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Critique my investment strategy (thoughts appreciated)
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jbkunt2 Offline
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Critique my investment strategy (thoughts appreciated)
There have been various threads on here regarding investing topics and it’s clear from them that there are a few knowledgeable heads on here.

With that in mind, I would love to get thoughts on my saving/investing plans.

I’m 30 years old and own my house outright (no mortgage).

I am accruing a decent bit of excess cash each month.

Currently I am putting about:

20% of it into Wealthfront (risk tolerance set to 10/10)

20% into stocks (based on recommendations from Seeking Alpha, Motley Fool Money podcast, etc.)

The above I am very much in a buy-and-hold for a good 7-10 years mindset.

I am thinking about ploughing in a solid 20% or so into REITs as I love the income aspect.

I would love to buy a rental property or two at some point but the market is very hot. As are stocks.

So I am probably saving half as cash in a 1.5% interest savings account for now. I’m just cautious everything is high right now.

As I have paid off my house, I don’t think I will need immediate aspect to much more than say a year’s worth of living costs probably. So I have a decent horizon for holding.

Any thoughts on this approach?

How would you split your capital and amongst what sort of vehicles?

Thanks for any comments.
07-13-2018 10:06 PM
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sonoran_ Offline
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RE: Critique my investment strategy (thoughts appreciated)
Atleast you are aware and at terms with the risk that is present, specifically that of investing in stocks and real estate. You better be ready to dollar cost average for your "7-10 year" strategy, cause for all we know, you could be buying the top.
07-13-2018 10:40 PM
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MANic Online
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Post: #3
RE: Critique my investment strategy (thoughts appreciated)
I would need some sort of info on your citizenship/residency and the jurisdicitions of your investments to be honest. Though no one can really critique you based on the above.
07-14-2018 12:34 AM
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Tactician Offline
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RE: Critique my investment strategy (thoughts appreciated)
I'm no pro, but it seems fine, albeit you were pretty scant with the details.

From a bird's eye view, the only thing I'd change is throwing a small % into crypto.
See: http://wallstreetplayboys.com/triangle-investing/

There's a lot of room for disagreement here regarding crypto, and there's a lot of bad things about crypto (e.g. no cashflow), but my rationale is that you seem like you're in a pretty solid situation and can take a bit of extra risk. There's a lot to be said about this emerging asset class (like whether or not it is an emerging asset class, ha), but I'm just throwing this idea out there for you. Go poke around and see if you think throwing a small % into crypto is a good move.

Quick note for your sanity. If you decide to put some $ into crypto, I'd stick to top 10 coins or even just BTC and ETH and maybe 1 or 2 picks that you are partial towards. Crypto is volatile as hell and can be a giant time suck, so sticking to your 'buy-and-hold for a good 7-10 years mindset' and not sweating all the details seems like the right way to go.

Quick edit: Here's a vid posted by JayJuanGee in the BTC thread. Just some food for thought:
(06-30-2018 10:41 PM)JayJuanGee Wrote:  Below is an interesting 20 minute presentation by a crypto investor researcher named Thomas Lee. He presents a decently bullish scenario for bitcoin based on demographic changes.



(This post was last modified: 07-14-2018 01:55 AM by Tactician.)
07-14-2018 01:50 AM
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Thomas Jackson Offline
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Post: #5
RE: Critique my investment strategy (thoughts appreciated)
Are you maxing out a 401k/Roth IRA? The tax benefits are huge that should be the first thing you do.
07-14-2018 06:33 AM
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456 Offline
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Post: #6
RE: Critique my investment strategy (thoughts appreciated)
Pre-tax investing is the biggest "alpha" you'll earn over a market return
07-14-2018 09:22 AM
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jbkunt2 Offline
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RE: Critique my investment strategy (thoughts appreciated)
I’m in the US.

I’ve not utilized my 401k/IRA though I am in a high tax bracket simply because I just don’t want to tie up capital for as long as 35 years. I would consider starting at 40 maybe.

It is tax deterrence not avoidance, also. But I definitely get the attraction to some.

Cheers.
07-14-2018 10:03 AM
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456 Offline
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RE: Critique my investment strategy (thoughts appreciated)
Well the compounding is tax-free -- that makes a big difference.

And the old "you'll prob be in a lower tax bracket when you remove the funds".

