Senior TRP members, what would you advise (financially wise) to guys in their 20s?

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June 19, 2019
141 upvotes

Basically the title, I'm in a position with a good job that has a good income, I have my own place with a debt that takes away 1/5 of my paycheck every month for the next three years and that's basically it. Any financial advice for guys like me in their 20s looking NOT to screw up their adulthood by bad financial decisions?


Post Information
Title Senior TRP members, what would you advise (financially wise) to guys in their 20s?
Author Cross_De_Lena
Upvotes 141
Comments 71
Date 19 June 2019 08:04 PM UTC (1 year ago)
Subreddit askTRP
Link https://theredarchive.com/post/242772
Original Link https://old.reddit.com/r/asktrp/comments/c2lxjg/senior_trp_members_what_would_you_advise/
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[–]Modbsutansalt[M] [score hidden] stickied comment (12 children) | Copy

AT LEAST 10% of your savings into a qualified account, and then load it up with high dividend REITs if you can. When the coming crash occurs, load that fucker up with stocks that are going to appreciate 15%+ a year or more. Right now I'm keeping about half of my wealth in cash so I can load up when the dip hits, which should be somewhere in the next 6-18 months by all accounts.


Reduce your tax liability and save money!

  1. Maxing out your your HSA means you never pay taxes on that money when you use it, and it rolls over year after year.

  2. If you can do a 401K and an IRA, of course do both. A ROTH IRA and a ROTH 401K is the way to go as you'll never pay taxes on the gains.

  3. If you can't do a Roth, then at least get a traditional 401K or IRA and save what you can. Some will say to only put in enough for the the company match, but maxing it out could save you thousands of dollars in taxes. Would you rather put in an extra couple grand that you get to keep, or pay the govt even more money than you'd otherwise be paying?

    Additionally, you have to do the math and figure out which tax bracket you will fall into when you draw from the 401K as it's taxed at the highest tax bracket you fall into rather than as a progressive tax rate like income taxes are. That's something you need to plan for, otherwise you could be caught off guard once you do retire. And of course a Roth avoids this "gotcha" entirely as there's no taxes on the funds you withdraw.

    Last thing about 401Ks and IRAs, you can't access that money until you hit 59 and a half, otherwise there are big penalties. You can borrow against them though for qualified reasons and pay that money back as a loan. You can also tap the money in a 401K or IRA penalty free as early as Jan 1 of the year you turn 55... if you quit or get fired and decide to retire early. There's some fine print to this I'm not fully spun up on yet, so YMMV.


A secured credit card with a small amount of available credit (eg. $200) is all you need to build credit. Put 1 charge a month on it and then pay off. I do this with my card as it has an option to automatically pay the full balance, which is awesome. Set it and forget it. I try to max it out each month as I have it ballparked as a monthly $200 expense. At no point do you need to carry a balance month to month! It's an old myth that needs to die in a fire. Those who don't understand interest pay it. Those who do understand interest earn it.


Don't have kids until you're absolutely ready (if ever); protect those grapes at all costs or go seedless and get snipped. Quite frankly kids (and women) are dream killers and are fucking expensive. You're basically going to pay what it would cost to have a really nice house in your 30s-60s, or nearly $2,000,000+ you'd otherwise have in retirement. People don't think of it like that, but it really puts it into perspective. If you just take the average of the $285,000 it takes to raise a kid and put that into an index fund that follows the S&P 500 over the course of 18 years, you'd have over $640,000. Over 30 years that'd be $1.9M. If you know what you're doing that same money could grow to as much as $1.3M over 18 years or at much as nearly $8M at a compounding 15% rate of growth!


The second biggest wealth destroyer to having kids is buying a new car. I'm not even going to bother with the math, just watch these and pay attention:

https://www.youtube.com/watch?v=flkZ9A9gTug

https://www.youtube.com/watch?v=Q5_X36qBceE


There's two schools of thought regarding paying down debt:

Option 1: Pay the highest interest debt first, and then add that amount you were paying each month to the next debt, and so on.

Option 2: Pay off the smallest bills first, adding their monthly payment to the next, and so on.

Option 1 is the most fiscally sensible, but it doesn't factor in the human element. Hence why I think Option 2 works better for most people. There's a psychological impact of being successful paying off a debt and that helps people stick to the plan.

And of course, the best solution for paying down debt is NOT HAVE ANY TO BEGIN WITH!


