Best way for my 23 year old daughter to invest 3k? (1 Viewer)

[Ben & Jerry's]

She opened up a free account at Schwab and deposited 1k. A friend suggested she look at a Vanguard retirement 2060 fund (VTTSX). The minimum investment is 3k.

Add the funds and dip in or look elsewhere?

 

[Leroy Hoard]

Mega Millions jackpot rises to over $1 billion for fourth time ever

 

[Tick]

Sounds pretty smart. Anything long-term with a low annual cost is the way to go.

 

[General Malaise]

For the first time in a long time compound interest is alive and viable. 4.75% for a 1-yr CD was unheard of for the last 20 years. I'll try and hunt down a great intro to compound interest I read when I was young. Eye opening. Props to her for saving early!

 

[johnnycakes]

With the recession in the offing, I would keep my money either in cash or in investment-grade bonds. And the recession IS definitely coming, make no mistake. Stay the hell out of equities.

Investing legend Jeremy Grantham flagged a huge market bubble and predicted an epic crash. Here are his 12 gloomiest warnings since the pandemic began.

Grantham expressed deep concerns about investor euphoria, sky-high valuations, and rampant speculating on meme stocks, crypto, and other risky assets.

markets.businessinsider.com

 

[Navin Johnson]

Defense stocks seem to be pretty steady

 

[Osaurus]

Vanguard is solid

 

[Sand]

Dump it into IVV - at her age that will work well.

 

[Monty Burns]

Vanguard Total Stock Market Investor Shares (VTSMX).....maybe wait a few months and then use this as a core fund for the next 30+ years

 

[Desert_Power]

She opened up a free account at Schwab and deposited 1k. A friend suggested she look at a Vanguard retirement 2060 fund (VTTSX). The minimum investment is 3k.

Add the funds and dip in or look elsewhere?

Just pick a portfolio out of this thread.

Just kidding. Something VTTSX or ETF equivalents is the move.

 

[D_House]

Is this in a taxable account? Has she already maxed any workplace retirement account and a Roth IRA? If not, would make sure she is taking full advantage of those before investing in a taxable account.

As far as what to invest in, a total market stock index fund or ETF would be the most tax efficient, diversified, and age/risk-matched investment for use in a taxable account in her case. The lower the ER the better. Target date funds like the one in the OP are for tax-protected accounts.

 

[titusbramble]

Bills to win the Superb Owl can't go wrong

 

[Ben & Jerry's]

Is this in a taxable account? Has she already maxed any workplace retirement account and a Roth IRA? If not, would make sure she is taking full advantage of those before investing in a taxable account.

As far as what to invest in, a total market stock index fund or ETF would be the most tax efficient, diversified, and age/risk-matched investment for use in a taxable account in her case. The lower the ER the better. Target date funds like the one in the OP are for tax-protected accounts.

She doesn't have any 401k through her job. Recently graduated from Anderson University with a Bachelors in Mathematics, but is currently a server/bartender.
I think she wants to put the 3k in a Roth.

 

[Zegras11]

Cydy

 

[Desert_Power]

Is this in a taxable account? Has she already maxed any workplace retirement account and a Roth IRA? If not, would make sure she is taking full advantage of those before investing in a taxable account.

As far as what to invest in, a total market stock index fund or ETF would be the most tax efficient, diversified, and age/risk-matched investment for use in a taxable account in her case. The lower the ER the better. Target date funds like the one in the OP are for tax-protected accounts.

She doesn't have any 401k through her job. Recently graduated from Anderson University with a Bachelors in Mathematics, but is currently a server/bartender.
I think she wants to put the 3k in a Roth.

That is absolutely what she should do if she has the earned income.

 

[The Big Donkey]

Is this in a taxable account? Has she already maxed any workplace retirement account and a Roth IRA? If not, would make sure she is taking full advantage of those before investing in a taxable account.

As far as what to invest in, a total market stock index fund or ETF would be the most tax efficient, diversified, and age/risk-matched investment for use in a taxable account in her case. The lower the ER the better. Target date funds like the one in the OP are for tax-protected accounts.

She doesn't have any 401k through her job. Recently graduated from Anderson University with a Bachelors in Mathematics, but is currently a server/bartender.
I think she wants to put the 3k in a Roth.

That is absolutely what she should do if she has the earned income.

Agreed. If she qualifies to open one, I'd honestly look at Vanguard. VTSMX was suggested earlier and I'd agree.

