
Ask HN: How do you invest your money? - sergiotapia
&#x2F;r&#x2F;personalfinance has turned me on to the idea of investing for retirement.<p>How does HN invest their money?<p>- Passive robo-investing with Wealthfront&#x2F;Betterment?<p>- Actively searching for stock on the rise&#x2F;timing the market?<p>- Real estate purchasing then renting those out?
======
itamarst
While investing is important (personally it's 50/50 stock index fund and US
treasuries), another important thing to do is reduce your expenses.

1\. The lower your expenses the less money you need on an ongoing basis. This
means you need less savings to fund your lifestyle.

2\. The lower your expenses the more money you have left over to save and
invest.

The combination means you have more money _and_ it lasts longer. This is
pretty important career-wise because it makes it much easier to find a better
job: when you need to quit or lose your job you have much longer to find a
good job, you don't need to take the first one you find.

Expanded version here: [https://codewithoutrules.com/2016/08/08/living-below-
your-me...](https://codewithoutrules.com/2016/08/08/living-below-your-means/)

~~~
ryanwaggoner
You missed an important benefit: expenses are mostly post-tax, so reducing
your expenses by $1 may reduce the amount you need to earn by $1.50 - $2.

Also, 50% in treasuries seems overly conservative for most investors,
especially if they're young. That's basically just going to match inflation.
You may have your reasons, just wanted to point that out :)

~~~
carsongross
Being 50% in treasuries right now is not particularly conservative. The
Schiller P/E ratio was only higher in 1929 and 1999:

[http://www.multpl.com/shiller-pe/](http://www.multpl.com/shiller-pe/)

So, broadly, equities look like a pretty bad deal right now.

~~~
the_gastropod
The Schiller P/E has historically been pretty useful, but it's not a great
tool for comparing pre 2001 and post 2001 market valuations because of changes
in GAAP. Check out
[http://www.philosophicaleconomics.com/2013/12/shiller/](http://www.philosophicaleconomics.com/2013/12/shiller/)
for a more in depth explanation.

~~~
itamarst
There's also q, which has same result as Shiller P/E 10 but is calculated very
differently:
[http://smithers.co.uk/page.php?id=34](http://smithers.co.uk/page.php?id=34)

------
Arcten
I invest using mutual funds through Vanguard. Some percentage US stock fund,
some percentage US bond fund, some percentage international stock, and some
percentage international bond. This is by far the simplest and easiest
approach. I currently invest using VTTSX which is a Vanguard fund that does
this splitting for me.

You can read more about this investment philosophy here:
[https://www.bogleheads.org/wiki/Three-
fund_portfolio](https://www.bogleheads.org/wiki/Three-fund_portfolio)

------
austenallred
I'm not convinced there's any passive investment that will beat a Vanguard S&P
500 index in the long-run. 99% of people would be best-served to just dump
100% in that.

I've made some pretty incredible returns researching and investing, but in
retrospect even though I did very well I would have been better off spending
that time earning more money rather than investing it. My net worth isn't big
enough that an extra percentage gain moves the needle that much.

~~~
vladimirralev
S&P is too US-scoped. One bad president pick and it will be all gone. It's
better to diversify 20-30% worldwide and a little into assets with different
source of value like gold, real estate, crypto, oil, whatever. Just S&P is not
going to cut it forever. I know central banks are buying it now too, so it may
find itself being very political soon.

~~~
austenallred
> S&P is too US-scoped. One bad president pick and it will be all gone

Respectfully, if that were true it would all have been long gone a long time
ago :)

------
gnicholas
There's a tension between "invest in what you know" and avoiding correlation
between your financial investments and your job.

Most HNers know the tech sector better than other sectors. But investing
(long) in tech would not be a great idea from a diversification perspective.
If the tech market tanks, your job prospects will suffer (you could get
fired/furloughed, your startup could stagnate) and your portfolio will drop
simultaneously.