Two introductory books I recommend are: Rich Dad, Poor Dad and Rule #1: The Simple Strategy for Successful Investing. Once you have the basics, then go read Intelligent Investor. There are more books, but these are great for your 20s and just starting out.


The #1 thing you have got to do is get started, which really is the biggest hurdle in my experience. $25 a week adds up to over $1,000,000 at market average by the time you're retirement age. You can do far better with more money and wisely investing, but just socking away $100/mo into an index fund will make you a millionaire one day. That's the power of time in market.

[–][deleted] 80 points81 points  (9 children) | Copy

  1. Despite what anyone says; and it seems to be very very commoner with those "get rich, get money" type youtubers (who often turn out to be full of shit) is to not buy real estate. At the VERY LEAST get yourself your own principal place of residence. I regret not buying when I was able to in my early 20s. I could have easily weathered the GFC and those apartments ($50k each with views) would be well and truly paid off now. Alot of people my age simply cannot enter the market now because the barriers are too high.

  2. Get a good accountant. Manipulate your financial situation as best you can. This is dependent on your locale, but I've done amazing things with my accountant. Moving assets between businesses, moving things between my businesses and myself, taking advantage of certain tax breaks I wouldn't otherwise be wise to etc.

  3. Always ask. Don't get, don't get. I fucking haggle on EVERYTHING. "Oh you've got this on 50% Clearance already? Can you take anything else off?". This is part of sales/game imo. I often flirt with the salespeople, or just be nice to them. They deal with dickheads all day, make the sale easy. You catch more flies with honey than with vinegar.

  4. I'm a car guy. I've always had hot cars. Hot cars get hot bitches. However, when it comes to cars, 95% of women are idiots. They see a BMW Badge, or Lexus, or whatever, and they don't know the differences in models. Keep that in mind. You can get a nicely presented lower model of a used luxury or prestige vehicle and still pull in the pussy if that's your game plan. However, consider the TCO of the vehicle before buying it.

  5. Save save save. You should always have 3 months pay in savings if you can. Why? Fuck you money. Boss being a cunt? FUCK YOU. Need money for emergency? FUCK YOU. Just got fired? FUCK YOU. Also if you're saving for something, save extra. There might be a chance to get a deal by buying more, and if you save $10k for something and spend $10k, suddenly you have nothing.

  6. Consider your educational options. Example: I went to university for a year immediately after school and dropped out. I wasn't ready and frankly, no employer gave a shit. I struggled to get good jobs. I went to trade school / technical college and got 2 self paced diplomas in the field I was studying in quickly. The beauty was they included on the job experience, so I was able to get into a good job faster and saved a heap of money. Later I went back to university and used RPL (Recognised prior learning) with my diplomas and other certifications to do a masters in under a year.

  7. Women cost money. If it's got tits, wheels, sails or propellers it's gonna cost money. Work that to your advantage.

  8. Use a credit card for manageable debt. Keep the limits low and say for instance you have $800 saved for a big ass new tv. Pay for it on the CC, then pay that back within the interest free period. Boom, easy to gather good credit; plus the bank will like to see you have 'an existing debt product' that you manage well.

  9. At an early age take financial risks, but manage them. You have time on your side and you can recover. Now is the time to take managed risks with higher gains. You can change your attack profile later as you get older.

  10. Most Important. You are the average of your 6 closest friends. This is harsh, but cut the shit heaps out of your life. Sails and Anchors. Some people are sails, others are anchors. Choose wisely.

  11. Get a decent mentor, and get one through work. Don't bother imo paying for some E-celeb to mentor you. If you have a job in a company, approach one of the seniors and just ask them. They will most often be super happy to have someone want to learn from there. It's a good ego stroke, and it's about networking. Through them you will not only get experience and advice relevant to what you're doing, but doors will open to new people and new opportunities.

  12. On that vein, ALWAYS take the shit jobs. Make a name for yourself as someone who can GET SHIT DONE. Be a straight shooter. Don't fucking lie. Do as you say you will do. Make your word your bond. People respect this. If a senior gives you a shit job to do, don't whine about it. Just get it done, DO IT WELL. Make a name for yourself as someone who GETS SHIT DONE. Trust me.

  13. Make empires, no matter how small. Are you at a low level job that has low responsibility? Take control of your area and make your empire. Make the shit awesome. Make it a shining gem in the company. The people who need to notice will notice, and it will work for you.

