Beginner investor, good plan of action?

Quote from IvoryCadenza : In the meantime pick up The Bogleheads' Guide to Investing [amazon.com] to help you understand what all your investment options look like (and learn that its darn near impossible to beat the market, so indexing is a good strategy for most people. If you're still feeling lost then check out the Bogleheads Forum [bogleheads.org], where people can help you set a target asset allocation and understand more about investing.

Since you are asking for financial advice from random strangers on the internet, I qualify. But I am just going to second the above quote. Start with that book. It could be all you ever need.

Great resources! Thanks guys!

In the meantime, are there any good blogs/newsfeeds to read up on that you guys would recommend?

Quote from Handonam : In the meantime, are there any good blogs/newsfeeds to read up on that you guys would recommend?

AndrewTobias.com is good. He's rich but a tightwad (believes in stocking up on bargain priced canned goods, buys used cars). However a lot of his blog is political, not financial. Also don't buy any specific investments he recommends (specific stocks, specific mutual funds, or bonds that aren't US Treasurys or Savings bonds), not because he's worse than most experts but just because you should never follow anybody's advice for single securities.

CBSnews.com has a MoneyWatch section, and the best investment columnist there is probably Larry Swedroe [cbsnews.com]

Speaking of politics, keep politics out of investing, and especially avoid highly political portfolio managers, as they have a track record of having done poorly (while claiming they've done great and were the first to predict <name of crisis>). I think the reason they've been bad is because they tend to advocate doomsday portfolios.

Vanguard founder John Bogle has a blog: http://johncbogle.com/wordpress/

Business Week has become a great magazine ever since Bloomberg bought it, about on par with the Economist.

Money and Kiplinger's magazines have a few very good columnists, like Jeremy Seigel. They hired them out of fear that Smart Money magazine would take readers, but Smart Money is ceasing publication next month.

The Wall Street Journal's investment advice articles are good, like columnist Jason Zweig's. It's weekly sister publication, Barron's, is also worth reading. OTOH avoid that other financial newspaper, Investors Business Daily, which exists mostly to sell the publisher's expensive investment information service (Daily Charts), and its advice columns seem to think every investment is good, no matter how big the comissions on it are. Publisher William O'Neill ran two mutual funds -- into the ground, including his second one, which was run according to the principles advocated in his book, How To Make Money In Stocks.

The best TV shows about investing are probably all on PBS: Wealth Track, Charlie Rose, Nightly Business Report, all which have websites where you can get complete episodes. Wealth Track often gets the best experts. OTOH avoid CNBC and all loudmouth commentators who sound smart and 100% certain in their predictions.

Unless you plan on being an extremely active investor, it's probably not a good idea to put much effort into keeping up to the minute on the financial news, and it's probably bad for the vast majority of people to be extremely active investors.

What do you guys feel about betterment.com?

Quote from Handonam : Great resources! Thanks guys! In the meantime, are there any good blogs/newsfeeds to read up on that you guys would recommend?

I'm 23 and at the start of my path to FI also. I read GetRichSlowly and SeekingAlpha pretty often. Pick up I Will Teach You To Be Rich [amazon.com] I've recommended this book to a ton of friends and they all have really learned a ton from it.

Quote from Dem Bums : Can't he/she just max out there IRA each year and the withdraw any contributions later for a down payment? You can't withdraw the earnings but it was my understanding that you could withdraw your previous contributions without tax or penalty.

Yes! But no!

Do this, but know that you cannot pull more than $10,000 for a downpayment from your contributions. I actually know several high income people who were maxing out their 401k with the hope of using the money as a downpayment, and I burst their bubbles with the $10k limit. However, that does not appear to be a problem for OP now, assuming OP has some liquid savings in an emergency fund, retirement is a good place to park funds and get some tax savings (now or later).

Quote from bullcity : Yes! But no! Do this, but know that you cannot pull more than $10,000 for a downpayment from your contributions. I actually know several high income people who were maxing out their 401k with the hope of using the money as a downpayment, and I burst their bubbles with the $10k limit. However, that does not appear to be a problem for OP now, assuming OP has some liquid savings in an emergency fund, retirement is a good place to park funds and get some tax savings (now or later).

