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How do you invest your disposable income as a tech worker?
I've put 50% my money on amazon and netflix.
50% in us treasury bills.
Plus, 6 month expense kept as cash.
What about you?
- sharemywin 8y agoI have kids so much of my disposable income goes to living in a decent school district. and food, lots and lots of food. I used to put a lot in 401k. It's sitting 50% in bonds and a 50% USD account in my 401k. waiting for trade wars to blow up the economy. Maybe trump's a genuis, but probably not. Then, I will move the money probably to S&P 500. might put part of it in one of those double or triple leveraged indexes.
- Spoom 8y agoThat big a percentage in two stocks would freak me out a bit. My money is in indexes, roughly 90% stocks, 10% bonds. Boring, but it's worked well so far and it's more of a long-term thing.
- EADGBE 8y agoAgreed on two stocks and such a large percentage. It's an easy way to lose money, quick. Same indexed fund strategy here. It's not sexy, but it consistently has a positive net.
- dev_north_east 8y agoYou're not very diversified... Why only two stocks? My pension and stocks picks are 90% equity/bond split (between Vanguard FTSE Global All Cap and their Lifestyle 80% fund).
- bko 8y agoI keep maybe 2 months cash and the rest 50/50 in VTI and SCHF, a very diversified low cost us and international etc, respectively. I'm early 30s so I don't anticipate needing it for a long time. I would comment that for me 6 months sitting in a savings account is unnecessary as long as I have enough in a liquid wtf after maybe a 20% haircut. Selling the etf, settling and transferring would take only ~3 days so it's not so much having that money not doing anything but having it liquid. As for tech and finance specific exposure, I definitely try to remove exposure since my personal career is already correlated with that segment.
- schmidty 8y ago25% in each: gold/stocks(index fund)/30 year US bonds/cash Its called the Permanent Portfolio and it has a great long term track record: https://portfoliocharts.com/portfolio/permanent-portfolio/ https://portfoliocharts.com/portfolio/permanent-portfolio/
- et2o 8y agoThis is going to sound harsh, but that bad investment advice for most people. US Bonds and Cash appreciate less than inflation, so you're actually losing money. The same is true for gold, which has historically underperformed vs. S&P500 (for example) by thousands of percent (http://www.longtermtrends.net/stocks-vs-gold-comparison/ http://www.longtermtrends.net/stocks-vs-gold-comparison/). Meanwhile the stock market has more than doubled in the past 10 years. 25% is almost definitely not enough equity exposure unless you are in your golden years. If you're investing for the long term (which you should be), it is much better to use a simple index funds or Robo-manager which will buy a variety of index funds with broad exposure according to modern portfolio theory.
- tonyedgecombe 8y agoMeanwhile the stock market has more than doubled in the past 10 years. After plummeting due to the financial crisis and a long period of quantitive easing.
- et2o 8y agoNo, you are wrong. If you put all of your money into the S&P500 only at the absolute, single worst possible day (the market top on May 16th, 2008 at $1,425) you would still be up about 100% today, 10 years later at $2,779 (So about 2X, just checked). If you put money in "after the plummet," as you suggest, which is the best case scenario, (buying at the low of $735 in January of 2009) would put you up approximately 300% (4X). The average investor would get somewhere between these two just by ignoring the market and investing biweekly. I'm not even advising to go 100% for the S&P500 Index Funds. However that's an infinitely better idea than a portfolio that is 75% of Gold (Dumb), T Bills + Cash (Losing money everyday), and Bonds (Which are paying at near-historic lows). It's just bad advice.
- bigpicture 8y agoGreat set of long-term charts here: http://www.crsp.com/resources/investments-illustrated-charts http://www.crsp.com/resources/investments-illustrated-charts
- IpV8 8y agoVery powerful. Would be useful to see more explanation on some of them though. Exe what the heck does the last one mean?
- mataya 8y agoI have used pretty much all investing apps out there but I've recently settled on M1 Finance. I created my own portfolio which consists primarily of stocks and index funds I picked. I have at least 20 different securities because, you know, diversification. What I like about it so far is the amount of time I don't have to spend on the platform, plus the fact they're free (they used to charge a fee but they got rid of it a while ago). Fractional shares is nice as well. I scheduled a recurring deposit and they will invest it for me in the stocks I want without having to do it myself. If you don't want to pick your own stocks you can use one of their professional made portfolios. I still own an account in Robinhood because trading can be fun from time to time.
- toomuchtodo 8y agoVanguard 2055 Target Date Fund (tax advantaged retirement accounts), VTSAX (Vanguard Total Stock Market Index Fund) and BND (Vanguard Total Bond Market Fund) in taxable accounts, real estate that I expect to appreciate or that cash flows well, and small businesses that aren’t asking for a large premium on ARR.