  14. FAIL FAST. If you are in a job, or doing a new business, trying a new investment or whatever. If it's not going favorably, PULL THE RIP-CHORD AND FUCKING BAIL OUT. Do not hang around any longer than you absolutely need to.

[–]Cross_De_Lena[S] 5 points6 points  (2 children) | Copy

Thank you!!!

I'll bookmark this answer!

Regarding your last point, sometimes I have a hard time deciding when it is time to bail. I'm always scared if I give in, it means I don't have the perseverance and patience to do what it takes.

[–][deleted] 2 points3 points  (1 child) | Copy

or you're not a sucker who hangs around too long and gets fucked. Sometimes you gotta let go, to grow.

Be confident in what you're doing, don't be emotionally invested. If you get new information, listen to it.

[–]sesamerox1 point2 points  (0 children) | Copy

hey, so about the mentor thing.....

Ok nvm, thanks for the post!!

[–]ixyfang1 point2 points  (0 children) | Copy

Excellent reply. My additions

  1. Save real, physical gold. At least 10% of your savings should be in something that a computer can’t delete e.g. guns and gold.

  2. Education: your education is just like your career - an investment that is your responsibility. Act like you own it. You want to be thinking 5 years ahead and 50 years ahead. 6A. The hierarchy is built on this: Power - more money - more responsibility - consistently good decisions - achieving goals - consistent performance - focus, persistence, minimizing waste/variables, education, competency, math, communication, integrity, positivity (additive personality), solving problems, anticipating problems, long-term thinking, courage, integrity. 6B. Always have a back up plan. If you work for someone else and only have one job - then your boss controls your life because your options are severely limited.

  3. Financial success will come when you excel at what you love to do as long as the market values your service.

  4. All jobs that matter have an apprenticeship of some kind - it just has a different name. E.g. doctors start as residents.

[–]jackandjill220 points1 point  (1 child) | Copy

Mmm. Some of these are golden rules. Others not so much, appreciated at any rate thanks.

[–][deleted] 1 point2 points  (0 children) | Copy

rad feel free to update the list with your better rules

[–]RevolutionaryPea70 points1 point  (2 children) | Copy

Buying a residence doesn't fit my MGTOW lifestyle. But you can still invest in property without actually buying a place (and taking out a mortgage).

[–][deleted] 0 points1 point  (1 child) | Copy

what does a mgtow need trp for

[–]RevolutionaryPea72 points3 points  (0 children) | Copy

I'm not celibate. My way includes women. It's just my way, not theirs.

[–]Endorsed Contributoritiswr1tten76 points77 points  (31 children) | Copy

Without digging in to your situation:

Get the best rewards credit card you can at the max spending limit you can. Put everything on it. This is the key to having a high 700s credit rating by 25-26 and 800 after that. /u/bsutansalt is correct that you only need one charge a month to build but skipping a 2%+ discount on all purchases is silly IMO.

About the first thing - it's not magic money. Do not carry a balance ever.

Credit rating is how much will they give you, do you pay it on time, and increases naturally with age. 750+ credit score means you get good car financing and don't get fucked on your mortgage later in life

Avoid lifestyle creep. More money does not mean spend more

Don't finance anything that isn't a house or car

Only have a car if you need it. Read up on buying used

Only contribute your 401k to get the full company match

Save a bare minimum of 10% of take home. Financial advice is very cheap, use betterment or a robot advisor if you know nothing.

Never take on some girl's debt. Joint and several liability aka cosign means they can go after you for the full amount. Yes, they could take your house

Remember not to be a fucking scrooge with yourself. Reddit financial advice is retarded because the circle jerk is acetism to absurdity. If you get a nice bonus or first big raise, pick one stupid item (I bought $400 shoes I still have a decade later) and save the rest.

Unless you are in a top tier white collar profession like mgmt consulting or banking, leave every two years for a 20-50% raise.

[–]trancedj54 points55 points  (1 child) | Copy

Can’t add anything more than this. Perfect summary.

Oh wait! Here’s a good one:

“If it flys, floats, or fucks it’s cheaper to rent it.”

You’re welcome.

[–][deleted] 19 points20 points  (0 children) | Copy

My dads greatest words of wisdoms to me were “the three things you should rent in life are boats planes and women. However I think your way is catchier.”

