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Consumption vs. Investment. How Much?

 
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BigRed
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PostPosted: Jun 28, 2006 3:30 pm    Post subject: Consumption vs. Investment. How Much? Reply with quote

After being married and owning our home for a year and I'm reviewing our monthly expenses. After paying all the bills (Incl. Taxes, insurance etc.) and allocating money for food and gas, we're still running a surplus. So far we've just been continuing to build our savings account back up, but now it looks like we're in a position to make some decisions regarding investment for the future.

I really don't know of any info regarding this kind of thing, so if anyone has any input to what they do, I'd appreciate it.

My inital ideas looking forward look something like this:

Total Monthly Surplus = 100%

Monthly Consumption Allocation = 50% : Going out, buying gifts, extras.. etc.
Monthly Savings Investment Allocation = 50%
Long Term Investment (~30year) = 33% of Total Savings Investment (17% of surplus) : 457K contribution
Mid Term Investment (~15year) = 17% of Total savings Investment (8% of surplus) : Agressive Investment Portfolio
Mid/Short Term Investment (~7-10year) = 17% of Total savings Investment (8% of surplus) : Moderage Investment Portfolio
Short Term/Immediate Future Investment (5year) = 33% of Total savings Investment (17% of surplus) : High Yield Savings Acct, CD's. etc.

Does this seem like a reasonable plan? Is there anything I'm missing? Is it overkill?

I'd appreciate the input from you greyhairs. At 26 I know there's alot of you with more experience in this area than me.

Thanks

-Greg

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chavez
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Joined: 22 Sep 2003
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PostPosted: Jun 28, 2006 3:33 pm    Post subject: Reply with quote

BigRed, you should really sit down with a financial planner. Even if you don't, you seem to have decent ideas.

I can't get into specifics for you, but I can say that the planner should be able to cover all of your bases and set you in a path that does not overlook opportunities that you may not take advantage of otherwise.

They should also give advice as to the tax implications of implementing a plan - this is very important!!!

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RIP MHL 04/25/1958 - 01/11/2006
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BigRed
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Joined: 22 Jul 2003
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City: Redwood City, CA

PostPosted: Jun 28, 2006 3:42 pm    Post subject: Reply with quote

Yeah, I guess we should probably talk to someone. Unfortunately, after working at a brokerage, my faith in investment "professionals" is tainted.

Listening to cold calls in the background or a broker calling up all the old ladies and telling them PG&E has tanked, now they have to "rob peter to pay paul" 100 times in a row.... yeah.. I don't trust anyone with my money.

But I like said, we're probably at that point. That's probably the best bet. I'll just make sure to stay very informed and not let them make any decisions... "just the facts, mam"...


Or I could just buy a boat.. Smile

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chavez
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PostPosted: Jun 28, 2006 3:47 pm    Post subject: Reply with quote

BigRed, DUDE for the love of crap don't go to a brokerage!!!!!!!!!!! Laughing

Find a real financial planner who is also a registered investment adviser who is also a licensed insurance agent who hopefully also has some professional designations like CFA, CFP, ChFC, etc. (Note: you will rarely find these folks at the big houses)

These folks should be found via referral only. Don't go to 401k only guy who sits 2 cubes over to ask either. Go to a well off person that you can trust, and ask who they use for their financial planning.

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BigRed
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PostPosted: Jun 28, 2006 3:51 pm    Post subject: Reply with quote

Um.. I think there's another thread for those who love crap.... j/k

Good idea. Thanks. I'll talk to some people.

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pyrocasto
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PostPosted: Jun 28, 2006 7:39 pm    Post subject: Reply with quote

BigRed, your plan looks pretty good, and what chavez said is good advice. I have nothing more to offer. Laughing
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lcap
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PostPosted: Jun 29, 2006 11:12 am    Post subject: Reply with quote

BigRed,

100% surplus. Shocked Now you can afford to have kids and have one of you stay home with them.

As for myself I'm not sure if a financial advisor could help. I have one thin dime in savings right now and no dimes in the stock market.

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5280HighButter
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PostPosted: Jun 29, 2006 1:07 pm    Post subject: Reply with quote

A financial planner is a good idea but do lots of research first, there are lots of them.....kinda like personal trainers and RE agents, just because you have a cert/license doesn't mean you are good at what you do. It doesn't take too much to get some certifications (from what I've heard and read).

Personally, IMO, F CD's at your age. Rock that 457 to the max. Next is the roth = 4Gs/year. Remember you are young, don't be too afraid of risk. However......risk, and chasing fads are different. Now go make millions!!!!!!

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chavez
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PostPosted: Jun 29, 2006 1:31 pm    Post subject: Reply with quote

5280HighButter, certifications are not easy to get, at all. The CFP takes close to a year to complete for most. 5 lengthy sections covering topics from basic planning to estate planning to complicated tax planning, with a 2 or so hour examination at the end of each section. Once that is done, it is finalized by a comprehensive 10 hour examination on the subjects.

The ChFC includes all that plus more detail/emphasis on investment products.

The CFA is more math oriented than those. It dives into investment management, research, and analysis, along with other topics in corporate finance, ethics, and economics. It takes about 250 hours of study (usually 5+ months), concluded by a large examination with 3 parts, 2 of which contain essay questions. FWIU, this one is a real bitch.


Now, licenses on the other hand, can be much easier to get depending on which one you are trying for.

But next time you run across a CFP, ChFC, or a CFA, understand that these folks gave up months of their busy lives to obtain these certifications.

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BigRed
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PostPosted: Jul 17, 2006 2:21 pm    Post subject: Reply with quote

lcap wrote:
BigRed,

100% surplus. Shocked Now you can afford to have kids and have one of you stay home with them.

As for myself I'm not sure if a financial advisor could help. I have one thin dime in savings right now and no dimes in the stock market.


Um.. 100% was just a reference to show how the surplus we're running is then broken down.

So yes. All of our surplus = 100% of our surplus!

about 31% of our takehome pay is surplus.

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