nVest Advisors, LLC
Jeremy Torgerson is the CEO at nVest Advisors, LLC, a registered investment advisor firm in Texas and Colorado, and has over 10 years of experience in the finance industry. Jeremy has been a small business owner for 20 years, and has mentored small business owners and startups for several years.
Jeremy is quoted reqularly in major US financial media. He also podcasts on financial topics, and blogs on his personal finance and success blogs, thinklikearichguy.com.
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It depends on what your goal is for this stock. Do you have an objective in mind? What are you investing for?
If you are simply speculating with some extra money, you can most certainly do it at an online discount broker, especially if you are starting with only a small amount of money. Trading fees and broker commissions can very quickly eat up your invested money.
A big mistake I see beginners make is not having a specific goal, time frame, and purpose for their stock purchases, and this will make you VERY susceptible to emotional decision-making.
For example, if you are investing for a child's college, and you have 15 years until you need the money, you will likely choose a stock that has growth potential but isn't wildly risky. And you'll also likely have more patience for it to grow if there's a market pull-back.
But if you have no goal, no time frame, your only purpose and strategy will be to have the stock "go up". You'll be whiplashed and trade way too frequently because of market movements without a goal and time frame firmly part of your decision-making.
My advice is to start with a company you know pretty well, that is widely traded, and research is abundant. Stay away from the temptations of penny stocks, cybercurrencies, and other highy volatile and risky (and illiquid) investments. Don't follow the herd into these types of investments.
I wish you every success!
Here's the problem: I don't know how soon you plan to use the 401k funds. Are you 35, or 65? The answer will be wildly different in those scenarios.
At any age, rebalancing at least once per year is the right thing to do. This means putting your account back at the original percentages of stocks/bonds/alternatives that you started with. You do that to "scrape the wins" from the parts of your portfolio that did well, and reinvest them back into the underperformers. It also helps to make sure your account doesn't suffer from more volatility than you intended.
For example, let's say you were a middle-of-the-road 50/50 investor. 50% stocks and 50% bonds. With the stock market the past few years, if you didn't rebalance, your stocks might have grown to now be 60% or more of your portfolio, and your bonds would be 40% or less of the value. That growth in the value of your stocks has shifted your risk from 50/50 to 60/40. Rebalancing corrects that. If you don't rebalance, and the market drops significantly, you would have exposed 60% of your portfolio to a market drop, when you intended to expose only 50%.
Here's the other bit of advice I'll give you: if you're younger than 50, totally and completely ignore today's stock market. Just keep plowing money into your account. Stock market declines are actually very GOOD for younger investors because you're buying. And when you are buying, you want the lowest prices possible on stocks. (It's when you're 70 and living off of those stocks that you can't have a down market, because then you are a SELLER, and not a buyer.) It's completely counter-intuitive to most people, but when you are young and investing, you actually WANT times of steep market declines. Most people, however, cannot manage themselves emotionally when this happens, which is one of the primary reasons to have a financial advisor - we're trained to keep emotions out of it and to help you stay focused on the long road ahead, not on today's market volatility.
The bottom line is, not one person here, on on CNBC, or anywhere else, knows when the market will drop, or how far, or for how long. Anyone who does make those kind of claims are either deluded or liars. To try to guess when it will happen will drive you crazy. Just pick the appropriate allocation for a several year period and get out of your money's way. :)
Best wishes to you!
Because of the way trading commissions will eat up small amounts of money very quickly, I wouldn't start investing until you had a larger pot to work with. By all means, continue to SAVE, but my guess is, if we only have $25, it's not likely you have much of an emergency fund saved yet, and that HAS to be the higher priority.
The other issue you have is, we're at all-time record highs in the stock markets right now. You anything you do buy will likely have never been at higher prices than now.
Save 3-6 months of your expenses (not "income" - expenses) and then shift that savings toward an investment account. Then, start with one of the zero-commission ETFs TD Ameritrade offers, and keep investing into one diversified ETF until you have several thousand dollars.
But baby steps. Do it right. Get some emergency savings built, THEN start working on your investments.
Best of luck to you! :)
Credit cards, without question. Although there is no such thing as "good" debt, there is such a thing as "smart" debt, and your mortgage is a smart debt. Let me explain:
1) Your mortgage interest is tax-deductible. So yes, you're paying interest, but for most people, that interest comes right back off their taxable income every year.
2) Your home is growing in value, whereas nothing bought on a credit card appreciates in value. That makes the home your only "investment", where the credit cards are flat-out expenses. Get rid of them.
3) The nature of compound interest means that the 12% interest payments are hurting you far worse than the 3% mortgage. At 12%, it will only take about 6 years for your credit card balances to DOUBLE (assuming you weren't making payments), but it'll take 24 years for the mortgage balance to do that at 3%. In short, the interest on the credit cards is compounding 4 times faster than the mortgage interest is.
There are a lot of strategies on debt paydown but the one I put my clients through is the "Snowball". Apply all the extra payment to ONE card, and pay minimums on the others. Then, as the first card gets paid off, apply that minimum payment plus the extra to the minimum payment of the NEXT card, and so on. It's like a snowball rolling downhill, growing larger as it goes. And then, once all of your cards are paid off, take ALL of those monthly payments (plus the extra), and add it to the mortgage.
One thing you didn't mention was how much you have in emergency savings. You need to start funding that, as well. If you don't, and all of your extra money is being put toward credit card pay-down, you won't have anywhere to go for emergencies except back on a credit card. It's a treadmill you won't escape from. I would put 50% of your "extra" money toward debt paydown and 50% toward an emergency savings account until you have 3-6 months of expenses saved up. Then put 100% of it toward the debt.
Best wishes to you! :)
This is a tough one, and probably not one that can be answered anonymously. You really need to sit privately with an advisor or planner so we can get a better picture of your total financial situation (like what your sources of income are).
I also don't know if you are hoping to lower your monthly expenses by doing this, or just shorten the life of the loan?
However, at first glance, my gut impression is that you should NOT pay it down. It won't reduce your monthly mortgage payment, just shorten the payoff period. I can understand the stress of having a mortgage looming over you this close to retirement, but here are a couple of things to consider:
1) Reducing your available cash, when we're only looking at $175,000 total savings, is really risky.
2) Mortgage interest is at least tax-deductible. That doesn't make the pain go away, but it does at least give you back some tax money every year.
3) Despite the mortgage interest being pretty high (see below), the rate of return you could make, and have made the past few years, on a diversified 401k is significantly better than that.
4) You'll pay income tax on the 401k withdrawals. That might push you into a higher bracket overall, but what it definitely means is that you will have to take out far more money than will actually pay down the loan. For example, if you have an effective income tax rate of 20%, that means you will only pay down the loan by $40k for every $50k you take out of the 401k. Is that worth it to you?
5) 5.25% on a mortgage seems pretty high. My strategy for you would include trying to refinance that loan at 3% or below. That alone might allow you to keep the monthly payment close to what it is, but reduce the payoff time to 15 years. Try really hard to get that loan refinanced, and see what a 15-year mortgage will be with a rate of 3% or lower.
I think you need a financial advisor. Don't pay through the nose for one, and don't work with one who pushes a product like an annuity at you. This scenario needs a pro who is looking out for what's best for you, not one who needs a commission right before Christmas. Try for a fee-only advisor willing to just give you ADVICE at first. You need a strategy.
I wish you the best! :)