[–]Cross_De_Lena[S] 3 points4 points  (3 children) | Copy

Thanks for your reply. I'm kind of glad I anticipated most of these answers here, means you guys did teach me something valuable. Regarding the last point, I'm a sucker for cars, and I like the sound of a V8 so that might be my second biggest expense.

I'm aware people advise against 4-5 year credit loans but I don't think I will able to restrain myself from buying it.

[–]Endorsed Contributoritiswr1tten5 points6 points  (2 children) | Copy

You can get a used mustang or challenger off a lease on the cheap. Don't be stupid.

[–]Cross_De_Lena[S] 1 point2 points  (1 child) | Copy

Was definitely thinking of buying a used one. Have to yet thoroughly do my diligence on which is better - lease or credit in my country.

[–]tornadoboy331 point2 points  (0 children) | Copy

As a general rule, never lease things. Unless the explicitly bleed value every year you own them or you happen to be filthy rich, it’s not worth it. You pour money into a pit and end up with nothing

[–]Iannovative11 point2 points  (9 children) | Copy

Only contribute your 401k to get the full company match

Why not more?

[–]Endorsed Contributoritiswr1tten5 points6 points  (7 children) | Copy

The company chooses your investment options. They are usually shitty. In addition there are usually cheaper things to own and you're locked in until retirement otherwise you pay a massive penalty to withdraw

[–]Gainznsuch1 point2 points  (1 child) | Copy

I thought doing a rollover prevented penalties

[–]Endorsed Contributoritiswr1tten0 points1 point  (0 children) | Copy

It does, but you end up with trash options paying 2% over and over. Find low cost etf and mutual funds, get the exact same return, and pay a few basis points.

Compound interest gains are massive over time vs. Buying the company trash some sweaty guy in an ill fitted men's wear house suit selected during a drunk lunch.

[–]opper-hombre10 points1 point  (1 child) | Copy

Lmao my employer matches 25% up to 8% (joke). So /u/lannovative1, it makes more sense for me to put 8% of my paycheck into my 401k to earn that extra FREE money, and then put another 7% (I put away 15% of my paycheck into savings) into a different retirement fund (ROTH IRA for me).

That 7% will do more for me in my ROTH IRA than it would to keep putting it into my matchless 401k account

[–]Modbsutansalt0 points1 point  (0 children) | Copy

That 7% will do more for me in my ROTH IRA than it would to keep putting it into my matchless 401k account

You get it.

  1. Roth > Traditional
  2. Having better investment options outside the 401K is very common, so it often makes sense to go that route after you get the match. Not always of course, and reducing your taxable income can help in other ways.

[–]plenty_of_eesh0 points1 point  (2 children) | Copy

otherwise you pay a massive penalty to withdraw

10%

I always assumed more because of people using language like "MASSIVE PENALTY", but I don't think 10% is that massive.

Let's say you spend 3 years at a job and then become unemployed for a year. Let's say the job is 100k and so normally you'd spend 29k a year in taxes. (Doing everything here basic for California, fed+state+everything)

So after three years, you've kept 71k x3 = 213k. Remember that number... Hopefully you saved some for your year off?

Now let's instead say you put 20k a year in a 401k. Gross 80k, you take home roughly 59k instead of 71, so 3 years makes 177k.

(By the way there's a modest 401k employer match of your first, say, 2%... so call it 22k/yr in there...)

Boom, then unemployment (or that dream backpacking year). Should you cash out your $66k 401k? You probably shouldn't, if you can help it.

BUT! If you need it, you'll get a 10% withdrawal fuck-you fee, then on the 59k leftover you would be in an even lower tax bracket and you take home 46k.

So at the end of four years (177+46) you've kept $223k instead of $213k.

[ Interest/Investments: I didn't put interest-calc on 401k in here, and obv if you invested that money by yourself you could maybe make more interest (but remember you invested 8k less than the 401k version, because 6 went to taxes and missed out 2 on employer match) but also you have a higher chance of bombing out. Plus, every 401k I've had lets me choose investments if I don't like theirs. ]

The reason it "doesn't work" in most people's minds is because they're imagining an emergency where they cash out their 401k in a year they're still earning (for a down payment, medical emergency, etc.) So yeah then it would be cut 10%, plus suffer your regular total income tax, plus a coupla extra percent off again (and a bigger dent in your other income) coz the total pushed your tax bracket higher.

