New to Real Estate · Houston, TX · Member since 2017 · 94 posts · 19 votes
Just curious to know if any of ya have yalls personal money in the stock market. Is it even worth the hassle and investment to also do that as well along real estate?
You really can't go wrong with index mutual funds, specifically Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX), requires minimum of $10,000 to start or Vanguard 500 Index Fund Investor Shares (VFINX), requires minimum of $3,000. Start with what you can afford and then setup automatic investing (weekly or monthly). You can invest in one of these funds with your IRA or personal funds, but remember this is a long term investment strategy, if you think you will need the money in the next few years you may do one of their bond funds.
Open a Roth IRA and get started! It's a get way store money for retirement and forget about it. There's a learning curve for investing in individual stocks, ETFs, or mutual funds. I opened an Roth at TD Ameritrade when I was 28... Wish I would have started earlier!
You really can't go wrong with index mutual funds, specifically Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX), requires minimum of $10,000 to start or Vanguard 500 Index Fund Investor Shares (VFINX), requires minimum of $3,000. Start with what you can afford and then setup automatic investing (weekly or monthly). You can invest in one of these funds with your IRA or personal funds, but remember this is a long term investment strategy, if you think you will need the money in the next few years you may do one of their bond funds.
Vanguard also has $1,000 options to start. It's a great way to diversity your portfolio. I have a 401k, Vanguard Roth IRA, Vanguard Brokerage account, and rental properties. And looking for multiplexes in my area right now. I'm still getting 10-11% returns over the past 12 months on my stocks and bonds.
Another option might be using a robo-investor, like Wealthfront or Betterment. In addition to my company-sponsored 401k, I have a Roth IRA at Wealthfront, and they've been really good to me over the past five years or so!
Real estate and stock market investing are not comparable..nor are they alternatives for one set of goals. The level of activity and involvement are very different, especially when getting started...and they meet different goals/objectives. If your goal is to generate passive returns, real estate (done properly) may not be the right vehicle. If you want more control over your investment results, the stock market may not be the right option. The goal drives the best strategy, not vice versa.
@Gabriel Benavidez I would stay away from stock market investing especially at these valuations. Real estate allows much more control & is a different animal. And it’s volatile unlike cash flow in Re most of the time!
Should you invest in the stock market? It depends. What is your risk tolerance like? Where are you in terms of your financial education?
I personally have a Vanguard 500 Index Fund but I do not think that means I am "investing" in the stock market. I say that means I am exposed to the stock market. Any idiot can sock money away in an IRA or index fund. However investing in the stock market (in my opinion) takes more sophistication than just "saving" money in a fund managed by someone else. Really investing requires you to learn how to study the technicals in order to determine the financial health of a company and make an informed decision about whether or not to put your capital at risk there.
Putting your money away in an index fund exposes you to the stock market but offers zero protection against systemic risk. When the the S&P crashes, so does the value of your mutual fund. It's alright for me right now because I need to be getting some kind of yield on my savings to stave off inflation. However, if the S&P falls too much I know when to get out. Paper assets also are not very tax efficient . You can argue that IRAs and 401ks are tax deferred but why defer taxes when with real estate you can basically eliminate them?
I would highly recommend The Intelligent Investor by Benjamin Graham. He was Warren Buffet's mentor and the book is a timeless classic on the stock market and value investing. It was and still is an eye-opening read that I return to periodically. I think there's definitely a lot of money to be made in the stock market but whether or not it's a fit for you depends on your specific financial goals, temperament, and frankly -- intestinal fortitude.
@Gabriel Benavidez It is always good to diversify investments to hedge against risk of severe loss in a particular investment. I personally have multiple investments so I have both stocks and real estate. They typically go together stocks go up RE goes us. Stocks go down RE will go down. Over the past year my return of my stocks have put paced my RE but I know long term my RE will be a more stable investment. Just depends what stocks and what kind of RE you are buying.
Invest in low-cost index funds. Understand tax efficiency. I agree with @Dmitriy Fomichenko. You cannot go wrong with Vanguard Total Stock Market Index Fund (VTSAX).
You may find value in JL Collins "Stock Series" - https://jlcollinsnh.com/stock-series/
It's probably wise to have both stocks and rentals, even if they have different goals like Mike mentioned. If nothing else, to have a place to store cash while you're looking for properties and to educate yourself on the market. Like others mentioned above, index funds are the way to go. What we did on our first house was sell our one stock that was down (harvesting losses) to pay for the down payment of the house.
If you're going to invest, make sure that you get yourself onto Mint or Personal Capital. Watching your money on there will make a big difference in how much you save.
@Gabriel Benavidez
You want to have a diversified portfolio. Your mix will vary depending on goals and risks.
I had 50% in stocks over the past 10 years, and enjoyed the bull run.
Now it is 70% in REI, 24% in equities/bonds/ETFs, 5% in Silver/Bullion, 1% crypto.
Just curious to know if any of ya have yalls personal money in the stock market. Is it even worth the hassle and investment to also do that as well along real estate?
Gabriel,
I think its prudent to diversify as much as possible. I've spread my investments between stocks/bonds, real estate holdings, education infrastructure, health care industry infrastructure, and agriculture infrastructure. Note, I don’t invest in REITS as part of my stock portfolio since I own real estate. I use TD Ameritrade Institutional which is carefully managed by a professional with a minimal fee structure.
Real estate investing is a bit easier to learn than successfully trading the stock market, but to both take an intimate knowledge that there are few short cuts for.
@Dmitriy Fomichenko I whole heartedly agree with this advise. Vanguard total stock market is the way to go, your betting on the entire market not individual stocks where you (and me) do not have nearly the amount of insights and expertise to make sound judgements. This is our “retirement” money...insurance if you will in case real estate investing doesn’t work out for us. We’re working on maxing our both our 401k contributions while also saving for rentals...once the 401ks contributions are maxed then all our excess gap will go into real estate. Will likely retire somewhere around a 50/50 mix of real estate and stock market investments. Money is fun!
@Gabriel Benavidez I recommend maximizing investment in a Roth IRA. Your largest expense over time will be taxes and the Roth IRA is a great way to avoid taxes on gains in the future. You pay taxes now and pay no taxes upon withdrawal. Invest in a whole market index fund which will give you a steady return without any hands on management. Invest using dollar cost averaging, which means put a steady amount in on a regular basis. That means you are always investing as the market goes up and down. I would not view this investment as a "retire early" but rather a secure investment for your older years. Retirement accounts are usually shielded from litigation, bankruptcy and divorce. In other words, even if everything goes to sh1t in your life, at lease in your older years you will have some money to live off.
if your going to paper assets I’d do a vanguard fund and not try to “ play” the stock market . Everybody I know that has done this ( picking their own stocks) has lost their shirt because it requires the right education and sophistication to beat a good fund .i think we are peaked out and would be hesitant to do stocks right now if it were me .