In late March of 2018 (thanks to my bonus) we became consumer debt-free, and on Friday, August 17th my wife and I hit another milestone in 2018!
We successfully hit another milestone in 2018!! Our 6 month emergency fund was fully loaded at $22,000 and we opened an investment account with Vanguard. We were happy about this but, didn’t think it was THAT big of a deal. As the days have passed, I realized just how big this actually was… We have worked for 4 years to pay off our debt and now we are at the point of building wealth! We should have celebrated this!
Financial Ground Hog Day
Paying off debt, and then saving money became a habit for us. It was just something we did every 2 weeks. Pay day -> Transfer Money -> Pay day -> Transfer Money… rinse and repeat. We did this for months and months. It was great to see the debt go down, savings go up, and our net-worth increase, however, it started to feel like we were stuck in the ground hog day of personal finance. The process just started to feel “normal”.
Fees, Fees, Fees!
Vanguard has extremely low index fees. From what I’ve read, fees are an investment’s silent killer. According to Dave Ramsey’s Blog, if you invest $25,000 and achieve a 7% return with .5% fees, your money will grow to $227,000 in 35 years. If the fees are 1.5%, that money will only grow to $163,000. That is a massive difference! Vanguard has incredibly low fees, anywhere from .04% to 0.55% on their US stock index funds.
Rate of Return!
I’m not going to be an active investor. I have NO desire to chase the rabbit and try to beat the market. Warren Buffett won a 1 million dollar bet against Protégé Partners. Warren bet that actively managed hedge funds would NOT beat the return of the S&P 500, and he won. The S&P 500 obtained an average return of 7.1% and the actively managed hedge funds only achieved 2.2%. If Mr. Buffett thinks that passive index fund investing is smart, who am I to disagree. Is it boring, sure? Do I care? Nope…
My wife and I will now begin to invest roughly $5,100 a month and, if all goes to plan, we should hit a cash investment of around $25,000 by the end of 2018 into our Vanguard account. The minimum invest for the majority of index funds appears to be $3,000. So, my initial $2,000 investment is patiently waiting in a Money Market Fund until 8/31/18 when I’ll have more to invest. I’m continuing to research the most appropriate fund to start with. As of today, it looks like I’ll make my initial investment into the Vanguard Growth Index Fund Admiral Shares (VIGAX) or a Growth and Income (VQNPX) fund. I still have to read more about this.
As we approach the last quarter of 2018, I can’t help but think about 2019… What will that bring for us? We have goals to get into real estate but, only when the time and the deal is right.
What are your 2018 and 2019 goals??
All information provided on this site is for informational purposes only and does not constitute professional financial advice. You should talk to a professional financial planner if you need help with your finances. I’m just out here trying to live my best life!