what is up my YouTube brothers and sisters how are you guys doing out there
I have a very special video for you guys today as we're gonna talk about my
actual 401k investments and why I chose them just so you guys know this actually
comes from a subscriber question from mr. Jules so big shout out to mr. Jules
thanks for recommending this topic I think it's a fun one and a good one to
talk about and he basically asked me he said Mike can you share what 401k
investments you are currently invested in and kind of your thought process and
why you picked them and I'm like sure why not in this video I'm gonna be super
transparent with you guys regarding my investments in my 401k and how I chose
them I'm gonna be almost as transparent with you as a ghost!
let's kick this off with how many funds am i invested in in my 401k how many
mutual funds do I own well currently it's very obvious you guys can see I
have five different funds within my 401k plan that I'm contributing money to on a
monthly basis now I used to own for about a year ago or late late last year
but early as of early this year the financial advisor comes to my company
he really strongly encouraged me to invest in an international fund so
that's why I've added the Templeton world fund to my investment mix just to
get a little bit of international exposure and move away a bit from the US
markets now now guys I understand each person's gonna have a different 401k so
your investment choices are gonna be different but like I'm not kidding you
these are my real investments and these are my real asset allocations currently
so speaking of asset allocations let's talk about that next as you guys can see
about 80% of my holdings are in large cap growth type of funds so if I add up
this one this one whoops this one this one and this one as you guys can see
down here well I don't know if you can see it but it's about 80% so really
large growth type of funds is what I'm primarily invested in all right these
mutual funds owned primarily large blue chip type of stocks that's what these
are invested in and I'll go in a little bit I'll cover why I'm invested this way
our allocating my money currently this way well we'll get to that in a bit so
if you if you look at my investments if you were to dive in the detail which
I've included the detail in each of these tabs of each of these funds I'm
not gonna go over this with you guys because you can look at this in your own
time and I would I don't wanna make this like a super long video or I want to
keep this as short as possible but you can feel free to look over this
information when you have time and in studies investments ninety percent of my
holdings are in stocks I'm not a big believer in bonds at the moment I really
am kind of shine away from bonds for the most part so 97% of my holdings are in
equities so what are these mutual funds owned these mutual funds
I feel like if you look in the detail on these things it owns companies like
Amazon Facebook Google United Healthcare Visa MasterCard sells force I mean I can
go on and on I think they own like Home Depot or Lowe's so there's all these
large blue-chip type of companies within these mutual funds now I'll be honest
there's definitely some overlap like if you look at the holdings of these funds
there's definitely overlap in my overlap I mean they own similar stocks so like
Jay IBC X and the fidelity contra fund they both own Facebook and they both on
Amazon for example but I'm okay with this overlap and the reason that is is
because as long as I feel strongly about the individual companies these mutual
funds owned I don't I'm not worried so much about the overlap I know that it's
not really diversify that way but I'm still at this moment I'm okay with the
overlap because I strongly believe those companies are gonna do well and continue
to do well in the future so you're probably wondering Oh Mike why are you
invested this way so I think it's good that we take a moment and we talk about
that let's talk about my mindset and why I'm currently invested this way in my
401k the first reason I'm invested this way
is because at the time of making this video I'm only 33 years old so I have
time for the money to grow I have time to take risks and I need this money to
grow because I'll probably plan on working another twenty thirty years or
even more because I like working I don't mind working as long as I like what I'm
doing and so that's one reason I'm invested in a very aggressive growth
type of strategy or in a type of heavy growth allocation so that's that's the
first reason the second reason I'm invested this way is because my wife and
I live other investments so we have another brokerage account and two Roth
IRAs and plus she has her 401k which I'm not gonna even talk about that in this
video but so we have other investments and those other investments are invested
in things like our more conservatively okay so this this 401k that you're
seeing on screen is very aggressive on growth but our other investments are
more conservative where we focus on dividend paying blue chip stocks where
we love investing for dividends and so that's why in my other accounts
try to do more conservative types of investments we have you know investments
and REITs utility stocks and things like that okay so what are some of the
downsides of this investment allocation the first downside is that my portfolio
is heavily invested in equities ninety percent or more which means if the stock
market tanks which I'm waiting for to do since we've been in a bull market for
the last ten years when it tanks my 401k portfolio is probably gonna go down hard
