A few folks have requested to see my approach to investing in more detail, so I decided to conjure up the following post. It obviously features a level of diversification, but more in style than substance. I see investments as both ways to grow money and also explore different concepts, so at times certain targets are selected more for interest than practicality.
1. Individual Account (Taxable)
This houses the bulk of my investing money, at times to great annoyance. The biggest upside is easy movement of funds If I need to do something important in the short-term, but the negative surrounds tax policy requiring me to hold longer than I would prefer in some cases.
2. Individual Robo-Managed Account (Taxable)
I got this to take some weight off my shoulders on a weekly basis. My broker service offers different plans optimized for taxes, conservative wealth strategies, or growth, and I place a small amount in each month with minimal overhead where management fees are concerned.
3. Roth IRA (Non-Taxable)
Probably the best place to store your investment holdings for the long run. The money goes in post-tax, but then grows without penalty until you’re older, providing no early withdrawals have been made. I do my best to max this out each year, though I fell short a few years back, and more recently got penalized by the IRS for contributing too much based on my salary.
4. Employer 401k
While I am not a fan of 401k programs, I started putting in 5 percent this year (pre-tax) because my income was creating expensive charges when tax filing rolled around. I made sure to pick the lowest fees for my funds, and generally don’t pay much attention to it other than the occasional checkup.
Fixed Income Sources
1. Savings Account
One can shop around, but I use the decently-high option from my broker service. This account yields a little over 1 percent and is effectively an airlock for money that will journey to any of the first three accounts mentioned.
2. Lending Club
This is more of a novelty than anything else to me. The site allows participants to purchase loans and get paid interest, providing you meet specific income standards. I tossed a grand in at the beginning of the year, focused on two different lines of credit. Probably should check it more frequently, but they don’t come due until a few years from now.
Not sure this goes here exactly, but I started with the REIT broker last year, and have enjoyed their products thus far. They offer different portfolios depending on your priorities, but I mostly bought in to take advantage of the projected growth in Midwestern city redevelopment. Biggest downside is receiving multiple forms to enter for taxes, which can create a problem if your software (*cough H&R Block*) doesn’t recognize small dividend amounts. That becomes a non-issue after you have been with them a while, however.
2. Physical Real Estate
As some of you know, I purchased a house earlier this year. Thus far it has required time and pennies, but the goal is to have at least half the mortgage paid by renters, and possibly as much as 100 percent. It also gives me the space to start a new business venture I have been planning for some months now. We’ll see whether I was smart to buy or not in the years to come.
1. Cryptocurrency (Coinbase)
I’ve been nibbling on Bitcoin, Litecoin, Ethereum, XRP, and even 0x for a while now. Can’t say any of them have done spectacularly well, or at least not long enough for me to react. I keep adding despite Coinbase’s obnoxious fees because we can never know what will happen to fiat currency in the future.
2. Precious Metals
I continue to accrue silver whenever possible. A key thing to consider is WHERE you are purchasing it. Going to a pawn shop or metals joint can lead to astronomically higher prices with no chance of a refund. Make sure to Google the value of whatever you choose to buy, and check online retailers to ensure there is no extreme markup.