And also: various ways to take funds out early sans penalty: SEPP, and some other things people don't often mention.

---

The way I think of it is, if I need it in less than 20 or 30 years, it goes in taxable. But I always try to max out the pre-tax stuff.

Because every $1 I throw in there is $0.30-something freed-up liquid money I can put in taxable (by shaving it off of my tax bill).

As someone who pays estimated taxes, it feels good to see that immediate benefit.
(This post was last modified: 07-14-2018 10:31 AM by 456.)
07-14-2018 10:31 AM
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Spaniard88 Offline
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RE: Critique my investment strategy (thoughts appreciated)
Well if bitcoin/crypto counts as an investment, then I recommend you also consider putting a small percentage of your net worth into tulips. It's true, they're off their peak from the 1630's, but you'd be getting in at capitulation, about 400 years after the top.

Your downside is limited, tulips can't go much lower, and like the bitcoin/crypto guys say, anything's possible, so it could always go back to the highs of the 1630's, or even, dare I say, higher.

Tulips are just a much better bet than bitcoin or cryptos, how much lower can tulips go? Not much, but they can always go back to their previous heights, since anything's possible and we can base "investments" on that mantra.

Tulips are like bitcoin/crypto, but with less downside, a far superior "investment" in this day and age.

As a matter of fact, I've bought some tulips myself with the high-risk allocation of my portfolio, and I'm so confident in how tulips will do that if they don't hit $1,000,000 by 2020, my girlfriend will suck my dick.

You heard it here first, my girlfriend will suck my dick (for the nth time that day) if tulips don't hit $1,000,000 by 2020.
(This post was last modified: 07-14-2018 11:27 AM by Spaniard88.)
07-14-2018 11:09 AM
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Spaniard88 Offline
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RE: Critique my investment strategy (thoughts appreciated)
For actionable advice to the OP, stack the cash and do nothing with it other than put it in any virtually guaranteed investments that you can see will make you a solid profit. These exist, but they tend to be accessible in your own field of expertise, due to your unique knowledge, and not accessible to market participants as a whole. If you don't have specialized knowledge, then just sit on that cash, don't scratch that itch.

You buy when everyone is selling.

Right now everyone is buying.
(This post was last modified: 07-14-2018 11:34 AM by Spaniard88.)
07-14-2018 11:32 AM
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Post: #11
RE: Critique my investment strategy (thoughts appreciated)
Very hard to be buying stocks and real estate right now and make it profitable without extreme risk. The market is through the roof. Save your cash and wait for the next market crash or bursting real estate bubble.

And crypto.... Pffft!

Facepalm

I'm not a businessman; I'm a business, Man
(This post was last modified: 07-14-2018 12:25 PM by Dulceácido.)
07-14-2018 12:24 PM
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MANic Online
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RE: Critique my investment strategy (thoughts appreciated)
I'm extremely sceptical of REITs atm as I do feel a correction is due almost globally. I would really prefer ETFs as opposed individual stocks, though you may make permittance for a percentage of individual stock selections in your portfolio. I'd scale down on the risk tolerance as well.

I agree with the idea of retaining good liquidity given the majority opinion of an overdue correction. I'm not an expert on your jurisdiction but consider tax planning as well prior to investing.

For instance, I pretty much avoid capital gains tax in my country by running the majority of my investments through a LLC incorporated offshore.
07-14-2018 02:44 PM
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jamaicabound Offline
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RE: Critique my investment strategy (thoughts appreciated)
(07-13-2018 10:40 PM)sonoran_ Wrote:  Atleast you are aware and at terms with the risk that is present, specifically that of investing in stocks and real estate. You better be ready to dollar cost average for your "7-10 year" strategy, cause for all we know, you could be buying the top.

Real estate really isn't that risky if your doing rentals as opposed to flips. If you buy at the right price and don't overleverage yourself and buy at the right price it's pretty hard to lose
07-14-2018 02:52 PM
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RE: Critique my investment strategy (thoughts appreciated)
(07-14-2018 10:03 AM)jbkunt2 Wrote:  I’m in the US.

I’ve not utilized my 401k/IRA though I am in a high tax bracket simply because I just don’t want to tie up capital for as long as 35 years. I would consider starting at 40 maybe.

It is tax deterrence not avoidance, also. But I definitely get the attraction to some.