now the overall beta which measures how volatile a portfolio is in comparison
with the S&P 500 is slightly higher than the S&P 500 so it means it's I think my
beta on this portfolio is around currently 1.06 so it's not too much
above the S&P 500 but basically what that means in plain English is that so
if the SP 500 let's say goes down ten percent okay
this portfolio will go down eleven percent so it's probably gonna go down a
little bit more heavily than the S&P 500 will if the market crashes or has a
major correction I since I'm still on the younger side I would actually would
prefer a crash to happen now and if it does I'm not gonna worry about it I'm
just gonna keep investing anyways because I have plenty the time for the
investments to come back and I would much rather buy and purchase these
investments at a lower cost than at a higher cost so I look forward to a
market crashed if it's going to happen I'm gonna keep investing either ways
because I found for myself it's extremely hard to time the market and
all only very few people can do it and I'm not one of them so I'm going to keep
investing anyways the good news is is that my Sharpe ratio on my portfolio is
slightly better than the S&P 500 and the Sharpe ratio if you guys don't know it
measures your risk relative to returns and so for the amount of returns I'm
getting relative to our risks I'm actually doing better than the S&P 500
so I'm really happy about that let's let's move on okay let's talk about how
these funds are performing and based on you know how these how I have this money
allocated in these investments so as you guys know because we just talked about
we've been in a bull market for a long times but so things have been doing
pretty well so last year I actually had a return on my
portfolio of about 28% this year year today as of June I just checked the
other day my my important folio or this portfolio was up about 10% for the year
which is not bad considering we had a pretty major pullback at the start of
the year so things are looking pretty good so on average every year I've been
able to get a 10 percent return or higher on these investments in my 401k
I know those results won't last forever but hey if they want to stick around
longer I'm cool with it so how much do I contribute per month so currently and I
have this information down here so currently I'm contributing about $1,000
per month to my 401k yeah I didn't start out like that when I first started I
think I only contributed like two or three hundred per month to my 401k but
over now I've been with my company for about six or seven years now
so over it's over that time span I just kept allocating more and more money to
my 401k plan each year and I will plan to continue to do so as time goes on now
you might be wondering well Mike why don't you just max out your 401k if you
can well well let you guys know like I could max it out we're in the financial
position where we could max out the 401k but really we we want to stay flexible
with our investment choices I don't want to have all of my money locked up in my
401k and so I have other investment alternatives but I'm not really gonna go
into crazy amounts of detail on that we can save that for a whole nother video a
whole other day just know that there's other reasons why I'm not currently
maxing out my 401k another question you might ask is will Mike do you plan to
have this investment allocation forever and my answer is no I wouldn't think so
so I mean as time goes on I would expect these allocations to change I'll
probably move the money around a you know as as I see fit you know I want to
get involved in some smaller growth cap type of stocks I want to move some of
the money out of some of these other funds into some small cap growth because
some small caps are doing fantastic this year if you guys haven't noticed but so
there but but basically I'm gonna be changing these allocations over time so
but I don't know what or when or what all invest in at the moment all right
guys this is really important to me but I want to talk about some other major
factors we think about before contributing to my
401k so that's just just so you guys know
more of my thought process so there's a few things that are really important to
me that I think about before ever investing any money in my 401k the first
thing is is that we like to be in a position where we can save anywhere from
twenty five to fifty percent of our net monthly income and that's after the 401k
contribution okay so let me say that one more time we want to be in a position
where we can save twenty five to fifty percent of our net monthly income after
401k contributions are taken into account so being able to do that's
really important for us so that's part of the reason why we're not maxing this
out at the moment the other reason that's really important that those in
those numbers is because I know from studying and reading books that if
you're if a person can save around fifty percent of their income per month they
have a good chance at developing and building wealth throughout the course of
their life the other factor we take into consideration is debt now we currently
only have mortgage debt I think we owe like around around ninety five thousand
at the moment on our mortgage but with the point being is if we had debt if we
had a lot of debt like let's say like car loans or credit card debt or
whatever then I would I would really reconsider how much I'm contributing to
the 401 K and I would probably want to pay down our pay off that debt first
so that would change how much we contribute every month and maybe how I'm
