Taking control of my money

[radionightster]

Hi all,

I'm trying to take control of the money in my life. I have about $20,000 in a random account that I really have no investment control over. I'd like to withdraw it, and start investing wisely.

I have an emergency fund already, and I already have a Roth IRA. I want to put this 20,000 to work for me. I'd like to diversify it a little, and my investment profile would be "moderately aggressive." I'm in this for the long haul - ie, 30+ years. I'd also like mutual funds that pay dividends so I can have them automatically re-invested in the fund. I do not need these funds for income, or anything like that.

Does anyone have any suggestions?

I was initially thinking something along the lines of:

$20,000 total, broken down to:
$5000 -> USFRX
$5000 -> USCRX
$5000 -> VBMFX
$5000 -> A 5-year CD ladder, just to keep some of the money absolutely safe

I'm active duty, etc, and I for some reason have faith in USAA. That's why I included two of their funds. Their portfolio planner recommended USCRX as a great "getting started in investing" fund. I like the idea of the USFRX (2040 targeted retirement fund) because it's very aggressive at first. And the Vanguard fund has had a nice return for a long time.

Question: Is this idea even remotely decent?

Question: Is a CD ladder a horrible idea if I'm in this for the long haul?

Please feel free to call me naive, or whatever. I really want to learn!

Thank you
RN

 

[Birchtree]

Mutual funds only pay dividends and capital gains once a year, usually in November. Stocks will pay their dividends four times a year which increases your potential return via dollar cost averaging. You can buy individual stocks through USAA at $8.95 a hit. I helped my new son in law build a 10 member stock portfolio over the weekend with USAA. I prefer to stay away from mutual funds but that's just my preference. Yours look good.

 

[Nate]

Yea...I'll give the same advice given to me from Tom, take a look at ETF's (and maybe other options) before you pull the trigger. Go over to ETFtalk.com maybe & browse around.

This is alot of money....research! Give yourself a time-frame to just explore your options.

 

[cawwilson]

Mutual funds only pay dividends and capital gains once a year, usually in November. Stocks will pay their dividends four times a year which increases your potential return via dollar cost averaging. You can buy individual stocks through USAA at $8.95 a hit. I helped my new son in law build a 10 member stock portfolio over the weekend with USAA. I prefer to stay away from mutual funds but that's just my preference. Yours look good.

I agree, IMHO taking control of your money isn't investing in mutual funds. Your return on individual stocks is where the real ROI lies. Of course, investing in stocks is just my preference!

 

[nnuut]

Best of luck radionightster and welcome to the MB!! 10/4
Norman

 

[JTH]

Mutual funds only pay dividends and capital gains once a year, usually in November. Stocks will pay their dividends four times a year which increases your potential return via dollar cost averaging. You can buy individual stocks through USAA at $8.95 a hit. I helped my new son in law build a 10 member stock portfolio over the weekend with USAA. I prefer to stay away from mutual funds but that's just my preference. Yours look good.

I agree with BT. You do avoid the 8.95 hit if the Mutual Fund is purchased, but if you have that type of money, avoiding trading cost shouldn't be a concern. Instead, opt to avoid the operating cost of mutual funds. I own both within USAA, with the Mutual Funds, you when you make a transaction, you get out with End of day prices just like TSP. With stocks, you can set a stop, so you have more flexibility with stocks, lower operating cost, and you're going directly to the source.