Turning 28 and Getting Serious About Investing

I don’t remember the exact day I opened my first Vanguard account, but I do remember the feeling that came with moving $3000 from my just-expired CD (then at a 3.5% or something renewable interest rate) into a Roth IRA. There was some thrill of taking a risk of earning more than 3.5%, and feeling proud that I was acting like a grown up and putting $3000 (a huge chunk of my savings at the time) into an account I couldn’t touch for another 45 years.

It was sometime around 2007 at this point. My yearly income was about $25,000, and I had $15,000 in savings which included the cash my dad gave me to buy my first car and money from a lawsuit when I was young. I could have spent $15k on a car, but instead I spent $7k on a used car and put the rest into savings and CDs. Investing from 2006 to 2011 hasn’t been a remarkably inspiring experience. I’m not surprised that the Millennial Generation doesn’t trust the market, and is afraid of investing. I’m trying to fight the urge to take my savings out of the banks and stock market and stuff my cash in a pillow.

A year or so after opening my Vanguard account, I started to test the waters of more significant investing. I somehow maxed out my Roth IRA that year, bought a taxable Index fund at Vanguard, and started researching other ways to invest any extra income. On 12/31/2007, I had $9,189.07 in all of my Vanguard accounts, and $7000 in a CD. That was the entirety of my investment accounts 4 years ago. At this time, I was paying $1000 a month in rent for a studio apartment, and making $35k a year. I opened my Sharebuilder account in 2008. According to my year-end account statements in 2008, I had $1542.28 in equities and $50.48 in a money market fund, totaling $1,542.28. That year, I earned a whopping $22.13 in dividends.

Read on to see how I’ve grown my investment accounts from $15k in 2007 to $110k in 2011.

2008 Investments

Mid-Cap Growth Index Fund — $2812.27 (down from $5205.67 in 2007!)
Roth Target Retirement 2050 — $2867.17 (down from $3983.40 in 2007)
Roth Total Stock Mkt Inx Inv — $2723.13 (down from $3k total investment)
Total: $8402.57

COMV — 4 shares, $19.60
EPI — 28.5 shares, $324.27
EWZ — 3.2 shares, $113.76
GLD — 5.8 shares, $502.28
KOL — 2.8 shares, $43.16
MCD — 3.4 shares, $216.92
PBD — 13.39 shares, $169.50
WFMI — 3.11 shares, $29.41
XLF — 5.9 shares, $73.90
Total: $1542.28
In 2011, my investment accounts are currently at…

Equities owned: AAPL (+$8,255.88), AMZN (+$434.35), AND (-$148.74), COMV (-$4,514.13), CSCO (-$264.19), CVX (buy), ENOC (-$305.38), EPI (-$80.44), EWZ (-$53.84), FTR (-$1.13), GE (-$15.88), GLD (+$458.18), GOOG (+46.68), IHI (+425.43), JNJ (+44.29), KOL (-$6.80), MCD (+$362.43), OSTK (-$450 *sold 10/11), PBD (-$296.48), PG (+$64.82), SBUX (buy), T (+$1.34), VMO (+$260.60) VZ (+241.81), WFM (+$92.84), XLF (-$602.91)
Total: $57,020.47 +$4398.84 (8.36%)

Sharebuilder IRA
AGQ (-$185.85), CIM (-$174.33), DVY (+190.18), GLD (+$411.19), SDY (+$206.79), SLV (+$386.86), VNQ (+$70.63)
Total: $7,646.24 +$905.46 (13.43%)

Mid-Cap Growth Index Fund — $7020.76 (+$349.69)
Roth Target Retirement 2050 — $7207.02 (+$857.02)
Roth Total Stock Mkt Inx Inv — $9926.57 (+$2,276.57)
529 Plan (for Grad school) — $3347.73 (+$237.73)
Total: $27,502.08 (+$3872.97)

John Hancock 401k
(+$1854.29 of 2010 maxed out 401k, no match)
Total: $18,354.29 (+1854.29)

$375 +$25 invitation award ($400 total investment??)
Total: $451.37 (+$51.37 or +$1.37??)
I think there was another affiliate program bonus or signing up for an account bonus earned somewhere, because according to Prosper my return from 2005-2008 was -1.08% and my return 2009-2011 is 7.42% so far. I’m considering trying Prosper out again with a more significant investment, right now I have $50 left in the account. Seems better to put the money into stocks, though, for the long term. Plus taxes with these P2P accounts is a total pain.

