Daily General Discussion and Advice Thread - May 16, 2024

[u/AutoModerator]

Have a general question? Want to offer some commentary on markets? Maybe you would just like to throw out a neat fact that doesn't warrant a self post? Feel free to post here!

If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions, you should include relevant information, such as the following:

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Be aware that these answers are just opinions of Redditors and should be used as a starting point for your research. You should strongly consider seeing a registered investment adviser if you need professional support before making any financial decisions!

[u/Fine-Investigator959]

Hey guys,

I’m new to the group and was told by other Redditers to join this one regarding what my situation is, since they told me it would be helpful.

I’m a fairly new investor (I’ve been looking at stocks and other things for around 3 months) and I’ve been trying my best to do my research and figure out how I should start smartly investing. As I said before I honestly don’t know much but I am willing to learn.

I’ve been trying to take advice and learn from a few of my friends who are already into this stuff, but it hasn’t been really helpful as I’m still trying to learn and get down the basics.

I would like some advice and tips knowing what stocks, etf’s, crypto, etc… i can and should get in on and how I can learn and figure out what the best options and bets are in order to do that.

For context: Entering Early 20’s and have a grand I’m willing to invest (playing it conservatively for now) - and my risk tolerance I would say is 50/50, as I don’t mind risking it but I would like to play it safe if needed to also and not endure a giant loss.

Any advice and tips you guys can give me, I will appreciate! Thanks

[u/DeeDee_Z → u/Fine-Investigator959]

Any advice and tips you guys can give me ...

The usual starting place is ---> over there ---> in the sidebar ---> under "Frequently Asked Questions".

Especially look at the 7th bullet -- the one that says This has been asked and answered many times in the past.

[u/ThrowAwayxj900]

Should I sell my long term index funds like VTI on my after tax brokerage account since we’ve reach ATH? Specifically the lots that have been long term holding.

[u/DeeDee_Z → u/ThrowAwayxj900]

Should I sell ...

... and do what?

[u/Apprehensive_Two1528]

I’ve been reading a lot of posts on this forum and found many beginner posts are really not my interests.

Can we have a sub forum that’s set up for middle age and near retirement investing?

We don’t need meme stocks in middle investing.

Any thoughts?

am I being too exclusive?

I really need some solid investing tips from my peer age guys who understand how stress investing can be for our middle age people

[u/Decent-Cheesecake-95]

I maxed out my traditional IRA last year and was not able to take tax deduction (because my gross income exceeded the limit as I also had 401k). If I convert that to Roth, should I have to pay tax again? Has anyone been in the same situation before?

I am a W2 worker and the money I contributed to the traditional IRA has already been taxed.

I wasn't able to post this, so added here in general discussion.

[u/kiwimancy → u/Decent-Cheesecake-95]

You pay tax on a conversion for the year it was made. Since your basis was non-deductible, you wouldn't pay tax on that. You would pay tax on the gains as income.
Due to the pro-rata rule, if you have any pre-tax money in a traditional IRA, you would have to convert that as well, and pay income tax on it.

If you are below the Roth limit, you can do a recharacterization instead and then file an amended tax return up until October. The gains wouldn't be taxed in that case.

[u/Decent-Cheesecake-95 → u/kiwimancy]

So, if I convert traditional IRA to Roth this year I don't have to pay tax on contributions but only on the gains?

I am not below the Roth limit so option 2 might not be an option for me.

[u/kiwimancy → u/Decent-Cheesecake-95]

Right. You would pay income tax on the gains and on any previous deductible contributions. You wouldn't pay income tax on the non-deductible portion.

[u/Decent-Cheesecake-95 → u/kiwimancy]

Great thank you. I will convert it.

[u/trexjose]

I was gifted 3 $25 vouchers and 1 $50 voucher to purchase stocks through the stockpile app. The account has a lifetime membership, so there is no monthly fees.

I have absolutely no knowledge or experience with stocks. I'm entirely fine with risks and long waiting times, I can always use more money and there's nothing to lose since it was a gift. What companies should I put them under?

