Where/how to invest a few thousand that I can add to over time

In My Humble Opinion
21

Telemark gave you a great answer in the first reply to this thread. Opening an investment account at Fidelity, Vanguard, or Charles Schwab is what you probably want to do. It’s extremely easy to do.

To add a bit of detail on the nuts and bolts of how to do it: For instance, you can go to the Fidelity home page and click on the “Open an account” link at the top of the page. There will be a variety of account types available, you probably want to open a brokerage account. You’ll enter all of your information, and have an account right away. You’ll want a secure password and also opt for the two factor authentication as well. Once you have the account, you’ll need to fund it. I suggest linking it to your checking account. You’ll need your checking account number and the bank’s routing number, you can get that from your bank. There is a verification process that might take a couple of days. Once that is set up, you can transfer funds from your checking account to Fidelity from the Fidelity site. The process is through ACH, which takes a day or two to transfer the funds. Fidelity will put these funds in a money market account that will pay a few percent interest. After the money is in that money market account, you can then move it to a mutual fund or ETF of your choice. Since you are looking at investing for 7 - 8 years, either mutual fund or ETF will be fine. And since you have some acceptance for risk, I suggest either a S&P 500 index fund or a total market fund (equivalent to the C fund or the C fund plus S fund, respectively). Put the money in and forget about it for 7 years. You can add more money as you sell collectables. You can also set up an allocation from your pay to direct deposit the $25 or so you want to add directly to the Fidelity account on a regular basis.

You can also use a low cost advisor service from Fidelity (or Vanguard or Schwab, they all have this service) suggest funds or manage it for you if you want, but for your purposes I don’t think you need this, but if you need a bit of guidance, it’s better than listening to some random dude at the dope.

BTW, the TSP only has 5 funds (G, F, C, I, and S). The lifecycle funds like the L2030 fund are just made up of different percentages of these 5 funds. The usual advice it to either put everything into a lifecycle fund, or individual funds according to what you want, but not both. That being said, what you are doing with the TSP is fine if you are happy with it, but the L2030 fund isn’t adding any diversity to your account, just changing the overall percentage of what you have in the 5 funds.

22

Also, since it is mentioned here, the TSP (or Thrift Savings Plan) is essentially the 401k for Federal employees.

23

Three of these funds are:

Fidelity 500 Index Fund (FXAIX); 10-year annualized return: 11.80%
Schwab S&P 500 Index Fund (SWPPX); 10-year annualized return: 11.76%
Vanguard 500 Index Fund (VFIAX); 10-year annualized return: 11.78%

I got the annualized return numbers by using the mutual fund search tool on the Fidelity website. If you open an account at Fidelity, I believe you can purchase any mutual fund or ETF that’s available on the market.

24

Thanks. I still don’t see it as a ‘scam’, but it motivated me to search online for some alternative MM options

25

Right, it’s not an actual ‘scam’ as such since they are not doing or saying anything illegal or even incorrect.

But they are profiting by holding assets of people who for whatever reason have not looked much into investment alternatives and are risk-averse. If their MM acount pays 0.1% to you, but meanwhile they are making 5% or more on their investments, they are coming out ahead!

Basic investing is not that scary. Reputable companies like Vanguard or Fidelity have some good information on their websites. It’s worth taking a little time to read up on it, I think.

26

While the S&P500 certainly is a good start, it only covers the US stock market (~60% of global markets, give or take). It is generally a good idea to include international stocks as well, to avoid things like the lost decade of the 2000s. There are cheap fund options for total world markets, too, like Vanguard’s VT or State Street’s SPGM.

27

Fair point about international exposure. It may have been good during the 2000s, but it seems to me that it’s been more of a drag on returns the last decade. The next seven to eight years? Who knows?

Last time I looked VT was about 60% domestic/40% international. For myself, I think that’s too much international. The neat work around for this is to use VTI (total market US) and VEU (total market non-US) in the ratio I feel comfortable with.

In the context of the OP’s specific use and timeline for this money, I suspect that either the S&P 500 or the total world market would work. That being said, either investment is unlikely to turn $10k into $50k in seven to eight years. A realistic expectation would be about 7% per year, or about $17k in that time. Actual results will vary of course.