Quote:
Originally Posted by noppenbd
Once you get over $10K you can consider investing more aggressively, as long as you are comfortable with risk. You need to think about how comfortable you are with large swings in the value of your investments. Stocks do not go in a straight line and some years your investments will go down. I would look into some of the online risk tolerance tests.
The funds I recommended have returned 8-10% a year in the past, but you cannot plan on this for the future. All you can do is manage your risk. So my advice is to not try to get too exact with the $10K target, but rather try to save up $10K in extra contributions on top of your 15%. Any return you get on that extra 10K will be extra money for retirement, which will be a good thing.
By the way, congrats on the new job!
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Thanks for the additional advice, and the congratulations!
I wanted to invest aggressively with the money in the Roth because if I figured *if* I pull in a big ROI, I won't get taxed for it, which is one of the main benefits of investing through a Roth. But that was my line of thinking before I knew how much income I would get with the raise.
Another way to look at this is to approach it as a 5-year plan. Every year I'll have 12k to invest, for a total of 60k when I'm 30. Any unexpected costs will decrease this amount, and any promotions/raises will increase it. How do I divvy up that 60k so that I meet my goals (which are still a little hazy) and manage risk so that it's more likely to grow?
The hazy goals:
-Have a DP in 5 years. Don't know how much yet because I don't know which neighborhood I'll end up in, but I would guess that I'll be looking at homes in the 175-275k range. I might be interested in flipping, but it all depends on how real estate goes, and what my life is like (e.g. if I have kids at that time, I'll have to invest in a changing table rather than a table saw).
-Get a nest egg going for retirement. I don't know whether to do this through the HSA, the Roth, or both. I also don't know how much I should aim for. Any feedback on this?
-Invest a small part of my income aggressively. I'm willing to take the risk; I'd like to try and take advantage of my youth to ride out swings in the market. I'll DEFINITELY need to do more research on this, though!