Cheers.

If your company offers a match it's kinda dumb not to take advantage of it though, at least up to the match
07-14-2018 03:13 PM
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jamaicabound Offline
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RE: Critique my investment strategy (thoughts appreciated)
(07-14-2018 11:09 AM)Spaniard88 Wrote:  Well if bitcoin/crypto counts as an investment, then I recommend you also consider putting a small percentage of your net worth into tulips. It's true, they're off their peak from the 1630's, but you'd be getting in at capitulation, about 400 years after the top.

Your downside is limited, tulips can't go much lower, and like the bitcoin/crypto guys say, anything's possible, so it could always go back to the highs of the 1630's, or even, dare I say, higher.

Tulips are just a much better bet than bitcoin or cryptos, how much lower can tulips go? Not much, but they can always go back to their previous heights, since anything's possible and we can base "investments" on that mantra.

Tulips are like bitcoin/crypto, but with less downside, a far superior "investment" in this day and age.

As a matter of fact, I've bought some tulips myself with the high-risk allocation of my portfolio, and I'm so confident in how tulips will do that if they don't hit $1,000,000 by 2020, my girlfriend will suck my dick.

You heard it here first, my girlfriend will suck my dick (for the nth time that day) if tulips don't hit $1,000,000 by 2020.

I was going to make a comment advising against crypto, but I think the way you did it is a bit off base. Crypto in and of itself isn't necessarily bad, I used to be a big crypto supporter and actually made a shitload of money off crypto. That said the crypto community did kind of annoy me with the cheerleading and circle jerking. I'd see people actively rooting for their own investment to go down in value so they "could buy more". Who wishes for something they are investing in to go down? Also the community as a whole had this attitude that taking profits was a pussy move or dumb, I'm sure a lot of people wish they had taken profits.

Crypto has certain use cases ie high risk merchants, industries with lots of chargebacks, grey area industries, cross border transactions. There is value to having moeny outside the control or regulators, corporations, etc.

All that said unless someone is interested in the technology or interested in a very high risk investment why even fuck with it. It's not something you can really passively invest in like an index fund you kinda have to know what to buy as well as where to buy it and how to hold it. I personally don't necessarily see that much upsdie for crypto at least at this point in time where as one day back in the day I used to think BTC could hit 100k.

The manicness and crypto craze of Dec 2017 will be tough to ever match again. I dont care if a Bitcoin ETF comes around a great new darkmarket drug site to rival alphabay. I really can't see anything bringing that type of hype ever again. Will crypto rise in value, maybe maybe not but if it does I think it will be more normal stable growth like most other investments.

As for the tulip thing thats a really dumb thing to say, it doesn't make an argument, well were at it lets throw out beanie babies as well. Crypto is nothing like beanie babies or tulips there's actual utility to Bitcoin ie having a bank in your pocket, having a way to pay besides visa, mc, paypal. having money that even a court can't seize even if they wanted to. there's value in all those things and more and tulips had none of that, you also can't send tulips across the world with a click of a mouse. Also FYI the tulip bubble never happenned, at least not in the way your referencing it

https://www.reddit.com/r/Bitcoin/comment...lip_fever/
07-14-2018 03:19 PM
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Spaniard88 Offline
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RE: Critique my investment strategy (thoughts appreciated)
(07-14-2018 03:19 PM)jamaicabound Wrote:  As for the tulip thing thats a really dumb thing to say, it doesn't make an argument, well were at it lets throw out beanie babies as well. Crypto is nothing like beanie babies or tulips there's actual utility to Bitcoin ie having a bank in your pocket, having a way to pay besides visa, mc, paypal. having money that even a court can't seize even if they wanted to. there's value in all those things and more and tulips had none of that, you also can't send tulips across the world with a click of a mouse. Also FYI the tulip bubble never happenned, at least not in the way your referencing it

https://www.reddit.com/r/Bitcoin/comment...lip_fever/

Tulips do have actual utility, just like bitcoin/cryptos have actual utility, that's why in 2014, the Netherlands exported 2 billion tulips according to this link (and beanie babies have utility as well):

http://www.amsterdamtulipmuseum.com/en/f...therlands/

And the tulip mania did happen. You referenced a bitcoin thread on reddit, I'll reference wikipedia:

https://en.wikipedia.org/wiki/Tulip_mania

It's not a dumb comparison, there's many similarities and many differences as well. Nonetheless, the comparison is valid in many ways.
(This post was last modified: 07-14-2018 04:17 PM by Spaniard88.)
07-14-2018 03:57 PM
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Post: #17
RE: Critique my investment strategy (thoughts appreciated)
As others have already pointed out, max out your 401k for sure. If you're not convinced about the value of this method, just punch in the tentative numbers in a compounding calculator/401k calculator, and you'll start to see it.
07-14-2018 04:48 PM
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RE: Critique my investment strategy (thoughts appreciated)
(07-14-2018 03:57 PM)Spaniard88 Wrote:  
(07-14-2018 03:19 PM)jamaicabound Wrote:  As for the tulip thing thats a really dumb thing to say, it doesn't make an argument, well were at it lets throw out beanie babies as well. Crypto is nothing like beanie babies or tulips there's actual utility to Bitcoin ie having a bank in your pocket, having a way to pay besides visa, mc, paypal. having money that even a court can't seize even if they wanted to. there's value in all those things and more and tulips had none of that, you also can't send tulips across the world with a click of a mouse. Also FYI the tulip bubble never happenned, at least not in the way your referencing it

https://www.reddit.com/r/Bitcoin/comment...lip_fever/

Tulips do have actual utility, just like bitcoin/cryptos have actual utility, that's why in 2014, the Netherlands exported 2 billion tulips according to this link (and beanie babies have utility as well):

http://www.amsterdamtulipmuseum.com/en/f...therlands/

And the tulip mania did happen. You referenced a bitcoin thread on reddit, I'll reference wikipedia:

https://en.wikipedia.org/wiki/Tulip_mania

It's not a dumb comparison, there's many similarities and many differences as well. Nonetheless, the comparison is valid in many ways.

While Bitcoin isn't widely used as cash, it is used as a currency. How many places can you find me that will let you buy an item with a beanie baby or a tulip? That alone a network of people who assign it value and accept it for purchases puts it leaps and bounds ahead of tulips and beanie babies.

I can send Bitcoin with a click of a button, can you send me a tulip or a beanie baby like that?

I could also grow as many tulips as I wanted to. Can you make me some Bitcoin?

Also I accidentally pasted the wrong link....

https://www.smithsonianmag.com/history/t...180964915/

Comparing Tulips to Bitcoin is like comparing Atari to AI
(This post was last modified: 07-14-2018 05:14 PM by jamaicabound.)
07-14-2018 05:11 PM
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RE: Critique my investment strategy (thoughts appreciated)
(07-13-2018 10:06 PM)jbkunt2 Wrote:  There have been various threads on here regarding investing topics and it’s clear from them that there are a few knowledgeable heads on here.

With that in mind, I would love to get thoughts on my saving/investing plans.

I’m 30 years old and own my house outright (no mortgage).

I am accruing a decent bit of excess cash each month.

Currently I am putting about:

20% of it into Wealthfront (risk tolerance set to 10/10)

20% into stocks (based on recommendations from Seeking Alpha, Motley Fool Money podcast, etc.)

The above I am very much in a buy-and-hold for a good 7-10 years mindset.

I am thinking about ploughing in a solid 20% or so into REITs as I love the income aspect.

I would love to buy a rental property or two at some point but the market is very hot. As are stocks.

So I am probably saving half as cash in a 1.5% interest savings account for now. I’m just cautious everything is high right now.

As I have paid off my house, I don’t think I will need immediate aspect to much more than say a year’s worth of living costs probably. So I have a decent horizon for holding.

Any thoughts on this approach?

How would you split your capital and amongst what sort of vehicles?

Thanks for any comments.

A few points, just my humble opinion, not financial advice.

You have a paid off house so your real estate exposure is already pretty high, no need to invest in REITs in my opinion.

I'm not a big fan of Wealthfront, Betterment and such. I like the idea of robo advisers but can't justify paying them extra fees. Even a few basis points difference in expense ratios can be a pretty big drag on portfolio long term returns.

I would decide on asset allocation, then invest for the long term and forget about it other than rebalancing every year or so: e.g. 50% total US market (VTSAX), 30% Total International (VTIAX) and remaining 20% in US bonds (VBTLX), CDs and cash. Your target allocation may be different but the idea is that you stick to it no matter what.