 

[eoMMan]

Well, I heard….nevermind. Ban would happen for sure.

 

[houston]

Darn, I thought this was the new thread to keep us entertained. Are there no longer entertaining threads around here? Sure seems that way.

 

[tri-man 47]

Is this in a taxable account? Has she already maxed any workplace retirement account and a Roth IRA? If not, would make sure she is taking full advantage of those before investing in a taxable account.

As far as what to invest in, a total market stock index fund or ETF would be the most tax efficient, diversified, and age/risk-matched investment for use in a taxable account in her case. The lower the ER the better. Target date funds like the one in the OP are for tax-protected accounts.

She doesn't have any 401k through her job. Recently graduated from Anderson University with a Bachelors in Mathematics, but is currently a server/bartender.
I think she wants to put the 3k in a Roth.

A Roth would be smart. And have her pick some sort of index fund, such as the S&P 500. Invest it and forget about it. Let the compounding happen. Her investment, on average, should double every 8-9 years, which means by her retirement, it'll grow to about $100K.

 

[IvanKaramazov]

Is this in a taxable account? Has she already maxed any workplace retirement account and a Roth IRA? If not, would make sure she is taking full advantage of those before investing in a taxable account.

As far as what to invest in, a total market stock index fund or ETF would be the most tax efficient, diversified, and age/risk-matched investment for use in a taxable account in her case. The lower the ER the better. Target date funds like the one in the OP are for tax-protected accounts.

She doesn't have any 401k through her job. Recently graduated from Anderson University with a Bachelors in Mathematics, but is currently a server/bartender.
I think she wants to put the 3k in a Roth.

A Roth would be smart. And have her pick some sort of index fund, such as the S&P 500. Invest it and forget about it. Let the compounding happen. Her investment, on average, should double every 8-9 years, which means by her retirement, it'll grow to about $100K.

This is what I came in to post. Put it in a broad-based index and forget about it.

 

[SpurrierisisGod]

There used to be an Arizona guy that knew what to do with 3 racks...

 

[General Malaise]

With the recession in the offing, I would keep my money either in cash or in investment-grade bonds. And the recession IS definitely coming, make no mistake. Stay the hell out of equities.

Investing legend Jeremy Grantham flagged a huge market bubble and predicted an epic crash. Here are his 12 gloomiest warnings since the pandemic began.

Grantham expressed deep concerns about investor euphoria, sky-high valuations, and rampant speculating on meme stocks, crypto, and other risky assets.

markets.businessinsider.com

If you believe that why not short the market?

 

[Demian]

For the first time in a long time compound interest is alive and viable. 4.75% for a 1-yr CD was unheard of for the last 20 years. I'll try and hunt down a great intro to compound interest I read when I was young. Eye opening. Props to her for saving early!

This. Since she's at Schwab she could buy SWVXX money market and collect the interest risk free. Plus you have the flexibility to sell shares and the cash settles the next day.

 

[Drunken knight]

Wait, wait, wait!

She has a few ranks to loan?

 

[Beef Ravioli Part 2]

And the recession IS definitely coming, make no mistake.

Is it not already here?

 

[johnnycakes]

And the recession IS definitely coming, make no mistake.

Is it not already here?

It's just getting started, chief.

 

[Manster]

Is this in a taxable account? Has she already maxed any workplace retirement account and a Roth IRA? If not, would make sure she is taking full advantage of those before investing in a taxable account.

As far as what to invest in, a total market stock index fund or ETF would be the most tax efficient, diversified, and age/risk-matched investment for use in a taxable account in her case. The lower the ER the better. Target date funds like the one in the OP are for tax-protected accounts.

She doesn't have any 401k through her job. Recently graduated from Anderson University with a Bachelors in Mathematics, but is currently a server/bartender.
I think she wants to put the 3k in a Roth.

A Roth would be smart. And have her pick some sort of index fund, such as the S&P 500. Invest it and forget about it. Let the compounding happen. Her investment, on average, should double every 8-9 years, which means by her retirement, it'll grow to about $100K.

I was gonna say put it in an S&P 500 index.....and then do a monthly auto deposit into the account.....whatever she can afford.

 

[Manster]

And the recession IS definitely coming, make no mistake.

Is it not already here?

It's just getting started, chief.

If your retirement is off on the horizon, it's a great time to buy

 

[Mitchie]

And the recession IS definitely coming, make no mistake.

Is it not already here?

It's just getting started, chief.

the economy is not the stock market, reality is timing the market is extremely difficult.