But if it's truly for an UNEMPLOYMENT emergency, or a well planned "step away from our shitty economic lives", then it can actually make sense to hide some of your income behind the 401k tax shield and then "spread it out" to when you have little to no other income-- that 10% penalty is cheaper than the taxes you just avoided, due to progressive tax brackets.

[–]Endorsed Contributoritiswr1tten1 point2 points  (1 child) | Copy

I rarely use this kind of language, but I completely disagree with your whole premise.

Cashing out a 401k costs 10% PLUS tax. The bracket at which you're a wage earner is 25%.

35% loss gamble on pretax (or higher if you move up) or 10%+taxes gamble for a 40 year lockup? Makes no sense because the net present value of money would increase in a huge way even if you put it in treasuries.

Avoiding tax is for the rich. The rest are better suited to put money to work asap.

[–]plenty_of_eesh0 points1 point  (0 children) | Copy

Cashing out a 401k costs 10% PLUS tax. The bracket at which you're a wage earner is 25%.

Did you not read what I wrote or something? My point was for exactly (and only) a case where that highlighted premise of yours isn't true. I'll try to tl;dr it for you again:

IF you pull money out of a 401k during a year when your wage-earnings disappeared, you will still have more money at the end than if you never put it in.

Edit: fat fingered premature submit

[–]Modbsutansalt0 points1 point  (0 children) | Copy

Most 401K plans are severely limited in what you can invest in, and that money is largely locked up until you're 59 and a half. Exceptions occur. Granted there are huge tax advantages.

If your 401K plan offers a robust offering and includes ETFs, by all means go nuts and max it out.

Also, you should have MULTIPLE retirement accounts. Do NOT just rely on the 401K.

[–]BydandMathias0 points1 point  (3 children) | Copy

Currently have a 792 credit rating at 18, because thankfully my mother started making pay off my credit card at 14. One of the several good things my parents did for me.

[–]4thAndLong0 points1 point  (0 children) | Copy

Even though your credit is good, remember you need good credit history to finance a lot of things. You might get denied a car loan or mortgage loan due to lack of enough credit history.

[–]Modbsutansalt0 points1 point  (1 child) | Copy

I'm seriously considering doing that for my boy as well. Low limit and pay it off automatically.

[–]Endorsed Contributoritiswr1tten1 point2 points  (0 children) | Copy

My parents did it for me. I started off at 750ish and I paid all my utility bills for my college houses on credit and collected checks from my roommates. I was at 787 when they ran my first apartment at 22.

[–]BradyBrosef330 points1 point  (3 children) | Copy

about financing, I finance some of my clothes and pay it over a 3 month interest free period, new shoes? £50/3 = £16 per month etc

however I watch what I buy, I dont buy expensive clothes every month, its usually a designer brand or shoes I do this with, new pair of jeans or something cheap I'll just pay it upfront but I think doing it with expensive clothes isnt that bad and it can boost your credit rating.

Only doing it with expensive items on a not so regular basis ensures that you wont end up paying for 10 items for the next 3 months amount to 300 a month or something. Like any financing, it makes it cheaper but its only cheap if its the only thing you have to pay off each month

[–]Endorsed Contributoritiswr1tten1 point2 points  (2 children) | Copy

0% is a trick to get you to pay full retail. That said, it's not worse than interest. Financing clothes is still top tier lower middle class behavior

[–]Modbsutansalt1 point2 points  (0 children) | Copy

Goes back to the poor vs rich mentality. You can have no money and still be rich and have money and still be poor. It's how to think and pay for things. h/t Robert Kiyosaki

To paraphrase, Being broke is a short term problem, but being poor is a long-term problem.

[–]BradyBrosef330 points1 point  (0 children) | Copy

is it really that bad if no ones knows about it? its all stuff I can afford but I like paying it off for the credit benefits

[–]4thAndLong0 points1 point  (2 children) | Copy

My company matches up to 6%, but right now I'm contributing 11%. Should I be investing that 5% elsewhere or just leave it in my traditional 401k?

[–]Endorsed Contributoritiswr1tten1 point2 points  (0 children) | Copy

Elsewhere. You lock in 30%+ losses if you ever need to pull it out

[–]MikykiM0 points1 point  (0 children) | Copy

You only want to match your company's contribution (free money) - but there are better options than 401k out there

[–]Modbsutansalt0 points1 point  (3 children) | Copy

+1 for rewards cards. ESPECIALLY if they don't have an annual fee. That's where they get ya.