invested in my portfolio so I take debt into consideration the other major
factor guys is that we do have a good cash position so we have liquid funds
okay where are all of our money's not tied up into investments which is nice
so 20 percent of our net worth is in cash so regardless of what happens to
our jobs the market we still have cash available if we need it and so that's
another thing I think do account is we like to have a good amount of cash
reserves alright guys I really hope this information helped hopefully you can see
that because we're young we're willing to take more risks and invest in more
aggressive growth cap type of stocks and I've kind of went over why I get how
much I contribute and why I don't max out our 401 K I talked about the other
considerations such as being able to save 50% of our monthly income or having
you know having a cash position emergency fund things like that so we
talked about debt so those are all the factors that I consider before choosing
and before investing in my 401k and I would encourage you to consider all
those things as well figure out like look at how old are you you know how
much risk are you willing to take what how far are you away from retirement you
know are you in debt do you how much of your money every month are you able to
save how because that's really important so you want to kind of think about all
those different factors in my opinion if I were to give you some general advice
just think about all those things before deciding what investment choices you
make how much you contribute to your 401k and how fast you pay after debt or
whatever think about those things guys really consider it and then go from
there and build a strategy that works for you now obviously you're gonna have
different investment choices then that I will because you have a different you
work for a different company and each company's 401k plan is is pretty
different now in my 401k fund there's like 60 choices but in some people's
401k fund there's only 20 so you just have to pick the investments that are
there and and and choose what makes the most sense but also take into
consideration that you you want to invest outside of your 401k and things
like real estate or you know in a Roth IRA or other other investment vehicles
so these are all factors I consider before investing in my 401k at the end
of the day guys this video is really not telling you what to invest in because
there's no way I could do that I mean you have to ultimately decide what to
invest in and how to allocate your money but hopefully by thinking through these
different things we just talked about hopefully this will allow you to make
better investment choices within your own 401k now like I said my performance
has been really good in my 401k over the past five years but I know we haven't
had a bear market in a long time
so I expect that to change but either way I'm still gonna keep investing I'm
not gonna stop investing because the best deals most money is made at the
bottom not at the top and just look at Warren Buffett you know when's the best
time to buy if the so the market crashes I'm all-in
I'll be very happy so I can buy more and more investment accumulate wealth faster
at a lower price I encourage you guys to check out this spreadsheet I've included
a research tab just so you guys can see kind of what I look at before making
investment choices and I've included the summary of each investments you know
when you're picking your investments your 401 K make sure you know what
you're invested in or if you if you're an uncertain of what your options are
talk to the financial advisor or somebody at your company to help you
learn once your investment choices are because some a lot of the investments
then your 401 K might be duds so I took the time to and I've mentioned this in
one of my previous 401 K videos but it's so worth your time to take the time to
figure out what if estimate choices you have and what makes sense for you
because if you can get a higher rate of return on your portfolio every year it
could mean thousands and even tens or hundreds of thousands of dollars in
growth difference had you not made better investment choices so just keep
that in mind guys all right guys well I think I'm done talking for the day
hopefully you found this information helpful and if you have questions which
I'm sure you will I mean if I've missed anything or if there's something else
you would want to know more about please let me know just leave a question in the
comment section down below and I will definitely get back to you as soon as
soon as I can and I because I am plus I just love reading your guys comments and
it means so much to me when you drop a comment so please leave one down below
before you leave if you guys liked the video make sure you let me know by
hitting the like button especially if you want to see more topics and videos
about investing like this especially with like 401 k investing and things
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regular basis okay guys that's all the information I have for you guys today
download the spreadsheet before you leave and you can review all this stuff
at any time you'd like and you can just do some stuff study on this stuff
because that's the best way to learn and I will see you guys in the next video so
thank you so much for hanging out with me I love you all and until next time I
hope you guys have a wonderful week and use this information to live your life
on Kage I'll see you guys in the next video peace
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