No degree in finance necessary.
I’m hoping the format of my post will hold up. It seems to vary between my tablet and phone….
Modified from advice from Dave Ramsey and my own life experience:
1. Stop any current 401k contribution and Pay off your #$% debt
(except house)- was I clear about that?
DO NOT INVEST UNTIL YOU HAVE NON HOUSE DEBT PAID
DO NOT BUY AN INVESTMENT PROPERTY
DEBT FREE? Now you’re ready…
2. Just do it (I will tell you how)
3. Stay away from bonds
4. Do not panic when the market “crashes” (it recovers, it always does)
5. Do not become a day trader (there is no need for you to do this unless you have play money or are Carmella Soprano)
6. No single stocks. Only Mutual funds. Unless #5 is true
1. Create your “portfolio” or “group of investments” to be 25% of each of these kinds of mutual funds:
25% Growth and Income
25% Agressive Growth
What the heck are those?
1. 25% Growth and Income: Mutual funds of Big, boring stable companies
AKA “Blue Chips”, “Dividend Income, Pays dividends (which you reinvest)
Examples of companies: IBM, ExxonMobil, Chevron, Procter and Gamble, 3M, Johnson and Johnson
Look for names like “Blue Chip Index” or ” Dividend fund”
Examples of Fund names: Vanguard Growth and Income, TRowe Blue Chip Growth, American Century G&I
Where to buy? Chances are you have a 401k at work. Find out who manages your 401k funds like UBS, Charles
Schwab, American Century, T Rowe or Vanguard.
CALL THEM (They have always been nice and have the heart of a teacher).
Say “which of the funds can I choose from that is most like a Blue Chip fund? I want my portfolio to be 25% that.”
2. 25% Growth Mutual Funds of Medium or large US companies that are still growing
AKA “Mid-Cap”, “Large-Cap”, “Equity” or “Growth”
Examples of companies: Whole Foods, Carmax, WalMart, Microsoft, GE
Look for names like “Mid Cap Growth Fund” or “Large Cap Index”
Examples of these funds: Vanguard Mid-Cap, Vanguard US Growth, Amer Century Mid cap Value
CALL your 401k managing company and Say “What fund(s) do we have that are Mid and Large Cap? I want 12.5% of the Mid and 12.5% of the Large.”
3. 25% Aggressive Growth Mutual Funds of really wild, rollercoaster funds
AKA “Small Cap” or some “Mid Cap” or ” Emerging Markets”
Examples of companies: Express, NeuStar, China Mobile, Tencent Holdings Ltd.
Look for names like “Emerging Markets” or “Small Cap Fund”
Examples of Fund Names: Vanguard Mid-cap Growth, TRowe Mid Cap Value, Amer Century Small Cap Growth
CALL your 401k managing company and Say ” What fund(s) do we have that are Small Cap or Emerging Markets? I
want 12.5% of the Small and 12.5% of the Emerging.”
4. 25% International Mutual Funds– anywhere except your country (non US, non-Canadian..)
AKA International (NOT Global or World Funds- those have US mixed in)
Examples of companies: Amara Raja Batteries Ltd., Nsaper’s of South Africa, Novo Nordisk of Denmark
These ARE NOT foreign currencies- DO NOT DO THOSE
Examples of Fund names: Vanguard International Growth, TRowe Emerging Markets,
So there it is in plain English.
I used websites of the funds easiest to navigate on my phone.
I don’t use Vanguard yet but do love how easily things are to find and that the funds are named in Ramseyese.
Disclaimer- I am not a stock broker or official financial planner. I can only share what has worked for me.
Get out of debt and stay out.
Live below your means.
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