[–]Endorsed Contributoritiswr1tten0 points1 point  (2 children) | Copy

When you start Ballin get Amex platinum. Go stay in a Mandarin Oriental with free breakfast, water view room upgrade, and 5x points. Yall welcome

[–]Modbsutansalt0 points1 point  (1 child) | Copy

Mandarin Oriental

Which one? There's many around the world.

Amex platinum

It's not blowing my skirt up. Some decent bennies, but not worth the annual fee IMO. Now if you travel a shitload for work then that's another story, but even then there are other airline cards that have better rewards IMO.

[–]Endorsed Contributoritiswr1tten0 points1 point  (0 children) | Copy

I travel and demand luxury. Perfect for that. That's Ballin. You're right otherwise

[–]Senior EndorsedVasiliyZaitzev19 points20 points  (3 children) | Copy

I'd read "CorporateLand" on the AskTRP sidebar. That guy knows his shit.

The bit about "How to Be And Old Guy" for guys <30 will help, plus the stuff about working in CorporatLand, plus the stuff about threesomes and slave girls. Just trust me.

[–]Cross_De_Lena[S] 5 points6 points  (0 children) | Copy

I've been here for a long time, read your CorporateLand probably three times by now, great stuff!

[–]Protocol_Apollo5 points6 points  (1 child) | Copy

Didn’t know he got you on his payroll as well ;)

[–]Senior EndorsedVasiliyZaitzev4 points5 points  (0 children) | Copy

That bastard takes all of my good ideas.

[–]escapethesolarsystem6 points7 points  (0 children) | Copy

A few basics, though it looks like a lot of this has already been covered:

  1. Cars are always a money loser - you may need one (if you live in the US) but never splurge on an expensive one or buy one new - it's just like flushing money down the toilet. Certainly pick the kind of car that you like, that portrays a good image, but do your cost of ownership research and make sure when it all adds up that it's not going to drain a significant portion of your income. Every dollar spent on a car is money you can't invest or save for the future. Definitely do not borrow significant amounts of money to buy one. If I could get back all the money I wasted on cars in my 20's, I'd be almost set for retirement.
  2. Try to avoid debt generally, this is the trap most people in developed countries fall in, and it's very difficult to get out of.
  3. Don't get any student loans. If are considering school but can't afford it, don't go.
  4. Don't play "keep up with the Joneses". I heard a great saying once that stuck with me but I don't remember where it came from: "poor people live like they are rich, rich people live like they are poor".
  5. Don't get comfortable in a "career". Unless it's extremely high paying (and you are really frugal - i.e., you make 200K/yr but spend like you make 50K/yr), you're never going to get long-term financial security that way. As soon as you can do so profitably, pivot to working for yourself or starting a business.
  6. Say "yes" to everything someone is willing to pay you to do. If you boss wants to you to do X, and you're not totally sure if you can handle it, say "yes" and figure it out. People who say yes to taking responsibility and solving problems are given more responsibility and more problems to solve. The more responsibility you are willing to shoulder, the more leverage you have to make people pay you more. As you get older, you'll start to develop experience and the knowledge you need to know when to say "fuck no, I'm not doing that", but when you're young, start with a baseline of just saying "yes".
  7. If you are in the west and work in a field that can be done remotely, consider leaving the west and living in a country with a lower cost of living. You'll save a lot faster and your money will go a lot further.

That's all I've got.

[–]Project_Zero_Betas5 points6 points  (2 children) | Copy

80% SPY, 20% EDV.

[–]Modbsutansalt2 points3 points  (1 child) | Copy

80% SPY, 20% EDV.

Eh. If you want to hope the market goes up and just play the dollar cost averaging game, that's fine. But it doesn't manage risk and is leaving a fuckton of money on the table. Also, SPY has an expense ratio that adds up over time.

I started out dividend investing like Joseph Carlson and have a bunch of his slices in my M1 pie in fact, but I've also taken on a value investing approach as well for the long-term a la Warren Buffett, Phil Town, and Hamish Hoddor.