One way to resolve this tension is to take short positions on tech trackers
and long positions on particular stocks that you think will outperform the
sector. On days when everything goes up, you won't win as big. But on days
where everything goes down, you'll be glad you have the hedge.

~~~
russellbeattie
I remember explaining to my mother in the mid 2000s that Qualcomm owned the
vast majority of the technology powering CDMA, which would power billions of
smart phones in the future. So she bought QCOM. I was right about smartphones,
yet the stock did nothing... What you know about tech and what Wall Street
thinks about a company is entirely two different things.

------
arkadiyt
Read /r/financialindependence (better than personalfinance, and more
appropriate for this subject), and also the Bogleheads forum [1] and wiki [2]

[1]:
[https://www.bogleheads.org/forum/index.php](https://www.bogleheads.org/forum/index.php)

[2]:
[https://www.bogleheads.org/wiki/Main_Page](https://www.bogleheads.org/wiki/Main_Page)

~~~
sergiotapia
I read /r/financialindependence and daydream haha, that's where I learned
about all this stuff.

------
rabidonrails
Here's Warren Buffett's advice for people with this question from the BRK
Letter to Investors:

"My advice to the trustee could not be more simple: Put 10% of the cash in
short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I
suggest Vanguard's.) I believe the trust's long-term results from this policy
will be superior to those attained by most investors – whether pension funds,
institutions or individuals – who employ high-fee managers."

------
chollida1
Advice like just buy Vanguard or US treasuries is not really all that great of
advice.

One of the biggest mistakes people make in investing is country concentration.
Telling people to "dump 100%" into Vanguards S&P 500 is just, well I'll use
misguided but I should use stronger language.

Telling someone to invest just in the US equity market if you live and work in
the US there is just an broader way of telling someone to invest everything in
the company they work for.

You still have risk like 2008 where you can have the double whammy of both
your company and your investments both getting beat up at the same time.

Everyone should have exposure outside of their own country, especially
American's. Or Put another way, if your whole investment portfolio is based in
one country that's better than investing in a single company but not too much
better in that you're still making the same investment mistake of significant
portfolio concentration

~~~
nunez
isn't that the point of having a three headed fund? 50% spy, 25% bonds, 25%
international?

~~~
chollida1
Not sure what a "three headed fund" is, but the sample you gave would
diversify out of the US, assuming the 25% bond fund doesn't just hold US debt.

You really shouldn't care about the number of funds you hold, assuming you
don't take it to extreme levels, just that you don't hold only exposure to one
country.

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extesy
I use Betterment. While I agree that for the upside market periods it won't be
any better than a Vanguard ETF, but for volatile or downturn periods I was
able to save quite a lot on their automated tax loss harvesting feature. Also
automatically using slightly different portfolios between regular and Roth
accounts to get yet another tax advantage is a nice touch.

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tanderson92
* Bogleheads investing philosophy -- [http://bogleheads.org](http://bogleheads.org) \-- the single best financial forum on the internet (and praised as such by none other than John Bogle)

* Vanguard index ETFs, mostly.

* International investing in proportion to market capitalization -- i.e. the market portfolio. The truly passive choice.

* Buy and hold, low-cost tax-efficient strategy.

As for where my ETFs are actually located: Merrill Edge. They have commission-
free trades on all ETFs/equity with a sufficient balance. And the credit card
rewards with Bank of America are tough to beat.

~~~
tzs
> Vanguard index ETFs, mostly.

Is it safe to have most of your money in funds handled by one company? Are
there scenarios that are at least remotely plausible where one could lose most
of one's money in a Vanguard index fund where a similar fund at, say, Fidelity
would be fine, or vice versa?

~~~
tanderson92
That is safe to say.

Such a scenario is not remotely plausible, in my opinion. The commonly claimed
scenario is fraud at Vanguard, but I'm highly skeptical that this is possible
given that Vanguard doesn't hold the stocks in the funds; they are held in
trust at (last time I checked) JP Morgan.

The bigger concern is massive sustained outflows (for some reason) from
Vanguard, triggering capital gains distributions which would hurt me tax-wise.
I have thought about switching to pure ETFs rather than the dual share
structure that Vanguard has with their mutual funds, for this reason.

