Dear Investor Juan,
I have a few questions regarding investment. I'm a 24 yrs old, single and my current financial situation:
* Free of debt
* Emergency Fund (good for 6months of expenses)
* Life insurance and Health card (provided by my employer)
Investment goals:
* Retirement Fund - invest in stocks (longterm), since I'm still 24
* Condo/House - I'm not yet decided on what to buy and I'm still searching for a nice place, but I want to prepare the money that I will use for buying my own place. For the meantime, I'm planning to put the money in Mutual Fund (Money Market Fund) since I'm not sure when I will be needing the money.
* Future Personal Expense - I'll be using this fund for 3-5 years from now, but I can't decide if I will put it in stocks or Mutual Fund (Equity Fund)
Here are my questions:
1. Based on my current financial situation, do you think I can now proceed to my investment goals?
2. Is it okay to have a fund dedicated to each goals?
3. Since I have 3 funds to monitor, I'm thinking if it could be costly for maintaining the multiple funds because of the fees. I'm not sure if I'm doing it correctly or not.
If you have any inputs to improve my goal, I am gladly to hear it :)
Thank you.
Best regards,
Jay
Dear Jay,
Dear Jay,
I completely support your plan. This is exactly what I proposed in this post about the "DRREW" framework. Congratulations--YOU GET IT. :)
Here are my answers to your questions:
1. Based on my current financial situation, do you think I can now proceed to my investment goals?
Yes. I assume that you already know what portions of your savings to allocate to your retirement fund, the property that you are planning to buy, and "future personal expenses."
2. Is it okay to have a fund dedicated to each goals?
Since the three goals that you mentioned above involve different holding periods, funds for each must be invested in the appropriate type of asset or fund.
3. Since I have 3 funds to monitor, I'm thinking if it could be costly for maintaining the multiple funds because of the fees. I'm not sure if I'm doing it correctly or not.
Nah, you won't have to pay more since fees are charged as a percentage of the value of your investment--so given the same fee percentage, investing 900,000 in one fund would result in the same fee as investing in three separate funds of 300,000 each. Also, if you do it right you don't really have to monitor anything since your decision to sell or divest should be solely determined by need and not by how much money you are making or losing. To minimize hassle, though, you may want to buy funds from just one bank.
I have nothing more to add, really, given what I know about you situation. Thanks for your email, and good luck!
