How did you invest your salaries in the early years of your career?

Question

Hi!

I have been working for a year in consulting so far and am looking now into how to best invest my savings. I am likely going to go for an ETF like the Vanguard All-World. However, I would very much appreciate insights into how you have invested your savings and why.

Thanks a lot already :)

Answer 1

Hi there

Frankly - I wish I thought about this early in my career like you are. So fantastic job on starting early and preparing for your future! For all others reading this post, it is great practice to start thinking about your future finances as early as you possibly can.

Advise I got at my personal finance class during MBA.

1. Pick lowest cost funds, ideally ETFs

2. Invest with a long term horizon, aka put your money and forget about it till you need

3. Dollar cost average, aka invest fixed amounts every month regardless of the market

4. Stay diversified but do not invest in more than 3-5 funds.

My personal folio is -

FTSE Developed World UCITS ETF (VEVE)
FTSE Emerging Markets UCITS ETF (VFEM)
S&P 500 UCITS ETF (VUSA)
Global Bond Index Fund - Hedged Accumulation

With the idea with invest in Equities and Bonds and Developed and emerging markets.

(This is by no means any financial advice, just a personal philosophy I follow based on things I have learnt)

Answer 2

Eishan's answer is really good.
Just invest in 2-3 ETFs (I strongly advise investing in VanEck MOAT Global) and don't look at your investment for years.
You can invest a portion of your savings on a monthly bases to run some dollar cost averaging. If commissions are too high an accumulation plan may work quite well.

Answer 3

Hi there,

First of all, it's great that you're thinking about this!

Secondly, none of us are CFPs… (I don't think). Be very careful with any “free” advice. I highly recommend you to pay for a financial/wealth planner's advice here. If you want to go “free”, then reddit is also a good resource.

Personally, I use Vanguard ETFs and I optimize my portfolio for tax efficiency. But that's me…not financial advice

Answer 4

Great suggestions already by the other coaches. In addition, another reason why ETFs are a good choice is because you likely wouldn't need clearance to trade them.

Consulting firms will have some sort of compliance restrictions (e.g. having to submit and clear each individual stock trade) regarding individual stocks given the high likelihood that many of the blue chip companies are also the firm's clients

Answer 5

this really depends on so many factors: your risk preference, how fast you want to get your investment, amount, etc….

Answer 6

Hi there,

coming from a behavioral finance background I would advise you to:

1. diversify: in terms of asset classes, geographies and industries

2. minimize cost: over the long run, even slightly higher cost have a huge impact.

3. take the long-term perspective: empirical trading behavior is shown to be tremendously harmful to your returns - so stay calm and clearly separate between investing & trading!

Concerning diversification: Even though ETFs are fairly good regarding diversification, especially if you are looking for replication of worldwide indices, an optimal diversification is not only build on “stock only" ETFs, but rather includes other asset classes. Depending on your risk profile you can add company / government bond ETFs to your portfolio and potentially also an ETF on ressources / real estate.