What funds do I invest in?

(Before I start this post, I thought I’d mention – I updated the post on investment vehicles to cover two patented advantages that Vanguard funds have over their competitors).

So finally, I think I have explained enough about investing to explain what funds I use. Although it took me a decent amount of time to figure out how to invest and what I wanted to invest in, once I figured all of that out, it has been incredibly simple to maintain. I only use three funds. It doesn’t get much simpler than that. My school lets me split my paycheck into three bank accounts. Using Vanguard’s direct deposit service, I can directly deposit a portion of my paycheck into my Vanguard account, and have it automatically invested into those three funds (or If I wanted to, any fund they offer).

But before I explain these funds, I do have a disclaimer. Do not just blindly follow my fund selection. You should read my previous posts first. And do not just open an account right now and get started. There are tax advantaged accounts you should use first, which I will explain in a future post.

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Should you start investing?

Last time I went over why I decided to invest: it’ll help me reach FI faster, and risk is unavoidable even if I don’t invest. Now I should probably clarify – the risk of rampant inflation isn’t the same as the risk of a loss in the stock market. But remember the rule of 72. By investing, your money just earns more money (and can earn more money in a year than you can!) The risk I take is worth the reward.

But should you actually get started? Well, it depends. Over on the Bogleheads forum (a great resource that I will bring up again later), they ask that if you ask a question about your portfolio, you list how much debt and emergency funds you have (among other things). If you don’t have any emergency funds, and/or you have high interest rate debt, you shouldn’t be investing. And if you have low interest rate debt, it depends. But if none of these situations apply to you, then yes. Definitely. Even if you’re young like me and you think your retirement is a long ways off. You have the best asset available to you right now that older people don’t—time. Time to let that rule of 72 take hold.

I’ll be going over some good practices with respect to emergency funds, and also if you should invest if you have debt. And finally, how a loan might affect your credit score.

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Why did I decide to invest?

Investing. Some people consider it gambling. Which, depending on how one invests, could be regarded as such.

I know that reaching financial independence by 40 will be virtually impossible if I don’t invest. But I didn’t actually have that goal in mind when I decided that I want to invest–I was thinking that I’d retire at the “normal age.”  I just knew that investing for retirement was the “normal thing” to do.

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Who am I, and what is Financial independence?

Hello everyone. You can call me Fiby (from the URL). I’m a PhD student in my early twenties, and I want to reach financial independence by the time I’m forty years old. I realize that’s quite a few years away, and I won’t be disappointed if I don’t reach that goal. But I know that I need to make smart decisions now for that to even be a possibility.

Financial independence is being able to never worry about money. Put one way, it’s having the ability to retire if you so desire. Now I don’t think early retirement is for me – in some sense, it opposes the reasons to get a PhD. But from what I hear, there are a significant number of people who love the work they do at their job, but still hate their job because of their boss and/or coworkers. Having the freedom to just walk away from a stressful situation like that is incredibly valuable. Also, I’d love to travel the world. Being retired and traveling year round sounds like a great life.

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