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Investing Question from a Scribe

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  • Investing Question from a Scribe

    One of the scribes that I work with asked me a series of questions by email recently.  He's very close to professional school.  Below are his questions and my replies.  Any other opinions?

    "1. What would be the best long term investment to make at my age (19)?

    2. What would you recommend for short term with a slightly higher risk?

    3. Which ETFs are favorable in following the NASDAQ and S&P 500 (or other strong insex funds)?

    4. What percentage of my savings should be allocated towards these investments?

    5. Any recommendation for decent online brokers?"


    1. Long term it is hard to argue against index funds that track broad markets.  Right now keeping your expenses low (think car, phone bill, rent/housing expenses) is probably more important than any specific investment.

    2. I don't find short term high risk investments appealing anymore.  I lost $8k on a high risk bet during med school.  What I want is boring long term stable growth with as close to a guarantee of future financial independence as possible.  Short term high risk to me is essentially gambling on my future.

    3. It is hard to go wrong with the Vanguard or Fidelity ETFs.  Vanguard etf is a free transaction if you set up an account with them.  I have a small amount of the VTI etf which is a total market fund.

    4. A specific percent may be a hard number.  A goal of 20-30% savings rate for retirement once you are out of schooling is what we target. I currently try for 50%.  Right now, any savings you need to be able to spend in the next 5 years should probably just be placed in a high yield savings account like ally or discover bank.  If you are taking money out for school, then I wouldn't advise investing much.  If school is paid for then I'd keep an emergency fund of up to 6 months of expenses and then invest the rest.

    5. If you want etf access for free, I would go with Vanguard.

  • #2
    I would just add that the very best vehicle for a 19-year old to use for long-term investing is a Roth IRA.

    on a side note, I just lost a post when the forum booted me out and had me sign in again. Had to recreate. Fortunately, it was short, but still annoying.
    My passion is protecting clients and others from predatory and ignorant advisors 270-247-6087 for CPA clients (we are Flat Fee for both CPA & Fee-Only Financial Planning)
    Johanna Fox, CPA, CFP is affiliated with Wrenne Financial for financial planning clients


    • #3
      The percentage of savings depends on when you want to retire. The higher the percent, the earlier Fire occurs. I like the MMM post on the math of early retirement:

      that being said, I believe you mentioned school, in which case the best investment is in himself.

      fidelity also has free ETFs. Schwab is also good.




      • #4
        WCICON24 EarlyBird
        1. Equity index funds in a Roth IRA
        2. Just don't. Why?
        3. Any one whose r² > 0.95, so p much any major fund like VTSAX, FSTVX, etc. If specifically ETFs, VOO is literally 1.00 to the S&P, meaning perfect correlation. Would still do VTI (0.986 to S&P, but 1.00 to Russell 3000) to capture some small caps.
        4. All
        5. Fido, VG, Schwab are the ones I see most commonly. I like Fido. VG also great. Schwab's funds look great. Dealer's choice