- andrewmcwatters 8y agovtsax 15.1% yoy
- Blackstone4 8y agoI'm a Chartered Financial Analyst (CFA) and in my opinion that's a very concentrated portfolio. You're taking on a material amount of company specific risk. I would consider diversifying your stock investments. Myself, I like investing in close-ended funds (CEF) or otherwise known as investment trusts. I can overlay some active management whilst having a fairly diversified portfolio. I tend to try and buy the CEF when their discounts are wider than usual i.e. a 5% discount widened to 15% to 20% of NAV. Then I sometimes sell when the discount narrows. I switch between different CEF in the same sector if I find one with a better discount i.e. US small cap. There are a bunch of gotachs so be careful. Some have wide discounts because they are managed by bad managers or they have expensive debt or preferred equity in the capital structure. So do your own research. If you're in the US, check out: https://www.cefconnect.com/closed-end-funds-screener https://www.cefconnect.com/closed-end-funds-screener In the UK, I use: https://www.theaic.co.uk/aic/find-compare-investment-companies https://www.theaic.co.uk/aic/find-compare-investment-compani... I would also say that this market can be inefficient. Investment advisers don't like it because it doesn't scale well.
- poster123 8y agoI'm also a CFA and a closed-end fund investor and agree with this advice. People interested in CEFs should check out the Morningstar CEF forum https://socialize.morningstar.com/NewSocialize/forums/100000006.aspx https://socialize.morningstar.com/NewSocialize/forums/100000... .
- StriverGuy 8y agoSeems to be a lot of indexers here. I am always curious if/how people plan for the volatility risk (and implied personal financial risk when vol spikes) from being purely indexed in their portfolios...
- bsvalley 8y agoIt's called dollar-cost averaging. A lot of people invest in indexes because they put on the research and learned how to invest. When it comes to your own money, don't listen to the crowd... always put on the work and do the research.
- StriverGuy 8y agodollar cost averaging does not in reality mitigate the volatility risk... Consider the scenario where you are invested in 100% indexes and get hit by some black swan event resulting in >70% drawdown. Odds are that you will lose your job during such an event and therefore could not feasibly continue investing at the same pace (there goes DCA as risk-neutralizing strategy). The more likely occurrence in this scenario is that you actually NEED your invested cash to stay in illiquid assets (i.e. house, college tuition etc) and are forced to draw out money at the bottom of the market. Index investing without any hedging for fat tails doesn't seem that smart.
- bsvalley 8y agoAssuming you don’t have any passive income, you have a mortgage and maybe other loans, as well as no savings/cash. I would indeed not recommend anyone to put 100% of their money in index funds :)
- marketgod 8y agoIf you bought the S&P with 50% and held the rest of your money in assets that don't fluctuate alongside the market or hedged, you can buy the S&P at the low and it always recovers. Others keep their portfolio completely hedged so when there is a dip they can buy the swing.
- NKosmatos 8y agoThe what? LOL Some of us living and working in less "privileged" countries (I'm from Greece) don't have the luxury of having disposable income to invest, especially tech workers that are paid way less than tech managers. I don't know exactly how things are in the first world countries, but the only disposable income goes as spare cash for emergencies, health problems and other similar activities.
- ddorian43 8y agoBecome better developer and work remotely for better wealthier countries. Probably cutting the middle tech manager. If your wage as tech worker relatively sucks compared to local wages, whatever country you're in, you're probably doing it wrong.
- dev_north_east 8y agoIf things are so bad, why not move? (Not being patronizing, genuinely curious as to why you don't.)
- stealthmodeclan 8y agoYou can move to Berlin or Krakow. If you are a good developer, you'll be handsomely paid. Also, it's trivial to move there for you since you are a EU citizen.
- tonyedgecombe 8y agoIt's interesting to compare savings rates in the US to Greece: https://data.oecd.org/chart/5cbS https://data.oecd.org/chart/5cbS No doubt there are some savers in Greece although if I was one of them I'd probably keep my savings in a German bank account.
- marssaxman 8y agoI've put most of it into sound system equipment, burning man art projects, starting a makerspace, organizing festivals and dance parties, and that general sort of thing. Any delusions I might have once had about the possibility of accumulating enough money to retire ended after I got divorced, so I'm not particularly concerned about long term finances anymore. Might as well enjoy my life here and now, and use whatever surplus money comes my way for the benefit of my friends and my community.
- ed_at_work 8y agoany delusions I had about retiring disappeared when I spent my 20's chasing women, drugs, booze & abusing credit.
- marketgod 8y agoI did the same but it's not too late. I can turn a $40K account into $100k easily.
- Blackstone4 8y agoSorry to hear that buddy but sounds like you're having fun. One of the best decisions a high-earner can make to secure their financial future is to never get married. Have a partner yes but never marry.
- deleted 8y ago[deleted]
- poster123 8y agoArguably a tech worker should be underinvested in tech stocks, because if there is a tech bust, as in the early 2000s, both his income and his portfolio could plummet. Economists would say that you should try to diversify your labor income with investments.
- charlesdm 8y agoMaybe. But then again, technology is disrupting pretty much every industry. Do you want to be underinvested in that? I always want to be overinvested in what the future brings. Unless valuations have gotten way out of hand.
