The following is a guest post from Crystal at Budgeting in the Fun Stuff. That’s where she writes about her bills, saving for the future, and making sure that they fit in fun stuff along the way.
I have always loved budgeting. Prioritizing our money and keeping us on financial track is my domain. But once the bills were paid and the leftover cash was assigned appropriately, I felt like my part of the job was over. Getting into the world of investing took way longer than learning to manage our monthly income.
Our Investing History
My husband and I got married and I started my first “real” job in May 2005. As soon as it was allowed, I started contributing to my 401k. Since we wanted to buy our own home though, I simply contributed the minimum needed to get the maximum company matching. No reason to leave free money on the table, right? But instead of investing in specific stocks, I chose a target date mutual fund (Vanguard 2040) and never looked back. It’s easy and has given me solid 10%+ annual returns. In fact, even after going self-employed in July 2011, I’ve left my 401k untouched and it’s still making money from that fund.
In 2006, we jumped into the stock market for the first time. It was easy to open a trading account, deposit a couple of thousand, and then he started researching stock investing. In the first year, we didn’t do so well. But now we have made back the loss several times over since he discovered the wonderful world of high dividend yield stocks and solid companies like Johnson & Johnson.
While the 401k was pretty much handling itself and my husband was handling our stocks, we discovered Roth IRA’s in 2007. We each started contributing to one in our name. I once again selected a solid target date mutual fund (Fidelity 2035), but my husband uses his contributions to invest in specific high dividend yield stocks.
Lastly, there is our real estate. We bought our first home in 2007. We paid extra towards the principal from the very first payment, and self-employment sped along the payoff process as well. We moved into our new home in 2012, paid off our first house in early 2013, and now use the rental income from House #1 to pretty much pay for House #2.
Our Investing Future
Given that we are now both self-employed, we are looking at our other investment options. A rental property, two Roth IRA’s, and one slowly appreciating 401k doesn’t seem like enough. So we have looked into a SEP IRA, a SEP 401k, and are even thinking about buying another rental property. We’ve come pretty far from 2005 when we didn’t know what any of that would even entail. But when it comes to investing, it seems there is always something to learn.
How do you invest? Was it easier for you to figure out your monthly budget or your long-term investments?
Photo via AndreasPoike