I'd just put the dough in an index fund, maybe put 1/2 in now and 1/2 at a predetermined time period, like 2 months from now.

ETA Vanguard funds have 3K minimum I think so won't be able to do that, at least with them.

 

[GordonGekko]

She doesn't have any 401k through her job. Recently graduated from Anderson University with a Bachelors in Mathematics, but is currently a server/bartender.
I think she wants to put the 3k in a Roth.

You are getting a lot of wrong answers, albeit practical ones and generally from those who are attempting to be well meaning.

Your daughter is a server/bartender. There's nothing wrong with that. But it's not a career with optimum earning power and longevity that will put her in a strong financial position of safety after you pass away.

What happens to our children after we die? Will they be safe? Can they take care of themselves? These are the core questions that matters to parents as they age.

The best thing for someone in her position to do, is to spend the money to expand her potential career network. The best job opportunities are ones not listed in any advertisement or via some recruiter. They are via word of mouth from insiders with legitimate pull or influence. What is your daughter's opportunity circle right now? She works at a bar? A restaurant? Maybe in a larger setting? I'm not trying to pry into her life, what I'm saying is she, like many others, have a finite range within her old friends, her old classmates, her neighbors, her former employers, the kind of people going in and out of her current job, maybe a gym, etc, etc.

She might be better off volunteering a place where big decision makers congregate. She might be better off taking a different job, that might not have much practical range, but it opens up doors, like working at place that does insurance or health care. She might be better off upgrading to a very nice gym or athletic club in the area, where you have a lot of small business owners and management types around.

When you are young, you want people around you to know your name, think well of you, see your potential, and have some time involved in seeing you in a much larger context.

Obviously this calibrates differently as we are in a worldwide pandemic, and depending on the city and location, the rate of violent crime has spiked and gone out of control in some areas. This is different for daughters than for sons. If anyone has a problem with that, then they do, I don't give a single damn, because it's true.

I'm not saying your daughter is stuck in a dead end job, I don't know the full calibration. I am saying it's easy to dry out your practical circle of opportunity very quickly and end up in a rut.

So no, don't "invest" right now in some retirement fund. Use the money to create more opportunity pathways to get more job/career opportunities that will hopefully uplift her earning power. Once she's in a better place at that level, then invest. Is it good to invest when you are young? Yes. In context. But if she can put herself into more opportunity zones, then if she can increase her annual earning power by 10K-15K-20K a year, then what is the force multiplier for her then?

Entry into these alternate access points usually costs money. Maybe it's joining a Soul Cycle class regularly. Maybe it's joining a certain kind of hobby. Maybe it's spending more time in a different part of town.

People want to help those they know and whom they like and where they have seen a full context of that person over some period of time.

 

[Mrs. Rannous]

There used to be an Arizona guy that knew what to do with 3 racks...

Does it rhyme with Nantucket?

 

[tri-man 47]

She doesn't have any 401k through her job. Recently graduated from Anderson University with a Bachelors in Mathematics, but is currently a server/bartender.
I think she wants to put the 3k in a Roth.

You are getting a lot of wrong answers, albeit practical ones and generally from those who are attempting to be well meaning.

Your daughter is a server/bartender. There's nothing wrong with that. But it's not a career with optimum earning power and longevity that will put her in a strong financial position of safety after you pass away.

What happens to our children after we die? Will they be safe? Can they take care of themselves? These are the core questions that matters to parents as they age.

The best thing for someone in her position to do, is to spend the money to expand her potential career network. The best job opportunities are ones not listed in any advertisement or via some recruiter. They are via word of mouth from insiders with legitimate pull or influence. What is your daughter's opportunity circle right now? She works at a bar? A restaurant? Maybe in a larger setting? I'm not trying to pry into her life, what I'm saying is she, like many others, have a finite range within her old friends, her old classmates, her neighbors, her former employers, the kind of people going in and out of her current job, maybe a gym, etc, etc.

She might be better off volunteering a place where big decision makers congregate. She might be better off taking a different job, that might not have much practical range, but it opens up doors, like working at place that does insurance or health care. She might be better off upgrading to a very nice gym or athletic club in the area, where you have a lot of small business owners and management types around.

When you are young, you want people around you to know your name, think well of you, see your potential, and have some time involved in seeing you in a much larger context.

Obviously this calibrates differently as we are in a worldwide pandemic, and depending on the city and location, the rate of violent crime has spiked and gone out of control in some areas. This is different for daughters than for sons. If anyone has a problem with that, then they do, I don't give a single damn, because it's true.

