Domestique Capital LLC
Damon Gonzalez, CFP®, RICP® has been serving clients since 2000. After almost ten years at Ameriprise Financial Services, he founded Domestique Capital in November of 2009. Damon has been a CERTIFIED FINANCIAL PLANNER™ practitioner since 2004 and has extensive knowledge in investments, taxes, budgeting, and insurance. He obtained the Retirement Income Certified Professional Designation in 2015. Damon was recognized by D Magazine as one of the Best Financial Planners of 2010 and 2015 as chosen by his peers. Damon has also been awarded the Five Star Wealth Manager Award in three different years as seen in Texas Monthly.
Domestique is the French word for servant and one of Damon’s favorite quotes is “I don’t know what your destiny will be, but one thing I do know: the only ones among you who will be really happy are those who have sought and found how to serve” – Albert Schweitzer.
In addition to serving, Damon loves seeking the truth and is a lifetime learner. One of his favorite things about his profession is that there are always complicated puzzles to solve and markets are ever changing. He graduated from the McCombs School of Business at The University of Texas at Austin in 1999. Outside of work, he enjoys traveling, cycling, volleyball, basketball, reading, and spending time with loved ones. Damon has been married to his wife, Kim, since 2007 and lives in Downtown Plano, Texas with their three dogs.
BA in Business Administration, The University of Texas at Austin
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Domestique Capital, LLC is an Investment Adviser registered with the State of Texas. All views, expressions, and opinions included in this communication are subject to change. This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy or the completeness of any description of securities, markets or developments mentioned. We may, from time to time, have a position in the securities mentioned and may execute transactions that may not be consistent with this communication's conclusions.
It does not count toward your $18,000 limit or $24,000 limit if you are over 50. Many people do not realize that there is a $53,000 limit that you AND your employer can contribute to a 401(k) per year. The company match does count toward the $53,000 limit. Very few people get a match high enough to worry about this rule. It sure would be nice to get a $35,000 match on your 401(k) plan.
I know your anxious to start building your retirement and let compounding work for you. I made the mistake of putting too much money in retirement plans in my early 20s and not saving enough cash. Your 20s are EXPENSIVE. If you are like I was, you need to save for a better car, a house, furniture, an engagement ring, and a wedding. It is not sexy or exciting, but I suggest that you build up a good cash reserve to be able to pay for these predictable expenses that are coming up for you. If you invest this money, you may be forced to sell your investments at a loss when these expenses come up or decide to go into debt to pay these expenses to avoid recognizing your loss.
I assume that you are making this assumption based on GDP statistics, which are not the best measure to predict stock returns. Nobody knows for sure why stocks are where they are today, but here are my two cents:
Check out this chart and you can see earning for the companies in the S&P 500 have grown amazingly since 2009:
This also demonstrates that earnings matter a lot more to stock prices than the GDP.
Another more important indicator than GDP for stock prices is liquidity. Here is a link that shows the Fed's balance sheet compared to the S&P 500.
You could make the case that the low interest rates and expansionary monetary policies of the Fed have also increased the value of stocks.
It may ding your credit score a little bit in the short run, but I wouldn't focus on a short blip like that. You need to get debt free and a balance transfer is a great way to reduce your interest so that you can pay more of the principal off each month. Your debt to income ratio is much more important when evaluating your credit score. Once you get the debt paid off your score will be better for it. Focus on the longer term goal and don't worry so much about a shorter term event. You can go to sites like www.creditcards.com and compare balance transfer cards. Always read the fine print!
The other advisors gave great answers to your question. I would only add that you read this article before thinking you are being smart by putting all of your money in one index:
According to the article, the real return (after inflation) of the SPY ETF is 1.77%. Investors who owned foreign stocks, bonds, and real estate in a diversified portfolio did much better than that. Ask yourself if you would be able to stick with a portfolio for 16 years that lost about 45% during the tech wreck and 57% during the 2008 financial crisis and only beat inflation by about 1.77% per year.
You should also be weary of hindsight bias (The US stock market has done well over the last 100 years) and home country bias (it seems safer to invest in your own country). It was not obvious in the late 1800s that the US was a better place to invest than Russia or Argentina (don't take my word for that and look it up). The latter two markets were devastating for investors. In short, don't put all your money in one asset class.