Regarding your cash position being half of the portfolio size because "everything is high right now", I am not a big believer in market timing because nobody has the foresight to do it accurately and consistently. However, if you happen to get lucky this time, let's say the market crashes in the near future and then you go all in buying stocks on sale, you'll end up with more money as a result. Ultimately it's your money so the choice is yours.

I don't know much about rental properties, but if you like real estate and have experience (e.g. your family does it, you know reliable contractors for renovations/repairs and good property managers or can do all of that yourself), then you are in a better position to invest in rentals. I personally can't be bothered even if it means missing out on higher returns.

For investment strategy, I highly recommend the following book: The Simple Path to Wealth by JL Collins. Very easy to read and great advice.
07-14-2018 05:58 PM
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RE: Critique my investment strategy (thoughts appreciated)
(07-14-2018 02:52 PM)jamaicabound Wrote:  
(07-13-2018 10:40 PM)sonoran_ Wrote:  Atleast you are aware and at terms with the risk that is present, specifically that of investing in stocks and real estate. You better be ready to dollar cost average for your "7-10 year" strategy, cause for all we know, you could be buying the top.

Real estate really isn't that risky if your doing rentals as opposed to flips. If you buy at the right price and don't overleverage yourself and buy at the right price it's pretty hard to lose

^^ This is key, so much of your money in real estate is made at the time of purchase, not afterwards. Get that right, and you've got a ton of leeway in regards to what you can do with the property.

Same thing with actually running the property, the initial action, the tenant selection, is key. For all intents and purposes, if you have a great tenant, that lease never needs to even be read, it only comes into play when you erred in tenant selection.

Get the purchase price right, get the tenant selection right, and you can more or less be on easy street.
(This post was last modified: 07-14-2018 07:04 PM by Spaniard88.)
07-14-2018 07:04 PM
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RE: Critique my investment strategy (thoughts appreciated)
Guys I just want to point something out for those who are fearful because "everything is high right now". That is a very U.S. centric view. No doubt that the U.S. stock market is overvalued. Its not the case for every country though, so consider investing in some international stock markets.

In Australia for example our main stock market index (the All Ordinaries) is at just over 6350. In 2007 right before the financial crisis it peaked at around 6850. So our stock market is lower than it was in 2007 (and in addition to that our valuation metrics look far more reasonable than the U.S.). Australia is just one example. There are plenty of other countries whose stock market valuations are reasonable. The Singapore stock market for example is still below its 2008 high and has reasonable valuations.
(This post was last modified: 07-15-2018 01:28 AM by Australia Sucks.)
07-15-2018 01:22 AM
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RE: Critique my investment strategy (thoughts appreciated)
(07-15-2018 01:22 AM)Australia Sucks Wrote:  Guys I just want to point something out for those who are fearful because "everything is high right now". That is a very U.S. centric view. No doubt that the U.S. stock market is overvalued. Its not the case for every country though, so consider investing in some international stock markets.

In Australia for example our main stock market index (the All Ordinaries) is at just over 6350. In 2007 right before the financial crisis it peaked at around 6850. So our stock market is lower than it was in 2007 (and in addition to that our valuation metrics look far more reasonable than the U.S.). Australia is just one example. There are plenty of other countries whose stock market valuations are reasonable. The Singapore stock market for example is still below its 2008 high and has reasonable valuations.

It'd be interesting to see how the Australian market did during the last two U.S. market crashes. I'm wondering how tethered the two are. It was my understanding that if the U.S. economy does very poorly, the rest of the world struggles as well, generally speaking.

Thanks for the post, this is an interesting angle.
(This post was last modified: 07-15-2018 02:43 AM by Spaniard88.)
07-15-2018 02:38 AM
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RE: Critique my investment strategy (thoughts appreciated)
Spaniard88 the Australian stock market did worse than the U.S.A. during the last financial crises (56% peak to trough decline for the Australian market). However, keep in mind the Australian stock market was much stronger than the U.S. stock market leading up to (from say 2003 -2007) the financial crises.

During the bursting of the tech bubble Australian stock market fell less than the U.S. stock market because our stock market had far fewer internet/technology companies than the U.S.A.

