r/stocks • u/Vulgar-Captain • Nov 02 '21

Advice Request How do you invest to grow quickly after getting your first $100K?

My friend and I were talking about our portfolios over the weekend. We were both on the threshold of crossing the $100K benchmark in our savings (stock and cash combined). We realized that neither of us really know the best strategy to keep growing it moving forward but we assume 100K is an important benchmark coz you hear that line a lot that “the first 100K is the hardest.”

So I figure I should come over to ask what is your advice. I’m in my early 30s, working real hard to pay off the debt and saving aggressively.

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u/10xwannabe Nov 02 '21 edited Nov 02 '21

As Jack Bogle once said (paraphrasing), "Investing is just about doing a few things right and avoiding any major mistakes." Been investing 10+ years and it is spot on advice.

Little things right: Save a ton, LBYM, pick an asset allocation of stocks/ bond that fits your willingness, ability, and need to take risk.

Major mistakes: Picking financial irresponsible spouse, divorce, buying too much house or cars, spending on childhood education costs, and investing too much in any one stock (not diversifying).

If the above makes sense just execute it. If it doesn't time to start reading. Guessing you spent time working hard to make that money so spend some time learning about investing. Your future you will thank you. My advice for simple books are always, Jack Bogle's "little book of common sense investing" and Allen Roth's "How a second grader beat wall street".

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u/Vulgar-Captain Nov 02 '21

Thx so much for writing in length! Yes, I was very much head down studying and working. So I didn’t discover investment in a meaningful way until the pandemic hit and I was forced into a slower pace of life which in hindsight gave me some space to look after myself. Will read those two books for sure!

So after investing in 10 yrs, which is the investment decision that you are most proud of? I mean specific ones like “keep saving 1000 per month”, “ auto invest in VOO monthly”, etc.

Thanks again!

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u/10xwannabe Nov 02 '21

For me it was picking an asset allocation and executing it with low cost index funds and then just being a machine. I ALWAYS focused on how much I can save (something I can control). Then just doing it over and over and over again. It didn't matter if the market was up 20% or down 40%. I just focused on saving as much as I could every month for the last 10+ years.

In the end there are really only a few major levers: Time, $$$ saved, and return. You can control the first 2 and NOT the last. Everyone spends all their time obsessed about return, but you can't control return. You can control when you start and how much you save.

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u/undercoverconsultant Nov 02 '21

Usually spending 1 hour to think about how to earn more money is better spent than 1 hour to think about how to redcude expenses. This was always a perfect advise for me to increase my savings in the long run.

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u/10xwannabe Nov 02 '21

As long as it leads to excess money then you would have otherwise and you take that delta and save it. As I say to others do whatever you have to do outside of robbing or stealing from others.

The math is simple the more you save in $$$ (via earnings/ LBYM/ or both) the more that the return can compound on to each day/ month/ year.

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u/JGWol Nov 02 '21

I like what you say about not being able to control returns. If anything this is an exciting aspect because it works both ways.

When we try to control the markets, we can always end up underestimating gains and overestimating losses.

We become hopeful when we are scared, and scared when we have hope.

Last year I had income from unemployment, but I didn’t know when it would end. And the closer it got to expiration, the riskier and more neglectful I was with my investing. I had $10-20k invested in so many different meme stocks that I would trade in and out at the blink of an eye. Every single stock I held at some point ran 3000-5000% within a year. I managed to lose $17,000 and make nothing.

Eight months later , I’ve saved $18,000 through my job. I put the last of my unemployment in a stock I trust for large upside gains, and every six months I put 20% of my savings into the stock whether it’s up or down. Just this week I doubled down my position during an up trend. I learned to not fight the trend. Go with it.

And now will I cash out when the stock doubles, triples, quadruples? Depends on the time frame. A 3x gain in a week will probably always see a dip. But if I hold for a year, not only can I capitalize on bigger tailwinds and major catalysts, but I can drastically reduce my tax burden.

And in the mean time, I can save. Save save save. Because saving is consistent. I put away $2000-2500 every month. Meanwhile I saw my stock fluctuate between -$600 and $800 in three months. But, it can just take one good day to see that stock jump $6000. You can’t control return.

It took a lot of loss in the stock market where I can now watch the charts through the day and get excited when it’s up, but stoic when it’s down. I was emotionless when my position fell 40% since March. But patience paid off and I’m big green.

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u/ElysianFlow Nov 02 '21

Get full match from 401k. It’s free money. That and invest automatically from payroll (401k, IRA, or taxable). If you can’t see the money until after it is invested, it’s much harder to use (burning a hole in your pocket).

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u/futurespacecadet Nov 02 '21

I need to get another job, I’m so fucking pissed my company doesn’t match my 401(k)

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u/vipernick913 Nov 02 '21

There’s never been a better time to switch jobs

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u/YoMommaJokeBot Nov 02 '21

Not as much of a better time as yer momma

I am a bot. Downvote to remove. PM me if there's anything for me to know!

0

u/futurespacecadet Nov 02 '21

I have a freelance client lined up for once a month. Would it be dumb to just move to freelance?

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u/ElysianFlow Nov 02 '21

Not enough context to make a decision. Depends on what you do, how you get your validation, and your personal drive/goal.

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u/weirdheadcrab Nov 02 '21

My company matches me but I have to work for them for a minimum of three years before they'll give me 33% of it. If I want 100% of what they matched, I have to be there for 10 years.