- icedchai 8y agoFor long term: I put $500/week into a total international stock fund (VTIAX.) I put another $500/week into a growth index fund (VIGAX.) For short term, I have about 30 stocks I play around with... I'm up about 20% so far this year.
- dev_north_east 8y agoA thousand dollars a week?!
- icedchai 8y agoYeah. I have a lot of disposable income. I've been doing this for years. I started off at like $300/week about 10 years ago, and gradually moved it up over time.
- marketgod 8y agoStocks returns are low, look into options if you have risk tolerance.
- icedchai 8y agoAny strategies you recommend? I'm open to putting a small percentage towards riskier stuff.
- marketgod 8y agoThere seems to be a trend lately with many tech employees asking what to do. I was really thinking of creating a service to tell you when to buy and maybe sell, or when I sell. I use volume patterns, chart patterns to get in and out. The big thing is time. Being able to get in and out of options requires time and being at the screen. Hard to do when you are not there. One thing I have noticed, chasing dips is hard, look for breakouts it's easier.
- marketgod 8y agoI just re-read your message and thought of something with regards to the 30 stocks you are playing with. Suppose you have $10,000 in AAPL for 52 shares. You can buy AAPL Jan 2019 195.000 call for $1170 for 1 contract. Now suppose you plug this option in here, http://www.optionsprofitcalculator.com/calculator/long-call.html http://www.optionsprofitcalculator.com/calculator/long-call.... and you will see if AAPL goes to $200 for July 28th you would be 30% in profits whereas your shares would only return $8/$192. You can also buy puts when you think it's too high instead of selling the contracts so this way you can arbitrage. This might work for you as well, http://www.theoptionsguide.com/long-straddle.aspx http://www.theoptionsguide.com/long-straddle.aspx Edit: You can also sell puts every week for the shares you hold and just collect premiums instead of holding dividend paying stocks.
- Symbiote 8y agoI'm partly lazy, partly uninterested, and the rest completely uninformed about what I ought to do — most people I know either don't have any money to spare, or work for the public sector where the salary is lower but the eventual pension very good. So the result is I have far too much money as cash in the bank.
- marketgod 8y agoLook into a high interest savings account at the minimum or ladder GIC's for better rates.
- cimmanom 8y agoUnlike a generation ago, there are now plenty of options for smart investment without a ton of knowledge. If you don't want to learn a ton or spend a lot of effort, the easiest thing to do is open an account at Wealthfront or Betterment and drop in everything except your emergency fund. (An hour or two of effort.) The next level of complexity would be to open an account somewhere like Schwab and put your money (minus emergency fund) in a Vanguard target retirement index fund for your estimated year of retirement. (Less than a day of effort.) The next level of complexity would be to open an IRA, contribute to it annually (to get the tax benefits), and invest that in Vanguard target funds.
- pards 8y agoWealthsimple. Done.
- afinemonkey 8y agoOver the past year I've decided to do something with my savings, rather than have it sit in a Dutch bank, getting far less than inflation in the country I live in now. I've sprinkled the majority in a selection of Vanguard's ETFs 80/20 stock/bonds, heavy on tech stocks and the rest in a 70/20/10 split on large-cap, mid-cap, small-cap. A little (more than) play money is in crypto. I've been successfully algo trading crypto for fun, largely through triangular arbitrage, and investing in some of the projects that I think will have an impact. The "investment" part is in a basket of 20 or so coins weighted by what I expect their chances are to succeed in their sector within the next 2 years, rebalanced monthly. I built the strategy with a tool I've been working on with friends in our spare time: https://nazcabot.io https://nazcabot.io
- zapperdapper 8y agoMy savings rate is 74.95%. Yes, I am that anal about it. I'm keeping a fair bit in cash right now (ready for the next crash). In terms of "stash" I guess overall I'm about 40% gilts and bonds, 30% equities, 30% cash. Not too spicy, but I sleep well. They reckon should should hold you age in bonds and gilts (55% for me). Total stash is equivalent to about 33.33 years of expenses. Then there's property which I don't include in stash. I would think seriously about the fact you have very little diversification in your portfolio. You also are holding the typical amount in cash that is recommended for an emergency fund. I'm slightly more contrarian on that issue - I like to keep one to three years of expenses as cash - it varies depending on various issues. Of course everyone has their own thoughts on investment and there is no "one size fits all". All the best!
- cimmanom 8y agoWhat are "gilts"?
- zapperdapper 8y agoGilt-edged securities. Basically UK government bonds. Equivalent of US treasury bonds.
- closeparen 8y ago6 months expenses in a “high yield” savings account. Maximal 401k contribution in a Vanguard Target Date fund. A slow trickle towards taxable investment in VTI while aggressively paying off my car.
- cautionarytale 8y agoAt the moment, give it all to my ex and hope she doesn't develop a drug habit. But had I any, Vanguard's Target Retirement 21XX funds would be very hard to beat. (Source: lots of reading, and am a Registered Representative)
- marketgod 8y agoI buy options. Way better returns than anything else.
- marketgod 8y ago100% options. AKAO Sep 21 2018 12.50 Calls The rest are shorter term.