Generally speaking if the U.S.A. stock market crashes, the Australian market will go down with it (the magnitude of the decline will likely be different though).
(This post was last modified: 07-15-2018 06:20 AM by Australia Sucks.)
07-15-2018 06:19 AM
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RE: Critique my investment strategy (thoughts appreciated)
(07-13-2018 10:06 PM)jbkunt2 Wrote:  There have been various threads on here regarding investing topics and it’s clear from them that there are a few knowledgeable heads on here.

With that in mind, I would love to get thoughts on my saving/investing plans.

I’m 30 years old and own my house outright (no mortgage).

I am accruing a decent bit of excess cash each month.

Currently I am putting about:

20% of it into Wealthfront (risk tolerance set to 10/10)

20% into stocks (based on recommendations from Seeking Alpha, Motley Fool Money podcast, etc.)

The above I am very much in a buy-and-hold for a good 7-10 years mindset.

I am thinking about ploughing in a solid 20% or so into REITs as I love the income aspect.

I would love to buy a rental property or two at some point but the market is very hot. As are stocks.

So I am probably saving half as cash in a 1.5% interest savings account for now. I’m just cautious everything is high right now.

As I have paid off my house, I don’t think I will need immediate aspect to much more than say a year’s worth of living costs probably. So I have a decent horizon for holding.

Any thoughts on this approach?

How would you split your capital and amongst what sort of vehicles?

Thanks for any comments.

I don't like it.

What I would do instead:

1. Don't listen to podcasts and other stuff. They don't beat the market, in fact chances are higher to make a bad decision by choosing a recommended stock, than buying a random one.

Ideally choose a little bit more diversified stuff. For example Alibaba, Gazprom, Apple, Nike, Nestle, Coca Cola,... Don't outplay the market, don't be super-smart, best mindset is to accept nobody has a clue. Just keep the variance low. Just be boring but risky Smile

2. Forget the REITs, you are too young for that, and you already own a house. It's stupid!

3. I don't know what Wealthfront is.

4. Think about extra assets like Bitcoin (but stay away from second players), art, physical gold, .... I think 5% into BTC even lowers your risk of going broke/loosing the majority. And like all others in this forum, I have no idea if BTC or any stock is over/undervalued. I see BTC as an insurance against worst-case szenarios.

5. Buying housing without leverage / mortgages is bad for me. You are 30 years old, your life expecancy is high, stocks volatility on an all-time low. Investing now 60% in stocks, is for me the same risk like a 40 year old investing 20% 20 years ago. Go Risky :-)

6. No idea about tax savings, just general advice. And don't be super-smart.
07-15-2018 06:46 AM
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jamaicabound Offline
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Post: #25
RE: Critique my investment strategy (thoughts appreciated)
(07-14-2018 07:04 PM)Spaniard88 Wrote:  
(07-14-2018 02:52 PM)jamaicabound Wrote:  
(07-13-2018 10:40 PM)sonoran_ Wrote:  Atleast you are aware and at terms with the risk that is present, specifically that of investing in stocks and real estate. You better be ready to dollar cost average for your "7-10 year" strategy, cause for all we know, you could be buying the top.

Real estate really isn't that risky if your doing rentals as opposed to flips. If you buy at the right price and don't overleverage yourself and buy at the right price it's pretty hard to lose

^^ This is key, so much of your money in real estate is made at the time of purchase, not afterwards. Get that right, and you've got a ton of leeway in regards to what you can do with the property.

Same thing with actually running the property, the initial action, the tenant selection, is key. For all intents and purposes, if you have a great tenant, that lease never needs to even be read, it only comes into play when you erred in tenant selection.

Get the purchase price right, get the tenant selection right, and you can more or less be on easy street.

Just curious, what's your feelings on the real estate market. Part of me feels like it's way overinflated at the moment, however at the same time I realize people having been saying the stock market is overinflated for the past 5 years or more and anyone to scared to be a part of it missed out on big gains.

I think real estate all over the country is hot, but the Southeast ie the Carolinas seems to be incredibly hot. I'm almost scared to buy in at this point in time. One particular area outside of Charleston I'm looking at has appreciated 22% on the year and were only in Jully.

As you and I both stated you make your money when you buy and right now there's few deals to be found. I'm torn between wanting to buy before I'm priced out of the area and wanting to get in at a good price
07-15-2018 09:35 AM
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