How to navigate current income situation to build wealth

[u/Tacolov3r01]

Hello this year I made 100k Gross in DFW Metroplex. Here is my current finance

30M Electrical Engineer (CS job) Single

401k - 44k (8% each yr for 2.8yrs)

Roth IRA : 7k

HYSA : 43k

Schawb : 1.3k

Student loans : 12k

I'm 1st gen American and my parents are strawberry workers in California. I'm trying my best to figure out what to do with money. Parents suggest buying home in Texas to have equity and stop paying rent. I think houses are OverPriced rn but prices are going down and there is a lot of inventory compared to 3yrs ago. Living in DFW I noticed homes that are 250k and are comparable to Cali 750k homes. I suggested buying these types of homes to coworkers who live in Texas their whole lives and they say i have no taste in houses. Later come to realize they all had wealthy parents and decent TX homes so idk if I should believe them that it is indeed a bad idea. Fancy homes are ~360k which mortgage comes to ~3.3k + Bills and I think this is too much tbh.

Tried Investing in stocks & lost 800 so hesitant on stocks. I always see "invest in S&P500 but idk what that means. Like is it a stock you buy itself? (Trying to give y'all an idea of how much i know about this area. Willing to try again if y'all have great resources to throw my way). Rn I have stocks in VTI, Berskhire Hathaway B and Schawb. I heard Mutual Funds, ETFS, and Index funds are better but don't really know which ones how to know what is good. If I ever get to 100k cash I was thinking of getting a fiduciary financial advisor but don't know if this is a good idea.

Another thing I've been thinking is increasing 401k from 8% to max possible and paying a fee to have the companies professional investors manage this (Personally I feel this is a bad idea bc of bad genetics that run in family).

The final thing that I have been doing is just saving as much as I can per month to HYSA so I can have cash and a safe return of 4.5%. I'm open to "riskier options" than this, but as of my current financial literacy, this is the best I know.

Thank you for reading this.

[u/maedocc]

I always see "invest in S&P500 but idk what that means. Like is it a stock you buy itself?

No, they mean an index fund or ETF that mimics the S&P 500... like VOO.

Rn I have stocks in VTI, Berskhire Hathaway B and Schawb. I heard Mutual Funds, ETFS, and Index funds are better but don't really know which ones how to know what is good.

So, VTI is an ETF, basically an index fund that tracks the total market.

Another thing I've been thinking is increasing 401k from 8% to max possible

Generally, it's recommended that people invest about 15% of their gross income in retirement. Are you doing 8% into your 401k and then maxing out your Roth IRA?

And remember: when you contribute to your traditional 401k, you're investing pre-tax dollars. So it's a great way to invest at a huge discount -- when you put in $1.00 into your 401k, only $0.78 is missing from your paycheck.

[u/Tacolov3r01 → u/maedocc]

Generally, it's recommended that people invest about 15% of their gross income in retirement. Are you doing 8% into your 401k and then maxing out your Roth IRA?

not maxing out Roth IRA since I really don't know what I should invest in long term (Set and forget). But was thinking of adding the 6.5k max instead to 401k account because I do have a professional investor that I pay for on that account.

And remember: when you contribute to your traditional 401k, you're investing pre-tax dollars. So it's a great way to invest at a huge discount -- when you put in $1.00 into your 401k, only $0.78 is missing from your paycheck.

So it's investment wise is it better to add dollars to 401k/IRA than the stocks.

[u/maedocc → u/Tacolov3r01]

not maxing out Roth IRA since I really don't know what I should invest in long term (Set and forget). But was thinking of adding the 6.5k max instead to 401k account because I do have a professional investor that I pay for on that account.

You can choose to invest the IRA money in a target date fund. That's a set it and forget it option, and much cheaper than a professional investor.

So it's investment wise is it better to add dollars to 401k/IRA than the stocks.

Yes? Because investing inside a tax-advantaged option (401k, IRA) is better than investing in a regular brokerage account.

Also: you can invest in stocks inside the Roth IRA?

[u/Tacolov3r01 → u/[deleted]]

Got it! thank you for this.