I'm not saying your daughter is stuck in a dead end job, I don't know the full calibration. I am saying it's easy to dry out your practical circle of opportunity very quickly and end up in a rut.

So no, don't "invest" right now in some retirement fund. Use the money to create more opportunity pathways to get more job/career opportunities that will hopefully uplift her earning power. Once she's in a better place at that level, then invest. Is it good to invest when you are young? Yes. In context. But if she can put herself into more opportunity zones, then if she can increase her annual earning power by 10K-15K-20K a year, then what is the force multiplier for her then?

Entry into these alternate access points usually costs money. Maybe it's joining a Soul Cycle class regularly. Maybe it's joining a certain kind of hobby. Maybe it's spending more time in a different part of town.

People want to help those they know and whom they like and where they have seen a full context of that person over some period of time.

Then again, LinkedIn is free.

 

[Mitchie]

She doesn't have any 401k through her job. Recently graduated from Anderson University with a Bachelors in Mathematics, but is currently a server/bartender.
I think she wants to put the 3k in a Roth.

You are getting a lot of wrong answers, albeit practical ones and generally from those who are attempting to be well meaning.

Your daughter is a server/bartender. There's nothing wrong with that. But it's not a career with optimum earning power and longevity that will put her in a strong financial position of safety after you pass away.

What happens to our children after we die? Will they be safe? Can they take care of themselves? These are the core questions that matters to parents as they age.

The best thing for someone in her position to do, is to spend the money to expand her potential career network. The best job opportunities are ones not listed in any advertisement or via some recruiter. They are via word of mouth from insiders with legitimate pull or influence. What is your daughter's opportunity circle right now? She works at a bar? A restaurant? Maybe in a larger setting? I'm not trying to pry into her life, what I'm saying is she, like many others, have a finite range within her old friends, her old classmates, her neighbors, her former employers, the kind of people going in and out of her current job, maybe a gym, etc, etc.

She might be better off volunteering a place where big decision makers congregate. She might be better off taking a different job, that might not have much practical range, but it opens up doors, like working at place that does insurance or health care. She might be better off upgrading to a very nice gym or athletic club in the area, where you have a lot of small business owners and management types around.

When you are young, you want people around you to know your name, think well of you, see your potential, and have some time involved in seeing you in a much larger context.

Obviously this calibrates differently as we are in a worldwide pandemic, and depending on the city and location, the rate of violent crime has spiked and gone out of control in some areas. This is different for daughters than for sons. If anyone has a problem with that, then they do, I don't give a single damn, because it's true.

I'm not saying your daughter is stuck in a dead end job, I don't know the full calibration. I am saying it's easy to dry out your practical circle of opportunity very quickly and end up in a rut.

So no, don't "invest" right now in some retirement fund. Use the money to create more opportunity pathways to get more job/career opportunities that will hopefully uplift her earning power. Once she's in a better place at that level, then invest. Is it good to invest when you are young? Yes. In context. But if she can put herself into more opportunity zones, then if she can increase her annual earning power by 10K-15K-20K a year, then what is the force multiplier for her then?

Entry into these alternate access points usually costs money. Maybe it's joining a Soul Cycle class regularly. Maybe it's joining a certain kind of hobby. Maybe it's spending more time in a different part of town.

People want to help those they know and whom they like and where they have seen a full context of that person over some period of time.

she works in a bar/restaurant, she can meet people there - assuming it's a fairly nice restaurant successful people will be patrons. And who says she knows exactly what she wants to do right now. Or that earnings is what she values most. maybe if she wanted to work at Goldman Sachs your advice would be relevant but this is a pretty small sub-section of people.

 

[General Malaise]

She opened up a free account at Schwab and deposited 1k. A friend suggested she look at a Vanguard retirement 2060 fund (VTTSX). The minimum investment is 3k.

Add the funds and dip in or look elsewhere?

This is a little corny and I'm not sure it's as easy to find 10% returns today, but the message is a good one. I'd have your daughter read this just to get a basic grasp of what the author is suggesting. I used to read this guy everyday when I was younger and was trying to learn about markets, investing, etc.

https://www.cmgwealth.com/wp-content/uploads/2015/11/Rich-Man-Poor-Man-Richard-Russell-Nov-2015.pdf

 

[Mookie]

Put it in a Roth IRA.

 

[arrow1]

CYDY :boatloads