SPY (1.73% dividend):
SPY 1 year - 6.13%
SPY 3 years - 40.68%
SPY 5 years - 49.53%

VOO (1.71% dividend):
VOO 1 year - 5.61%
VOO 3 years - 40.10%
VOO 5 years - 49.10%

Now compare those to my spread spectrum portfolio which is currently sitting at 3.029% dividend with the following growth rates:

1 Year: 16.84%
3 Years: 56.38%
5 Years: 55.16%

I think I'm on the right track.


When the market retracts in the coming crash/recession, I plan to sell large swaths of the capital appreciation slices and focus on building up the quality companies in the "long-term" slice as I'm vetting them for 15-20% growth rates over the long-term. I'm not buying into them in large quantities right now because their PE ratios are sky high for the most part and are overvalued (excluding Apple, which is priced right by my estimation).

I'm looking for companies with large moats, good sound fundamentals I understand, and huge margins of safety, which the market at large doesn't have right now.

I used to have a crazy big portfolio with higher long-term growth rates, but then I realized those are already appreciated before I got in and so it's not really MY performance -- what I should have been focusing on are the stocks that just got off a dip and are starting to go back up. Apple for example, since it was on sale at a good price and has room to grow again even if the market takes a shit in a year or two. Right now I'm sitting at 51 holdings, but by the end of the next crash I hope to reduce that amount to around 20.

[–]Project_Zero_Betas0 points1 point  (0 children) | Copy

I agree with everything you said, and am also of the value investor variety, but for 99.99999999% percent of people out there (like OP), they don't understand a discount rate from a growth rate, can't read a balance sheet, or comprehend why a forward P/B indicates the market is pricing in future elevated ROE (it's because assets carried on the balance sheet are assumed to earn their COC, and so for the balance sheet as a whole to earn an above indicated ROE, those assets individually must be earning it as well), then a simple market portfolio plus safe bonds is the route to go.

[–]TBtgoat4 points5 points  (0 children) | Copy

Saved the fuck out if this post

[–]batfish553 points4 points  (0 children) | Copy

Live beneath your means.

Start a retirement account, and no matter what happens, never pull from it until it's time to retire.

The days of putting in 30 years at a job and being handed a gold watch are done. Expect to move on every few-to-several years. Make damn sure you get a decent raise when you do move on.

Don't buy a house until you've moved around a bit and find a community and a house that you'd feel good about dying in. You'll save tens of thousands. Property taxes, broken water heaters, buying/selling commissions to real estate agents. Rent is a flat fee and includes all of that. You'll save tens of thousands. Then when you do buy, make DAMN sure you have a huge downpayment (AT LEAST 20%).

[–]BrodinsOats8 points9 points  (0 children) | Copy

My big mistake was that I started earning well at a young age (programmer at 18), and so I kept on putting off saving much money, hamstering to myself that I was already well ahead of the curve for making money and I had plenty of time to start seriously saving. Well guess what, that just slowly turned into procrastinating on it later and later.

Start the habit early and get used to saving at least 10-20% of your income as soon as you start making money. For you OP since you’re in debt, you’ll need to pay that off first.

The PersonalFinance subreddit’s wiki has a pretty solid guide on basic steps for where to put your money.

[–]omega_dawg933 points4 points  (0 children) | Copy

the hardcore financial advice has been posted... so I'll post some personal advice.

  1. don't buy the new car... buy the house first with only your name on the paperwork.
  2. buy all the toys (guns, boats, etc) you want before getting into an LTR or marriage.
  3. focus on your $ and personal goals above making some girl a priority.
  4. draw a hard line btw what you want and what you need.
  5. bring your home-cooked food to work for lunch.
  6. set a budget for alcohol and weed if you smoke and stick to it.
  7. no babies until you're married a/o living with a vetted woman.
  8. family members can drain you... you will have to cut some of them loose.
  9. with all your savings, put a little aside for that unexpected health event. a friend of mine put $ aside for a rainy day. he had insurance but needed some time off to detox after hiding a drinking problem. DO NOT REPORT YOURSELF TO YOUR EMPLOYER. he had money saved to pay his bills and for rehab while "going out of town for a personal matter."

I'll post others if i can think of a few.

[–]SeasonedRP2 points3 points  (0 children) | Copy

Do what Warren Buffett advises and invest in a low cost S&P 500 index fund, preferably through a tax advantaged vehicle like your 401k at work and an IRA, and then in a regular account if you have money left over after maxing out these options. Don't try to time the market or select individual stocks. Very few beat the market over time.

