tactical808 t1_jegpqgp wrote

Crypto, real estate, and options…

Make sure you learn to crawl before you walk/run. These three assets can provide crazy returns but come with many risks and/or capable of 100% loss.

Do your due diligence before throwing money at these assets with an understanding that you could lose it all.

In the meantime, build a diversified portfolio of ETF’s and cash (for rebalancing and opportunities).

Be cautious chasing the quick money!


tactical808 t1_jecyr2z wrote

Separate the emotional aspect of the home from the financial aspect. It’s nice to own a home, but it’s not a need.

Based on your numbers above, your mortgage and some utility costs will be more than 50% of your take home budget. You also don’t account for property tax, insurance, and maintenance. It seems a bit too tight. But, everyone is different. You could also rent a room to help out on the mortgage.

Build your overall budget, write down your goals (retirement, travel, etc.) and see how those goals fit in with what’s left.


tactical808 t1_j2b061u wrote

Hard to do, but best advice is to not let your lifestyle “creep up” with your new pay. If you were doing fine prior, try to stay relatively close to that. The biggest mistake you can make is to grow into this new income.

Conceptually it sounds crazy not to spend what you make, but 3x’ing your income can get you to Financial Independence that much quicker. Again, easier said than done, but the more you can apply to FI with this new pay, the quicker you can eventually leave the rat race (assuming that is the goal).


tactical808 t1_j29vfci wrote

Number one, a reminder that there will never be enough money, period. Even when you are making more money, you’ll always want more on top of that.

Everyone’s situation is different, but you have to balance your current flexibility with your current pay. You’ve pointed that out clearly and that flexibility at your children’s ages are priceless. But again, it comes back to, there is never enough money.

I think we all benefit when there is an end game in sight. For example, you want to retire at age 60 with ~$100k a year, you’ll need ~$2.5m. What do you need between now and then to get there? You want to remodel your home in 3-5 years, how much is that, and what do you need to do to get there? You want to have a college fund, how much and how?

Once you have these buckets, you can assign your income these tasks and, based on your budget, you can see whether you are on track or come up short. That will determine how much more income you’ll need and thus look for a higher paying job, etc.

But until there is a vision, you’ll never land on “when is enough?”.


tactical808 t1_j297td3 wrote

This is where asset allocation comes into play. The “general” rule on social media is to have an emergency fund, then invest the rest in 100% S&P500 index funds. We know not to touch the emergency fund. But, if your investments are 100% equity (stocks in the S&P500) how do you rebalance?

Asset allocation adds in a cash and bond position to your investment portfolio so you have three areas to invest your money; cash=opportunity funds, bonds=income, and stocks=appreciation/growth. Everyone’s allocation should be unique to their risk tolerance and your portfolio should be rebalanced periodically (every 6 months or annually works well).

We have a 15% cash, 15% bond, and 70% stock allocation. As stocks were going up in 2020, rebalancing told me to sell stock positions and rebalance my cash and bond positions. As stocks tanked earlier this year, my rebalance had me buying more stocks and reducing my cash and bond positions.

Asset allocation follows buffets, be fearful when others are greedy and greedy when others are fearful. You can never time the market efficiently and emotions always come into play. But, having an asset allocation in place and rebalancing to the set allocation removes all of that. You simply sell/buy what is needed to get back into balance.