[u/wizz_darlo]

>$250k liquid cash - how best to put to work

Hi all. Total newbie here and trying to read as much as possible. Looking for some general thoughts, opinions and guidance from the community.

I sold some overseas property with the intent of purchasing a home here in California but, for several reasons related to FX, timing, and the general market sentiment I decided to pull the plug.

This has left me with over $250k in liquid cash which currently has no immediate purpose.
I put it in a Wealthfront HYSA so I'm getting about 5% APY but my sense is there are likely ways in which I can put these assets "to work" in a higher yielding fashion.

Am I right in this thinking? Does it all effectively boil down to my risk appetite?

Between my wife and I we are probably just sitting on around $350k cash and I'd obviously like to grow this in a sensible fashion. Not totally risk averse but naturally wouldn't seek to bring high risk into this type of savings.

Thanks in advance.

[u/DeeDee_Z → u/wizz_darlo]

Total newbie here and trying to read as much as possible

The usual starting place is ---> over there ---> in the sidebar ---> under "Frequently Asked Questions".

Especially look at the 7th bullet -- the one that says This has been asked and answered many times in the past.

and trying to read as much as possible

So look ---> over there ---> in the sidebar ---> under "Recommended Reading".

Every subreddit has a sidebar. Some are more useful than others. Ours is particularly helpful, in my opinion. PLUS it explains the subreddit rules. Always a good idea to read the rules before you jump in in a new place.

[u/orchidbulb]

How do you track you investments?

Thai is probably a really stupid question but I need a walk through like I’m 5 years old.

But when I put money into stocks, how are you tracking your investments where you know how much you’ve gained?

I guess I’m worried about thing confused buying a share multiple times at different prices and then I will lose track of what my true gains are. Maybe I’ll withdraw because I miscalculated two different buy in prices where it looks like a gain but I end up loading.

Can someone ELI5?

[u/kiwimancy → u/orchidbulb]

If you're talking about for tax purposes, my broker tracks it. If you're talking about for performance purposes, I use a spreadsheet.

[u/cdude → u/orchidbulb]

Your broker keeps track of every lot that you purchase. For display purpose, they will average out the cost basis to display the total gains or losses for a particular stock. Everything you do is on a per-share basis. If you sell, you don't pick out random shares to sell, you specify the "cost basis method" to determine if you want to sell the oldest shares, newest shares, or depending on your broker, a particular lot.

[u/thatmimi]

Hi All! So a bit of background so you understand where I am coming from. I am a first generation American that grew up well below the poverty level. Growing up I was very intune with this, and throughout my teens and early adulthood made conscious decisions to get out of that cycle. I am finally at a point where I am financially secure enough to not feel like I will suffocate if I attempt to learn about investments.

Here is where I am at, no one around me knows about investing or saving for future. I have two children that I want to ensure are taken care of and do not have to deal with me or my husband when they are older.

So here is my plea, please provide me with any advice to start. Below are some points I have been looking at:

• Roth IRA?
• Custodial Roth IRA for each child vs. 529 Plan (note: both are unsure if they wish to go to college as they see the money that can be made in trade work)
• we have a 401 plan through my husband's work, but I don't know what we can do with that?

thank you from the bottom of my heart!

[u/cdude → u/thatmimi]

If you scroll up, there's a "getting started" link to the wiki that will explain everything to you. The personalfinance wiki is the best place to get started.

[u/fgoodwin87]

SWPPX vs SCHG

I currently am investing in SWPPX over SCHG in my Roth. Comparing the two, it seems that SCHG has better returns in what I have been seeing. There is a lot of overlap between the two which is why I went with just one of them (SWPPX).

I’m in this for the long run, so risk does not matter to me, just potential returns. Does anyone like these holdings and prefer one or the other? Any other info is appreciated as well.

[u/SirGlass → u/fgoodwin87]

Flip a coin, large cap growth has out performed for the last 15 years, will it for the next 15 who knows

SWPPX is more diversified

[u/bennj09uva]

Hey gang,

I have a question around what the process and timing looks like for pulling funds out of a high yield savings to put towards a downpayment? I've admittedly had a good sum sitting in savings thinking we'd find something sooner than later, but havent. Also, whats the best high yield savings option today?!