If I'm not mistaken;

You can withdraw all contributions made into your Roth whenever you want, penalty free. The earnings is what gets the penalties. So in this scenario, you can withdraw $10,000 of earnings.

You have 60 days (?) to redeposit any contribution to avoid counting against your cap i.e. withdraw $50,000, go past 60 day mark, can only deposit your yearly cap of $5,000.

Quote from bullcity : Yes! But no! Do this, but know that you cannot pull more than $10,000 for a downpayment from your contributions. I actually know several high income people who were maxing out their 401k with the hope of using the money as a downpayment, and I burst their bubbles with the $10k limit. However, that does not appear to be a problem for OP now, assuming OP has some liquid savings in an emergency fund, retirement is a good place to park funds and get some tax savings (now or later).

Quote from specialmoose : If I'm not mistaken; You can withdraw all contributions made into your Roth whenever you want, penalty free. The earnings is what gets the penalties. So in this scenario, you can withdraw $10,000 of earnings. You have 60 days (?) to redeposit any contribution to avoid counting against your cap i.e. withdraw $50,000, go past 60 day mark, can only deposit your yearly cap of $5,000.

Roth IRA contributions can be taken at anytime. Attempting to combine the '60 day rollover' into the $5k ($6k if 50+) annual contribution limit is confusing and unnecessary.

The $10k rule is an IRS rule regarding "first time home purchases" (doesn't necessarily mean the first time, seek a tax professional for a definition). Under this rule you have a lifetime limit of $10k that can be withdrawn from a traditional IRA without paying the 10% early withdrawal fee, if used for a "first time home purchase" You are still subject to income tax on the funds though.

Roth distribution are taken as such:
1st: contribution are taken out; these are taken tax "free" as you have already paid taxes on these funds

2nd: conversions into a Roth; there is a 5-year aging requirement on conversions (each one) that must be met to be taken tax free (assume age 59 1/2 and 5 year aging met on acct [first deposit year])

3rd: earnings are taken tax free so long as the person is 59 1/2+ and their first ROTH IRA contribution has met the 5-year aging requirement. Otherwise there is an early withdrawal penality (have not met the 5-year aging) and/or income tax (have not yet reached the age of 59 1/2).

*****
5-year aging is met based on the year of the first contribution into a ROTH IRA under your SSN. Say you make a Dec 31st contribution into a ROTH IRA under your SSN in the year 2012. The aging process begins on Jan 1, 2012 (not a typo). No matter what time during the year you make your first contribution, the aging starts as if you made the contribution on Jan 1 of that year.

1 - If your 24 you have a long time horizon (40+ yrs) to retirement.

2- You should open a brokerage and a IRA (ROTH Preferred). I like TD Ameritrade for a full service discount brokerage. Fidelity is also good as well.

3 - You should try to maximize your ROTH contribution every year as it grows tax free and the advantage of ROTH IRA vs Traditional IRA is that when you take out your money its also tax free. ($5000/yr can be put in the ROTH IRA)

4- Here is a Book I recommend everyone who is thinking about or does invest in stocks read: "The Single Best Investment" - by Lowell Miller

5 - IF you want your money to grow and don't want to trade a lot than buy stocks that pay dividends. In the IRA it is critical that you buy an investment that pays a dividend and reinvest those dividends automatically to buy more shares. Over time you will have more shares than you started with and your cost basis (how much you paid for the stock) will be $0...

