question on ETF Individual account?

**disneysteve** · 12-15-2009, 01:38 PM

First rule of investing: NEVER INVEST IN ANYTHING THAT YOU DON'T UNDERSTAND!

It sounds to me like you may be violating that rule.

What is this account for? Is it retirement money? Saving to buy a home? Saving to put a kid through college?

What other assets do you have? Do you participate in an employer-sponsored retirement account like a 401k or 403b? Do you have a ROTH? Any consumer debt like credit cards or car loan? Do you have a fully funded emergency fund? Do you have an asset allocation plan that you follow for your investing?

I think there are a lot of questions you need to know the answers to before we could help you answer the ones you've asked here.

**Broken Arrow** · 12-15-2009, 01:42 PM

Sooo... what's your goal with this money? Is it your retirement fund? Is it your play money? Or maybe something in between like a car replacement or house downpayment fund? Or something else?

The purpose and goal of the money will ultimately dictate what kind of investment vehicle and strategy will best suit you. This will also be in conjunction with your current financial picture that Steve has mentioned.

The bottom line is, before we can help you decide what to do next, first you have to tell us where you are right now, and where you are headed.

**Aaron414** · 12-15-2009, 02:41 PM

It's money towards future house. I do have 401K with this bank I work at, company match, I won't be touching that. 9k in student loan at 5%, 17k with BOA at 15.99 APR...yes it's killing me. I just want to know what's the best way to start saving and put my money to work somewhere other than a Savings Account even if it's little by little. Would investing in Roth a good idea for me right now? Are there services with Roth where they automatically manages everything for you? like with my 401K where Morningstar would auto manage everything for me, for a fee of course.

**disneysteve** · 12-15-2009, 03:38 PM

If you have $17,000 in debt at 16% interest, every spare penny needs to be going there, not into any type of investment at this point. No investment is going to earn you more than that debt is costing you.

I can't say if a Roth is appropriate for you without more info but to answer your question on automatic management, you could invest in a target date retirement fund. That is a mutual fund that starts out more aggressive (more in stocks) and as you near retirement, it gets more conservative (more in bonds). The 3 big providers of those funds are Vanguard, Fidelity and T.Rowe Price. They have about 80% of the market but their offerings differ significantly so if you go that route, be sure to compare all three before investing.

What is your timeline for buying a house? I would not be putting any money into an S&P fund/ETF unless I was prepared to leave it there for at least 5-10 years. If you think you may be financially ready to buy a house in less than 5 years, that money needs to be somewhere safe like a CD or money market.

**Aaron414** · 12-16-2009, 05:10 AM

I'm planning to buy the house in around 6-7 years. so by money market, i should just keep putting money in my savings account? and just focus on paying that 17K?

**disneysteve** · 12-16-2009, 05:50 AM

Originally posted by Aaron414 View Post

I'm planning to buy the house in around 6-7 years. so by money market, i should just keep putting money in my savings account? and just focus on paying that 17K?

Personally, I would be putting any spare money toward getting rid of that high interest debt BEFORE I worried about saving for a house.

**Snodog** · 12-16-2009, 12:42 PM

I agree you should pay down the 17k before investing*. Unless you know of a way to make 16% risk free.

16% debt is toxic to your wealth, get rid of it as soon as possible.

*except if getting a 401k match

**Aaron414** · 12-16-2009, 02:20 PM

know any place i can consolidate that to a lower APR?

**disneysteve** · 12-16-2009, 02:39 PM

Originally posted by Aaron414 View Post

know any place i can consolidate that to a lower APR?

First step is to call the current CC company and ask them to lower the rate. Sometimes all it takes is a phonecall. You may need to speak to a supervisor and not just the first person who answers the phone.

If that doesn't work and your credit is good, you could apply for a new card with a lower rate.

**Aaron414** · 12-17-2009, 04:34 AM

I found this site through MSN Money for a personal loan with 8% APR, think it's a good deal? I'll have to call them and find out if it's fixed

penfed.org

I can't post the exact link to it yet cuz I don't have 15 post

That 17k I have is a Line of Credit, that's what's killing me. If i can get a personal loan at a fixed rate

**disneysteve** · 12-17-2009, 06:14 AM

Penfed is a well-respected credit union. I think that is certainly a reasonable option. Cutting your interest rate in half would save you a bundle of money.

**Slug** · 12-17-2009, 06:52 AM

Originally posted by Aaron414 View Post

I found this site through MSN Money for a personal loan with 8% APR, think it's a good deal? I'll have to call them and find out if it's fixed

penfed.org

I can't post the exact link to it yet cuz I don't have 15 post

That 17k I have is a Line of Credit, that's what's killing me. If i can get a personal loan at a fixed rate

Yeah, PenFed is great. Worth the $25 to join that veterans club to become a member.

**Aaron414** · 12-18-2009, 03:42 AM

Alright I tried applying for their unsecured personal loan, and got decline saying i got too much unsecured loan? all i got is my student loan and that 17K, think i can talk my way into letting them let me have it? or try something else?

**disneysteve** · 12-18-2009, 04:48 AM

Can you post your income and expenses? You need to really slash your spending to the bare minimum to free up money for debt repayment. How much are you contributing to your 401k? Is there a match and, if so, are you putting in more than needed to get the full match?

The other thing is what I suggested earlier. Try to get a low interest rate credit card and transfer some of the high interest debt to that.

question on ETF Individual account?