------
baccredited

      house       8.1%
      US stocks   36.6%
      Intl stocks 12.8%
      bonds	      16.0%
      real estate 4.6%
      P2P lending 3.5%
      vc          6.4%
      college 529 6.7%
      cash        5.4%

------
qwtel
Passive equity ETFs across all major regions, weighted by contribution to
world GDP. A minor portion in various cryptocurrencies, so I can do some
active 'trading' (really just losing money), but on a smaller scale, without
getting anywhere near the ETFs (studies found that people who buy ETFs often
fare poorly _in practice_ because they start to actively trade them).

------
xur17
I max out my 401k, and then once I have over $X in my bank account I transfer
more into my Vanguard account, buying enough to rebalance based on my asset
allocation spreadsheet (US Stock, International Stock, US Bond).

I limit myself to investing a max of 10% in individual stocks.

------
massysett
I'm a federal employee so I put it into the Thrift Savings Plan (think 401k).
The tax advantages are huge.

Taxes, taxes. Taxes will eat you alive. Find the best tax reduction vehicle
you can, and then get into it and keep your costs low.

After all, if you had to read something on /r/personalfinance, then "Actively
searching for stock on the rise/timing the market?" is not something you have
the expertise to do; "Real estate purchasing then renting those out?" is not
something you have the passion or expertise to do. As for
wealthfront/betterment, I have no idea what those are, but if you have a tax
advantaged vehicle available like IRA or 401k, use that first. Taxes taxes
taxes.

~~~
austenallred
What vehicle you use and what you invest it in are different questions. You
could put your whole 401k in JNUG (a 3x-leveraged gold miners ETF that will
regularly have 20% up/down days).

So 401k is very good advice, but then you have to determine what your 401k is
invested in.

------
HockeyPlayer

      Vanguard index funds & Berkshire Hathaway 
      LP real estate investing
      AngelList and VC
    

If you are new I'd recommend Arcten's Three-fund approach and don't forget to
rebalance annually.

------
akg_67
I suggest you do some reading before getting started with investing for
retirement.

Bogleheads wiki and forum has good information and knowledgeable forum
participants. [https://www.bogleheads.org](https://www.bogleheads.org)
[https://www.bogleheads.org/wiki/Main_Page](https://www.bogleheads.org/wiki/Main_Page)

In addition, following books will give you good fundamental understanding of
why and what.

Your Money or Your Life, Vicki Robbins ...

Millionaire Next Door, Thomas Stanley

A Random Walk Down Wall Street, Burton Malkiel

------
pesfandiar
How you invest depends on many factors: e.g. your age, your family status,
income, locale, tolerance for risk, and above all your investment goals.

I live in Vancouver, so real estate investment would be crazy for me. Since I
don't like to dedicate time and energy to investing money, I'm just going with
broad ETFs. More info: [http://www.pesfandiar.com/blog/2015/05/01/how-i-
invest-my-sa...](http://www.pesfandiar.com/blog/2015/05/01/how-i-invest-my-
savings)

------
user5994461
Vanguard.

Whatever the question is, the answer is vanguard, as long as you are American.

------
PM_NAKED_PIKS
To be honest, insider trading.

------
kowdermeister
Because I don't have serious money to invest, I invest in building my network,
"buying" time and then... relaxing.

------
sharemywin
I worry about passive investing. Does it turn into winner take all?

If most everyone puts there money in a index tracker it would go up or down
based on contribution and withdraw rates versus actual results of the market.

So, while there is more contributing than withdrawing it continues to go up
which would attract more money to it.

~~~
politicalthrow
Index funds are therefore the next bubble?

~~~
sharemywin
Assumptions:

* index funds are larger and larger share of investing

* Median Baby boomer about 63

* 1/2 Americans in stock market

* In 2017, over 62 million Americans receive SS benefits

* US Adult Population 247,773,709 = 123M in stock market

* Only 25 M generation X

* Millennials don't invest in stocks [http://www.businessinsider.com/why-so-few-millennials-invest...](http://www.businessinsider.com/why-so-few-millennials-invest-in-the-stock-market-2016-7)

Conclusion Drain of stock market as sellers begin to out number buyers

~~~
dbjacobs
This ignores just how skewed towards the rich stock ownership is. The
liquidation of stocks owned by the middle class will not move the needles
much. And the very rich don't need to liquidate their stocks to maintain their
lifestyle.