[–]SerialATA_Killer4 points5 points  (5 children) | Copy

I'm not a financial advisor, and this isn't financial advice, but I would encourage anybody with extra money looking for high-risk, very high-reward investments to do some research and enter the crypto market. About 99% of the cryptocurrency community AND institutional banks like Fidelity and JPMorgan believe we are at the very start of a massive bull run, which kicked off about 2 months ago.

Bitcoin has gotten kind of expensive, but there's still time to get into the big name crypto such as Ethereum(ETH), Ripple(XRP), and Litecoin(LTC) relatively cheaply.

Of course, crypto is extremely volatile so you should only invest what you're willing to lose.

[–]RevolutionaryPea74 points5 points  (1 child) | Copy

If 99% of the community thought that then they'd already be fully invested and that would be reflected in the price.

[–]SerialATA_Killer0 points1 point  (0 children) | Copy

BTC is up 300% since February, LTC is up over 500% since February, ETH is up 450% since February.... and we've only been on a bull run since April 2nd. Similarly, the last time the market cap was this high, it only took bitcoin 1 month to rise 200%, over $10k, to reach its all time high.

[–]whosaccisthis940 points1 point  (1 child) | Copy

Any advice on some guides for those looking to enter cryptocurrency.

[–]SerialATA_Killer0 points1 point  (0 children) | Copy

I'll PM you some links because they aren't allowed here. It can be kind of spooky getting into the market because of all the legal requirements exchanges have to comply with, specifically Know-Your-Customer(KYC), but it's just how it has to be.

[–]opper-hombre10 points1 point  (0 children) | Copy

He included XRP!!

[–]0io-3 points4 points  (0 children) | Copy

Keep more than you spend!

[–]snaptogrid1 point2 points  (0 children) | Copy

Every month, buy a gold coin, biggest one you can afford. Put them all in a safety deposit box. Don’t touch them.

[–]5xEBITDA1 point2 points  (0 children) | Copy

Pretty weird that you'd seek financial advice from here (rather than, you know, financial centric subs). Alas, most of the advice here is reasonably sound. Save a portion of your income (not for the purpose of saving, but rather to invest and create wealth). Don't play the market and try to hand pick individual stocks, you're against professionals who do it full-time (and still fail to beat the market index). I've had years where I've beat the market by double-digit percentages, but I'm grounded enough to realise it's largely luck - not incredibly raw skill. Look at some Vanguard funds, buy ETF units ideally every month / second month depending on your income and savings rate.

Live below your means, save (to invest) and work hard at bettering yourself professionally in order to grow your income year to year. That's really it. I don't live in the US so I can't really comment on 401(k) plans and the works, just develop good spending habits (a budget), investing habits and your future self will thank you.

[–]Endorsed Contributorleftajar1 point2 points  (1 child) | Copy

  • Save your money.
  • Stop drinking. Alcohol is expensive and fucks up your workout game.
  • Learn how to negotiate salary. Check glassdoor.com at least every six months to make sure you're being paid appropriately.
  • Plan your career 1, 2, and 3 years ahead. Ask your mentor, "if I kick ass in my current position for a year, what's the next move?"
  • Travel is fun, but super-expensive. Do you really need it? Is there a way to do it cheaper and still get the same benefit?
  • Women are money drains. Find a frugal one.

[–]TheGoblinTurkey1 point2 points  (0 children) | Copy

I agree with cheap travel but I disagree with your point of 'Do you really need it?'.

I get it's not for everyone but I've done quite a bit of travelling, which although expensive, I have absolutely zero regrets about.

Solo travel is such a great way to push yourself out your comfort zone, meet great people, learn about yourself and bang fitties.

[–][deleted] 0 points1 point  (0 children) | Copy

Don't spend your money on things that break down and loose value - biggest example is a car.

Everyone thinks a nice car will pull women, and sure there is a degree to it, but its not valuable in the long-run. Its one of those short term benefits that hurt you down the road. Even the short term benefits are very short term and might only pull really materialist women.

In hindsight, i would definitely trade in my 2-3 sexual experiences my sports car pulled for some more financial freedom that I would have had without it.

[–]thechaosz0 points1 point  (0 children) | Copy

DO. NOT. GET. MARRIED. EVER.

EVER.



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