6- a good forum / website to check out is
http://socialize.morningstar.com/...fault.aspx

Quote from larrymoencurly : The Wall Street Journal's investment advice articles are good, like columnist Jason Zweig's. It's weekly sister publication, Barron's, is also worth reading. OTOH avoid that other financial newspaper, Investors Business Daily, which exists mostly to sell the publisher's expensive investment information service (Daily Charts), and its advice columns seem to think every investment is good, no matter how big the comissions on it are. Publisher William O'Neill ran two mutual funds -- into the ground, including his second one, which was run according to the principles advocated in his book, How To Make Money In Stocks. The best TV shows about investing are probably all on PBS: Wealth Track, Charlie Rose, Nightly Business Report, all which have websites where you can get complete episodes. Wealth Track often gets the best experts. OTOH avoid CNBC and all loudmouth commentators who sound smart and 100% certain in their predictions. Unless you plan on being an extremely active investor, it's probably not a good idea to put much effort into keeping up to the minute on the financial news, and it's probably bad for the vast majority of people to be extremely active investors.

Solid.

I did a bit of research and reading. I bought and read http://www.amazon.com/gp/product/...hs_product and http://www.amazon.com/gp/product/...hs_product .

My goals were pretty simple. Supplement my 401K at work and start an investment account. I chose vanguard because of their fund expense ratios are super low and the fact that their accounts have no fees as long as you meet simple requirements. I chose VTSMX:Vanguard Total Stock Mkt fund for my initial investments. I don't have time to do a bunch of market research and try an cherry pick winning stocks. I wanted something that was more automatic. Next year I'll be adding a whole international market fund as well as a whole bond fund. I feel like this will give me great diversity and the best chance at having great long term growth without spending a lot of time on it. automatic monthly investing. Log in a few times a year to rebalance my funds to my target percentages. I'm 30 and wish I started at 24. Good luck to you.

Quote from oakfan52 : I did a bit of research and reading. I bought and read http://www.amazon.com/gp/product/...hs_product and http://www.amazon.com/gp/product/...hs_product . My goals were pretty simple. Supplement my 401K at work and start an investment account. I chose vanguard because of their fund expense ratios are super low and the fact that their accounts have no fees as long as you meet simple requirements. I chose VTSMX:Vanguard Total Stock Mkt fund for my initial investments. I don't have time to do a bunch of market research and try an cherry pick winning stocks. I wanted something that was more automatic. Next year I'll be adding a whole international market fund as well as a whole bond fund. I feel like this will give me great diversity and the best chance at having great long term growth without spending a lot of time on it. automatic monthly investing. Log in a few times a year to rebalance my funds to my target percentages. I'm 30 and wish I started at 24. Good luck to you.

Vanguard's a great choice - the best in my opinion.

Have you considered one of their target retirement funds? They're the most automatic of any your choices. You simply put money into it month after month and it automatically rebalances itself through the years as you get closer to retirement - you never have to rebalance.

If you do decide to stick with the more hands-on approach, you may want to consider adding other funds to your portfolio such as their emerging markets index fund or ETF. Also, keep in mind that America represents only 25% of worldwide capitalism, so much of the growth in capitalism in the upcoming decades will be seen outside of the US simply due to other countries are starting from a lower base than we are. With that said, you may want to consider having a pretty healthy percentage of your portfolio overseas - probably more than you'd think.

Quote from Brian1 : Vanguard's a great choice - the best in my opinion. Have you considered one of their target retirement funds? They're the most automatic of any your choices. You simply put money into it month after month and it automatically rebalances itself through the years as you get closer to retirement - you never have to rebalance. If you do decide to stick with the more hands-on approach, you may want to consider adding other funds to your portfolio such as their emerging markets index fund or ETF. Also, keep in mind that American represents only 25% of worldwide capitalism, so much of the growth in capitalism in the upcoming decades will be seen outside of the US simply due to other countries are starting from a lower base than we are. With that said, you may want to consider having a pretty healthy percentage of your portfolio overseas - probably more than you'd think.

Actually yes. I have my roth going to one of their target date funds. The mutual fund I was talking about is just for my investment account. I get what your saying I am planning on getting into two more funds next year. A total international and a total bond. I'm thinking about 55% domestic, 25% international(VGTSX), and 20% bonds(VBMFX).

It just hard when the minimal buy in for each is 3K. So to get to a 55/25/20 ratio I'd have to commit a lot more up front than I have for my investment account so I'm just going to add the other two funds and try to bring them to a better balance as I go.