive learned a lot from both good and bad examples of adults in my life and just want to get off on the right track myself. Y’all are a big help.

I will look into the Roth sooner rather than later. Best of luck to y’all too

 

I started investing in 457 when i was 20 years old the rule of 72 worked out good for me i was fortunate enough to be able to borrow from it to buy a couple properties and pay my self back with interest and cashflow with my properties and build equity its a good stepping stone as you get older you learn to minimize risk and acquire more wealth

 

I took all the cash in my IRA and bought a couple energy stocks and some cruise line stock. It’s all on sale. I’m not a finance guy or anything but I have a decent head in my shoulders. My advisor said it was risky but the stocks I bought, she said were solid companies and should pull through.

 

I have a 457 as a supplement and really don't know to much about it to be honest. I only put a little in every payday but it is mostly invested in "aggressive" I guess you would call it. care to share a few details on it?

Thanks!

 

49 yrs old!? Is he planning/needing to sell Everything all at once?

The vast majority of folks draw Slowly on a 401k, like 3-4% month, so unless he's planning on pulling it all out in the next few months, couple of years, there is Zero reason to panic, fear or stress out about. It willl have time to bounce back some if not all within 5 years....if not sooner...

 

A 457 is just a qualified retirement plan, just like a 401k and 403b. The 457 refers to IRS code section 457. Ultimately, you just need to contribute as much as you can and chose sound investments in that plan.

 

Also, FYI. If you are in a qualified plan through your work the IRS limits who can contribute to a Roth IRA. If you make too much they won't let you contribute to your Roth. To get around this, you can make a non-deductible contribution you a traditional IRA, and then the next day convert it to a Roth IRA. This is called a "backdoor Roth contribution"

 

Since you work in finance, you already know this, but it still bears saying. At your age I would recommend a Roth for as much as you can afford. With a Roth you pay taxes on the money today that you invest, but never pay taxes on the profit. That profit will be considerable if you leave the Roth alone and let it grow.

That said, if your employer contributes to a 401K based on your participation, then you should participate in that as well.

Do not buy individual stocks unless you really understand the market and know what you are doing. That requires a great deal of your time. Instead, buy into a fund that looks good to you. The considerations for a fund are fees and reputation for risk and growth. Generally more growth potential means more risk. How much risk can your stomach/head handle? That is a personal thing for you to consider.

Regarding timing, we are in a bear market. In a typical bear market there would be one more testing of the bottom before things pick up again. This in not a typical bear market, so the bottom may have already been reached or it may be a lot lower before this craziness is over. If the virus, and 'quarantine', sticks with us for a prolonged period then I don't know how to predict the future and any investment is a gamble.

 

We can borrow on it to purchase primarily residence up to 50000 if you have enough in your 457 it could be combined two loans max i pulled one $25k to buy my first home then pulled $25k for investment property i use the cashflow to pay loans so can evenly get more properties