------
thisisit
Just a piece of advice here. Buying stocks on the rise is no better than
momentum chasing in stocks and you end up with stocks which are not worth it.
It is advisable to find good businesses to invest in if you have time and
inclination to do so. If not passive index investing is great.

~~~
benjohnson
Conversely.. I wait for a wait for a stock to rise - it's another signal that
others have come to the same conclusion, and I'm ok with leaving some money on
the table as a payment for that information.

------
amorphid
In my USA job's 401K, I pick the closest thing to low fee index fund that
captures tracks the stock market. In my personal retirement, I use
Wealthfront. I do not like actively investing, and so these approaches work
well for me.

~~~
gcb0
is maxing 401k for someone who won't stay in the US longer than 4 years wise
or dumb?

~~~
amorphid
Does your employer offer free matching? If yes, you're turning down free money
if you don't make contributions. Also, might be worth looking into rolling
401K over into your home country's equivalent, which may or may not be
something you can do.

------
readhn
There is no investment. There is only speculation!

Question should be how do you speculate with your money?

\- stocks \- Real estate \- bonds

I wonder how different these answers are from the answers Back in 2007?

We are almost 10 years into this bull run. Nothing lasts forever...

------
kaikoenig
I go for bluechips in sectors I understand. Yields 6-7% YOY

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anonymoushn
Index funds.

------
legend2
[https://intelligent.schwab.com/](https://intelligent.schwab.com/)

The best robo offering available atm imo.

~~~
basch
or just invest in Schwab Target Index Funds which acomplish the same thing at
0.13%, without the overly complex "customized for you" coat of paint, and have
only $100 minimum.

[https://www.schwabfunds.com/secure/file/P-9430864](https://www.schwabfunds.com/secure/file/P-9430864)

Buy SWXKX. Done.

~~~
faet
They've lowered the ER on their target retirement mutual funds to 0.08%, SWYNX
would be the equivalent.

~~~
basch
thats an institutional share. requires employer funded account or 10 million
investment. said rate you cite is laid out in the link I provided.

------
soperj
Vanguard and the non-market etf ~ Berkshire Hathaway.

------
skdotdan
Does anybody know the equivalent to Vanguard but for Europe (not UK)? Or, can
I buy Vanguard from Europe?

~~~
tonfa
You can. Some mutual funds are available depending on countries.

But in any case you can just buy the ETFs, either in the US stock exchanges
(same as you would buy your FB or AAPL shares), or they also have some UCITS
version trading in european stock markets.

The UCITS version may have some advantages depending on your country of
residence (since they are EU based, and follow EU mutual fund regulations).
There are also some downsides (e.g. you might be losing a bit of US tax that
might be recovered otherwise depending on dual taxation treaty). Also US stock
would be subjected to potential estate tax in case of death (detail will also
depend on dual taxation treaty).

Overall the largest difference between the various options is going to be tax,
and since it can be significant, it is worth spending some time.

As to the original question, there are also a lot of other similar ETF to the
Vanguard ones (e.g. from BlackRock/iShares/UBS/etc.). The fees will be
different, but as mentioned before, the tax implication might make a bigger
difference.

(you can research the ETFs on sites like justetf.com)

Edit: and depending on your country, some special retirement account might
have much much better tax treatment, compared to simple ETFs, also worth
researching.

~~~
skdotdan
Thank you very much for your answer.

