I have been very fortunate to receive a union construction job through a relative, and I am very excited about the position. I have no debt of any kind and currently live at home with my parents. The job is 7 days a week, with double shifts during the summer, which gives me a lot of overtime pay. I’m in shape, down 120 lbs, and muscular. I’m also stress-free because my diet is already planned out on a spreadsheet, and I have no college debt (didn't go) and no credit card debt.
According to my calculations, the job should provide take-home pay of $3,778/week, or $16,400/month during the summer. During the winter, it goes down to $1,430/week, or $6,200/month. The year-round average take-home pay is $8,800/month, which works out to about $2,020/week.
I currently have no money saved except for investments in XMR, and I want to invest around $10k–$12k into it. I also plan to contribute as much as possible to a 401(k). I do not plan on buying anything unnecessary, such as a new car, RV, computer, guitars, or anything else I do not really need.
My expenses are:
- $370/month for car insurance
- $50/month for my phone bill
- $150/week for groceries
- $15/month for Planet Fitness
Total: $1,085/month
I do not pay rent. My parents would not ask me to pay rent and are okay with me staying until I am able to move out and buy a house.
My plan is to build an emergency fund first, then set up automatic transfers into separate accounts for index funds, a house fund, a personal fund, a buffer fund, and a crypto fund so I can invest passively. I do not really want a credit card, but I need to start using one because my credit score dropped to 550 after not making a payment for a while.
Any advice is appreciated. Currently looking into HYSA and IRA, and will adjust this post later to show the amounts I want to transfer over to each account.
Way back when I took a short class in investing, and the bottom lines were:
Individual stocks are risky, because you really don't know what's going on inside each company. A sure thing today may collapse tomorrow. The more different stocks you invest in, the lesser your risk.
1a) Index funds work according to that principle of lowering risk by investing across hundreds of different stocks.
Choose the ones that have low expense ratios, because they're automated, and fees will eat into the fund's earnings.
Vanguard is famous for their index funds, but other brokerages have copied them, but those others still have higher expense ratios somehow.
1b) Also these days, ETFs are similar, but you will be paying stock commission fees to buy and sell them, taking a hit on your initial and parting investment.
Let's say you have set a target of 70% large cap index, 10% international stock index, 20% bonds, and you balance your portfolio on July 1st every year.
In a fictional example, this year, the large caps did well and now constitute 75% of your total portfolio's value, internationals did okay and are now at 11%, and bonds relatively speaking didn't go up as much, and are now 14% of the total value.
That means that bonds are relatively cheap, and a relatively good buy.
So sell the "extra" 5% of your large cap, 1% of your internationals, and put that total 6% of your portfolio into bonds, rebalancing your portfolio back to 70% large cap, 10% internationals, 20% bonds.
Next year on July 1st, the stock market has tanked, and bonds are now 30% of your total portfolio value. That means that you should sell the extra 10% total portfolio value of bonds and re-assign them to your large cap and internationals, however that works out mathematically.
edit: There's no need to watch your portfolio like a hawk and rebalance every time you glance at it. Just do it once a year, but be consistent.
etc, etc.
As you get older, and closer to retirement, your tolerance for losing value gets lower because you're approaching the point where you have to start using your accumulated retirement nest egg.
Lower your risk of the stock market, and increase your holdings of fixed ~~income~~ return investments, such as actual bonds (NOT bond mutual funds) that are (practically) guaranteed to pay you X amount of interest.
But holding 0% of stocks still carries risk of inflation wiping out all of the bonds' earnings.
It was said that holding 10% of your portfolio in stocks is the lowest risk that works.
There are index funds that automate this rebalancing and risk reduction for you: Multiple brokerages have "Target retirement funds" These types of funds have years in their names, stating when these funds will reach a minimal risk portfolio. Once again, shop around and find which ones have low expense ratios.