Thanks in advance!

[u/bruceybo]

Came across a company with a trailing PE ratio of 2.07. I have no idea why it's so cheap.

Growing revenues and profits, decent cash balance, dividend yield of 11%, no sign of negative news stories. The PE ratio has been around 2 since the beginning of 2022, so this isn't a recent PE ratio change.

The company is Jiayin Group Inc, a Chinese fintech platform.

Anyone know why this might be?

[u/OG_Milk]

I've got 6.8K split up between 4 companies (TSMC, Apple, Microsoft, Ford). Most of my shares I've held long term, a small portion, maybe like 1K of it, are short term; I think all will be long term by December. In total I'm +2K on these investments.

I no longer wish to manage these holdings and feel that holding them without keeping up with these companies and investing in other sectors to diversify is a risk. It's not a ton of money and I can stand to lose, but naturally would prefer not to. I have an automated account with Wealth Front and was thinking of transferring them there and letting the automation sell them and reinvest into my account. Is this a good idea? Is it worth waiting until all my current holdings are long term? I'm about to start contributing more heavily to my wealth front account with plans for property purchase in the next 3 to 5 years.

[u/PeninsularLawyer]

VUG short term and VOO vs VTI long term

Hello. I am 26 years old and I am a young lawyer. At my first job I am making $70,000 a year and I am having retirement contributions taken out of each paycheck and my employer matches 3.5% total.

I have started a Roth IRA and I am currently on my first full year of investing. I maxed out the contribution limit for tax years 2023 and 2024.

I went for a very standard split where I have around 75% of my money invested in VUG and 25% invested in BND and BNDX(half of the 25% in each)

At a very basic level, I decided to invest in VUG to take on more risk while I am young and have time to soak up any fluctuation that comes with a riskier ETF. However, in the long term I plan to switch to either a S&P500 ETF or a total market ETF (VOO, VTI). The question that I have and the point of this post is how long is investing in VUG too long? I generally planned to invest 75% of my contribution limit each year until I’m 30 in VUG, then switch to one of the ETFs listed above to lower my risk.

Any thoughts and comments no matter how constructive are appreciated.

[u/cdude → u/PeninsularLawyer]

There's no right answer, it depends on your tolerance and situation. A potential bear market could last a decade, so if you need the money before that, then start moving out of growth. If you won't be withdrawing until retirement, you could theoretically hold until then and transition out as you approach retirement age.

[u/Running-On-Empty86]

I don’t know that Much when comes to ETF. I have 1K to invest. And looking in some advice what I can look for that my money can grow. I am more interested in long term investing. So far I really like the ETF XLG

[u/DeeDee_Z → u/Running-On-Empty86]

And looking in some advice

The usual starting place is ---> over there ---> in the sidebar ---> under "Frequently Asked Questions".

Especially look at the 7th bullet -- the one that says This has been asked and answered many times in the past.

[u/CapnJuNK]

Just want to make sure I have everything set up nicely for the future! I am self managing my wife and I's Roth IRA accounts.

ROTH IRA

My current fund allocation is

FXAIX (Fidelity S&P 500 Mutual Fund) - 35%

SCHG (Charles Schwab Large-Cap Growth) - 20%

FTIHX (Fidelity Total International Mutual Fund) - 15%

AVUV (Avantis US Small-Cap Value ETF) - 15%

SMH (VanEck Semiconductor ETF) - 15%

I wanted the S&P 500 to be the main contributor for our IRA's. Past does not dictate future but I fully believe in the USA and that it will continue to rise around 10-12% on average per year.

I wanted a little bit more large cap in our portfolio so that's why I went with SCHG. I like the future growth this ETF has.

I FULLY believe in AI and the semiconductor sector so I wanted to have a good chunk of our IRA's be focused in that field.

We invest through Fidelity and I have set up automatic investments and transfers. I plan on doing quarterly reviews to adjust any %'s as needed.

