Please rate my savings plan ---

[nyczarnold27]

Hello. I am 26 years old and just started working and having an income of $3000/month after tax. I consider myself a conservative investor/saver. I just recently invested $10,000 in a taiwan base mutual fund (EWT). My total expenses is only about $1200/month (generous side), so I save about $1800/month. I am planning on adding the $1800 into EWT mutual fund per month.

Does this sound okay? Is there an online calculator to calculate my savings in 1-2-3-4-5 years if the return is about 7+%/year? And do i have to include these mutual fund investments in my tax returns? How much tax do I have to pay? Thanks.

[bigdaddybus]

Savings plan good, choice of investment ........pretty lousy

EWT opened in the year 2000 at an opening price of $18.75 a share.
Currently trading at $13.27 a share (a loss of 29% over 13 years)

Do you plan to buy and hold? Trade it? Why are you going to buy it? If you can't explain every position you buy, you shouldn't buy IMO.

[nyczarnold27]

Thanks for the reply.

Well the main reason why it opened at $18.75 and dropped so low back in 2000-2001 was because of the tech bubble crash. The reason why I chose to invest in Asia mutual funds is because American stock market is currently way too high in my opinion to jump in right now.

I am planning on holding it long term 3-5years+

[Wino]

The reason why I chose to invest in Asia mutual funds is because American stock market is currently way too high in my opinion to jump in right now.

I am planning on holding it long term 3-5years+

First off, 3-5+ years is not long term. 10+ years is long term. You're exposing yourself to a lot of volatility risk with this strategy.

Secondly, I heard exactly what you're saying "market is way too high" last February regarding the Total Market Index Fund (VTSMX I think is the Vanguard symbol, but I didn't look it up), and it has risen 10% since that time. You're doing two things wrong: you're timing the market, and you're investing in a long-term vehicle with a short-term goal. But who knows? Maybe you'll get lucky.

One last thing, the tech bubble burst in late 1999 to early 2000. Your index should have already been at a minimum for the dates listed.

[nyczarnold27]

First off, 3-5+ years is not long term. 10+ years is long term. You're exposing yourself to a lot of volatility risk with this strategy.

Secondly, I heard exactly what you're saying "market is way too high" last February regarding the Total Market Index Fund (VTSMX I think is the Vanguard symbol, but I didn't look it up), and it has risen 10% since that time. You're doing two things wrong: you're timing the market, and you're investing in a long-term vehicle with a short-term goal. But who knows? Maybe you'll get lucky.

One last thing, the tech bubble burst in late 1999 to early 2000. Your index should have already been at a minimum for the dates listed.

Thanks for the reply. Indeed 3-5 years is not long term if i think about it. I will be re-evaluating my goals to see if i would want to dedicate all that money long term (10+ years).

If im not mistaken, the tech bubble burst around march of 2000 and leveled off around mid 2002. My index opened around June 2000. The dates you are referring to (late 1999 to early 2000) is when the tech bubble is starting to unravel itself (feds increasing rates 6 times in that period, etc.) however the market at that time was still peaking.

[snafu]

When you buy an out-of-country products you add the complexity of currency gambles. I'm surprised you didn't choose S Kr. but Taiwan holds promise as long as it's relationship with PRC remains semi friendly and stable. It's safer to buy into an Index Fund but you have lots of time to replace/recover any loss over 30 yrs. If you have other plans for the money after 5 yrs, it's not really investing - more like long term gamble.

Many of us invest in a specific Mutual Fund or ETF with automatic transfer to a specific fund from chequing to investment product. It's call Dollar Cost Averaging [DCA]. When the market is high we get less shares/units, when the market turns down, we get more shares/units. Over the l-o-n-g haul, it compounds with amazing results.

[bjl584]

Your saving a nice amount of money for your age and income, but I second the others that you need to rethink what you are investing your money into.

As far as taxes, you will have to consider gains (dividends, capital gains) if you are investing outside a IRA or Roth.

[nyczarnold27]

I will definitely look into other investments strategies, primarily of DCA. Time to do some reading! Thank you for all your input.