I’m 24yrs old making 25,000 a year before taxes. Looking to invest for the next 5 years. What’s a reasonable capital gains for that time frame?

[cvanwey]

I make 25,000 a year before taxes. I am able to save 8,000 a year. I’d like to invest 6,000 throughout the entire year. Saving 2000. Currently have 18,400 invested.
14,300 in apple and 4100 in palantir.
I’m looking to keep on adding to Apple throughout these years.
The rest of the 6000 will be split into VOO

 

[godsmackamber]

@cvanwey My advice is to open up a Roth IRA and invest in index funds. I would get out of single stock asap. You’re on the right track with VOO, i’d personally do 80% VTSAX (or VTI) and 20% VTIAX. If you’re in that asset allocation 8% per year would be about avg, it’s difficult/impossible to know with single stock. You could use the 5 year avg with apple and use that as your guide tho.

 

[bookworm2345]

@godsmackamber 100% agree, especially since you have exactly $6k to invest which will max you out with the Roth. Good luck!

 

[cvanwey]

@godsmackamber True a Roth IRA does make sense, I can always withdraw the principal invest and incur no penalty. Is that correct? Reason being, I’d allocate that money toward a home down payment

 

[resjudicata]

@cvanwey The other guy is mostly correct. You can withdraw the principal at any time, plus you could withdraw earnings for a first time home purchase.

I would be careful not to kneecap your retirement savings for a house though.

 

[arester]

@cvanwey That is the exception with a Roth IRA. Hardship and home ownership, let your earning grow tax free

 

[broz]

@cvanwey Have to ask are you currently in college or trade school? What are you current plans of increasing your income? This sub is into investing and compound Interest. But don’t overlook investing in yourself, be it going to college to get a degree or more certifications for job growth. Money can always be taken away but knowledge and experience can not and that can be used to make money. Just my two cents

 

[k3mizt]

@cvanwey Stay away from single stocks at this point.

 

[arester]

@cvanwey I respect going into those particular stocks but you’re extremely undiversified, you don’t HAVE to go index funds like everyone says but if you like doing single stocks do more variety just to cover your losses. Different industries and all that. You’re one Apple mishap away from losing a lot of money

 

[resjudicata]

@cvanwey Make sure you look up the Saver’s Credit. You’re under the income limit, so just by saving for retirement (which you’re already going to do) you will get a tax credit (which is better than a tax deduction).

At $25k you would normally pay about $1300 in federal income tax. By maxing out the SC (which you will easily do based on your post), you’ll reduce your tax for the year all the way down to just $300.

As others have said, make sure to save via Roth vs a Traditional IRA. At most, with a Traditional you would be able to save the remaining $300. Roth savings are likely to be much greater down the line.

 

[needaanswer]

@cvanwey Honestly the best way to ensure a good retirement nest egg would be to put all 6k into a ROTH IRA and then just buy a broad market ETF like VTI, QQQ, or VOO.