I'm more inclined to index funds than to ETFs, though. What you have said
about ETFs also apply to their index funds?

~~~
tonfa
In case there is a misunderstanding: There are a lot of ETFs that are exactly
the same as another mutual fund, especially among index funds.

The only difference is that one is traded in an exchange, while for the other
you buy shares from the fund provider, other than that they behave the same.

(I would assume that in Europe, there is a lot less access to mutual index
funds, than to index ETFs)

------
stevenmays
Main portfolio:

70% - VTSAX (total US stocks)

20% - VTIAX (total international stocks)

10% - VBTLX (bonds)

Taxable:

Wealthfront

------
snowpanda
I buy twinkies and freeze them, just in case they go bankrupt again, laugh
now.

------
jpn
RSP Guggenheim S&P 500 Equal Weight ETF

------
artursapek
Stocks, XIV, selling covered calls

------
seanMeverett
TheBaseCode.com

------
ryanwaggoner
Everyone is going to have their own opinion and 2 cents about what you should
do, so I'll add mine to the mix.

First of all, most importantly, you'll never find a better investment than
yourself, up to a point. Whether it's education, new skillsets, saving time,
starting a new business, etc, you're likely the best investment vehicle you
have. Don't read this too literally, it's not a science, but I'd add it to
your thinking. Ask yourself regularly how you can invest in yourself and grow
your earnings.

Second, related to the above, I think it makes sense to spend a bit of time
optimizing and automating your finances (I'm a fan of "I Will Teach You to Be
Rich" by Ramit Sethi, despite the scammy title), but from then on, spend 20%
of your energy on keeping expenses low, and 80% on growing your income. You
can only cut expenses so far, but income is essentially unbounded.

Third, I would spend a lot of time educating yourself on finance and
investing. As has already been mentioned here, the /r/financialindependence
subreddit and the Bogleheads forums are both great places to go from here.
Read lots of books (both of those places will have recommendations), blogs,
listen to podcasts, etc.

Fourth, in terms of the stock / bond market, I'd recommend just doing index
funds with Vanguard. I could go on and on about the reasons, but basically it
comes down to it likely being the best way for you to get the highest returns
in the public markets. You can't beat the markets in the long run, and almost
all the non-index-funds out there can't either. Vanguard popularized index
funds, they're owned by their investors, and they have the lowest cost funds
available.

Fifth, if you're likely to get overwhelmed by options, just do a lifecycle
fund to start with. It'll handle all your asset allocation and rebalancing for
whatever your time horizon is. If you're _really_ likely to get bogged down,
consider Betterment or Wealthfront. You'll pay a bit more in fees, but in
return for convenience and a fancy dashboard that makes you feel good :)
Better than never getting started!

Sixth, I'm bullish on real estate in good cities with long-term growth, but
I'd recommend you have a decent pile of cash, start slow, and invest for
cashflow. Keep in mind that buying investment real estate is just buying a
small business. It just so happens that for a bunch of reasons, you can borrow
75% of the purchase at pretty favorable rates, and it's lower risk than buying
many other types of businesses. It is _not_ passive :) Biggerpockets.com is a
great community for learning more about real estate investment.

Seventh, going back to the first point, beyond public stocks / bond and real
estate, you could also look to invest in private companies, either your own,
as an angel investor, etc. There are some crowdfunding sites that have popped
up recently for doing angel investing in startups, investing in real estate,
etc. You can also look at things like Prosper or LendingClub, where you're
lending money on a marketplace to other individuals. Lots of options.

My advice would be to focus your energy on the big three that people have
almost _always_ used to build significant wealth: public stocks, real estate
investments, and your own business. The others are exciting and interesting
and can work, but generally carry a lot more risk.

My own (unscientific) approach is to keep them all below 10% of my networth.
Same with picking individual stocks, if you're into that.

Hope that's helpful!

------
dandr01d
1\. Maxing my 401K

2\. Buying a home

3\. Dumping everything else in index funds

~~~
oaktowner
Not only do I share the same investment strategy, but my phone is named the
same as your HN handle.

~~~
dandr01d
Hahaha awesome!

------
tehrealjames
In my hobbies

------
warsharks
buy bitcoins

that is all

~~~
AnimalMuppet
That is _terrible_ advice.

"Divide your fortune into seven, or even to eight, for you do not know what
misfortune may occur on the earth." \- Ecclesiastes 11:2

~~~
xiphias
Not worse advice than buying index funds which is strongly correlated to the
globally connected over-leveraged bond market.

I'm not against diversification, but cryotocurrencies are a good non-
correlating asset class

------
dmichulke
Bet on your beliefs, you either get wiser or richer.

I personally have

\- Precious metals (physical / stored / miners)

\- defense values (stocks)

\- crypto currencies

\- cash

Guess I'm not an optimist