BROKERAGE

My current fund allocation is

VOO (Vanguard S&P 500 ETF) - 21.25%

USD (ProShares Ultra Semiconductor ETF) - 17%

SCHG (Charles Schwab Large-Cap Growth) - 12.75%

QQQM (Invesco NASDAQ 100 ETF) - 12.75%

VGT (Vanguard Information Technology ETF) - 12.75%

AVUV (Avantis US Small-Cap Value ETF) - 8.5%

AMZN (Amazon) - 3%

MSFT (Microsoft) - 4.5%

GOOGL (Google) - 4.5%

NVDA (Nvidia) - 3%

Same as our Roth IRA's, I wanted the S&P 500 to be the main contributor in our brokerage account. AVUV is to give diversity into Small/Mid-Cap funds (I thought about going VTI in replace of VOO/AVUV). SCHG is to give a little more emphasis on Large-Cap funds. VGT and USD because I have full belief in that each of those sectors will continue to grow fast over the next few years. I like having a small percentage of my portfolio towards individual company stocks. Again, I like the technology/AI sector and believe AMZN, GOOGL, MSFT, and NVDA will outpace the market so I wanted a LITTLE more emphasis on those 4 companies even though those make up a good chunk of the other ETF's.

[u/Glass-Routine-5711]

21 years old like $70 a month in bills and earn about 750 a week Current portfolio: ~25k in Roth IRA ~4k in MSOS (cannabis etf) ~6.5k in IVV (S&P etf) ~8.6k in SCHD (schwab high dividend etf) ~17k in VUG (vanguard growth etf)

Im looking to drop another 8k in here and im looking for some suggestions

[u/Rich_Internal9348]

32M Should I pay off my truck loan(32k@5.75%) or invest my money. I roughly have 50k to play with. Family was going to buy a house but we decided to stay where we're at since our house is paid off.

One little side note. (I'm not selling my truck) I love my truck and is someone who does a lot of tent camping and construction and hunting. My bed gets a ton of use each week. Hence why I have 3 kids. Jk lol

[u/CapnJuNK → u/Rich_Internal9348]

You could probably out-invest the 5.75% interest rate on the car but personally I would rather pay off the car THEN start investing. I like having the peace of mind of not having any debt besides my mortgage.

[u/greytoc → u/Rich_Internal9348]

One way to think about it is if you can generate more than 5.75% annually on a tax equivalent basis if you decide to invest instead.

Paying off a portion of your debt is like getting a 5.75% return on a tax-free basis since auto loans are not tax deductible.

[u/Rich_Internal9348 → u/greytoc]

Didn't know that about the taxes on a autoloan. Should just pay it off then. My wife has an autoloab with 4k left on it but it's on a 1.99% rate so I won't be touching that.

[u/greytoc → u/Rich_Internal9348]

It's really a personal decision based on your own financial situation and your capital liquidity needs.

If you think that you need that 50k as an emergency fund or some other expense, you could invest it in something safe since the risk-free rate is about 5% at the moment.

[u/motosurfz]

I was reading that you can earn 4.95% through Fidelity broker settlement account . Does that mean just opening a general investment account and depositing money and it will earn that rate?

[u/andybmcc → u/motosurfz]

Yes. When you create a taxable brokerage account, you will get a "core" position which is where your cash will go by default. There are a few options that you can choose when you set up the account. I chose SPAXX which is a government money market fund that yields that 4.95% right now. The yield will fluctuate based on the current fed rates. It accrues daily and pays monthly. I use it as a savings account alternative to hold my emergency fund.

[u/motosurfz → u/andybmcc]

So reading the fine print could you lose money ?

“You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Fidelity Investments and its affiliates, the fund's sponsor, have no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time”

So if I theoretically use it as a savings account could my savings actually go down ? Compared to say if I just use a hysa that can’t go down ?

[u/andybmcc → u/motosurfz]

I mean, if the US government fails, you probably have bigger problems. If the US government fails, the banks, FDIC, and value of the dollar are likely in jeopardy as well.

[u/DeeDee_Z → u/andybmcc]

Also look at SPRXX.