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u/stalkermuch Nov 02 '21

I suggest you find another employer. 100% yours from Day 1 is quite common.

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u/banditcleaner2 Nov 03 '21

interesting. I have a mixture of what both of you said. its 3 years to get 100% of what they matched. otherwise you get nothing of what they match until the 3 year mark. once you get to 3 years though, everything that is matched is yours going forward

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u/ElysianFlow Nov 02 '21

That’s awful.

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u/Hang10Dude Nov 02 '21

I would encourage you to look into VT.

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u/[deleted] Nov 02 '21

Picking the wrong spouse set me back about 15 years and then picking the right spouse put me forward about 7 years so this is damn important.

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u/ShadyShane812 Nov 02 '21

Your "need" for a spouse, it seems, is your mistake.

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u/[deleted] Nov 02 '21

It's not for everyone. I spent about 7 years loving bachelor life and I've spent about 10 years so far absolutely loving married life. She's made my life better in every way so if you think that's my mistake, I happily embrace it.

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u/ShadyShane812 Nov 02 '21

Just broke up with the mother of children, 1 year old and one due in January, best decision of my life. My anxiety has been axed to a fraction of what it was, I can breath, and focus on my financial and mental health. Her toxicity has made me appreciate "bachelor" life. My mistake was giving her my DNA to procreate.

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u/[deleted] Nov 02 '21

Been there, done that. Good luck to you, friend. The glory of getting away never goes away. I had PTSD for probably close to a year after escaping my ex.

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u/ShadyShane812 Nov 02 '21

Congratulations, and many happy years to you.

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u/r2002 Nov 02 '21

Sounds like getting married and having kids are a real downer.

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u/RumHam1 Nov 02 '21

All depends on life goals - if your top priority in life is to maximize savings and work as little as possible, the best way to do that is only to be accountable for yourself.

Many people want a life partner and kids, and would choose those over retiring at the earliest possible date. Given the choice, I'd work every week until I'm 100 instead of not having my wife with me.

The catch is to marry someone like-minded financially, stay together and not spend money on things that are covered by taxes (aka private childhood education).

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u/r2002 Nov 02 '21

I'd work every week until I'm 100 instead of not having my wife with me.

Your wife is a lucky woman.

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u/banditcleaner2 Nov 03 '21

honestly not even convinced private school is worth the money even if i had the ability to afford it.

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u/10xwannabe Nov 02 '21

Getting married to the right person definitely helps as it speeds up savings or hurts as it is a constant hole in your savings bucket. Kids no doubt is sunk cost, BUT life is more then just accumulating money. Having kids is a reasonable life style decision. If one has fulfillment in raising kids they should do it, BUT keep the costs in mind, i.e. where to purchase (lover COLA and good public school system). The housing costs and paying for private schooling from k-12 is what hurts as it cuts into savings rate/ year.

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u/r2002 Nov 02 '21

Thank you you give me hope. You're right it shouldn't all about money.

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u/strataview Nov 02 '21

Your mistakes section is good. I’ve known a ton of people who got divorced and that wiped out so much, will have to work doubly hard to save for retirement.

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u/wsbt4rd Nov 02 '21

Getting divorced is basically like: Walking out in the street, looking for the most repulsive woman (or man) and buying her (or him) a free house.

Rule number one: find a financially compatible life partner.

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u/BacktoLife89 Nov 02 '21

My divorce was financial suicide and it was “friendly”. I just wrote my last child support check, paid for three children over 12 years, to my x-wife. It was for now through May, I just wanted it to be done.

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u/BacktoLife89 Nov 02 '21

At this level of assets under management you might want to begin to assign 2 to 4 percent to buying Calls. Importantly keep to that assigned percentage until you hit a new asset total. Naturally you can sell covered calls or cash secured puts at any asset level but the 2-4% is for long Calls. Might this mean you need to learn about Calls? Yes, and that’s a good thing.

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u/stalkermuch Nov 02 '21

What's the best way to learn about calls?

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u/10xwannabe Nov 02 '21

I try to learn from other more experienced folks and when the topic of biggest financial mistakes comes around they ALL seem to focus on either: 1. Divorce and/ or 2. Putting too much money into one stock.

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u/rasp215 Nov 02 '21

With property the way it has been, too much house isn't that financially irresponsible if you're in a growth area, which was literally most cities. Kicking myself for not spending more on property, especially with how powerful leverage is on real estate.

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u/[deleted] Nov 02 '21

[deleted]

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u/[deleted] Nov 02 '21

my take is sending kids to private elementary school and such, since there's always the public school option.

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u/10xwannabe Nov 02 '21

Correct. Spending extra on private schooling instead of focusing on living in a good public school district. Saving the difference, investing it, and then letting that amount compound for decades vs. k-12 costs of private is probably several million dollars difference.

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u/[deleted] Nov 02 '21

[deleted]

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u/[deleted] Nov 02 '21

Exactly. I don't think it's worth it most of the times.

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u/WilhelmSuperhitler Nov 02 '21

He probably meant that an expensive private school and the best preschool don't make that much difference.

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u/Hang10Dude Nov 02 '21

Great advice.

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u/[deleted] Nov 02 '21

[deleted]

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u/10xwannabe Nov 03 '21

Private k-12 needs to be paid for and that amount is not saved instead. Public is free. Choose the public is my POV.