Lending Club
Another one that doesn’t make it easy to see your real returns and losses on your investments! Their site won’t even show me my transfer activity for anything more than six months. Grr. Ok, so they say I’ve funded 32 notes, 18 are issued and current, 11 are paid off, and 4 were charged off. So, in theory, that means I lost $100, and invested somewhere between $375 and $800 in my Lending Club account. Ugh, I need to keep better track of this stuff. Lending Club says my net annualized return is 2.07% but that doesn’t tell me what my lifetime return/loss was on this account. Plus, there was also a sign up bonus.
Total: $316.46 (-??)

HSA Account
$788.03 — closing this out w/ medical expenses this year, doesn’t make sense to keep open, interest growth is smaller than $2/month fee they charge me to keep it open, plus I can’t invest any more money into it!!!

Bank of America CD
(+$1216.76 from initial investment in 2005)

Total Investments:
+ $20k stock options
(of $154,910 networth)

So, basically, at 27, I have $120k in investments

According to a compound interest calculator, if I can continue investment of $20k per year minimum, at at 3% interest rate, I will have $1.3M in 30 years, when I am 57. But, what’s more interesting, is that if I invest the same amount, but can secure 10% YoY interest, I’ll have $5.7M in 30 years.

In any case, I need to get serious about investing now. What? All of the above isn’t being serious about investing? No, it isn’t. I am very confused about my portfolio — both in terms of how much in annual interest I am making or losing. I need one place to consolidate all of my investment accounts to track this. Do you know any places to do this? Mint doesn’t work because their accounts break down all of the time, and I had to delete my Sharebuilder account at one point in order to get it working again, removing all of my data before that point.

Ultimately, tracking is one part of the equation, but the other part — the more important part — is figuring out if I’m over diversified, and if I should sell some of my losing stocks to put the money into any of the other options above. There’s also the idea of “investing” in a house or condo — but that seems silly, at least until I have a family. I’d rather have the money I’m saving from sharing a rental with roommates to invest in solid companies. And stop investing in small caps that are sucking out my gains with their significant losses.

I’ve been watching a lot of Warren Buffet videos lately, and thinking about how it’s possible to increase your wealth by investing in a few companies that are undervalued and have significant growth prospects for the long term. Now, it’s not easy — if it was easy to figure this out, everyone would do it. But now that I have some significant investing capital, it’s time to stop throwing money at random stocks and think about how I can take $100k and turn it into $1M. I don’t trust the markets to work for me, I need to do to the work, and get them to work for me, Buffet style.

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4 thoughts on “Turning 28 and Getting Serious About Investing”

  1. We have a lot of the same companies. I use good docs to keep track of all my funds and stocks. Just create a new spreadsheet and type in any cell…


    …to get the current stock price for McDonald's, for example. And you can use functions like SUM, etc to add everything up from your various accounts. I'm sure you can figure out the rest.

    I like watching the oracle speak as well. He has a good sense of humor. I don't think you're over diversified, but you can consider selling some really small holdings, and consolidate, like putting your GLD funds into one account. Also, I suggest you add more international exposure to your portfolio. If you're concerned about inflation in the future like I am, then you want to be in resource based economies. How about some of our Canadian companies eh?

  2. Also I agree about consolidating GLD. I originally bought a few shares in my taxable account, then found out GLD is taxed at collectable rate unless it's in an IRA and stopped investing in my taxable account. I guess I should just take the "profits" and move it into my Roth now, so I can get the tax advantages over the long term.

  3. I’ve realized I need to diversify more internationally — I honestly don’t understand inflation and deflation, but I realize that investing entirely in the US (or mostly) is a bad idea.

    I didn’t realize that you could automatically pull in the updated stock price with google finance. That’s pretty awesome. I’m going to have to try that out.

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