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All the below description is just to clarify my current situation.

I am a 27 y.o. single male immigrant from the third world (in a process of applying for a green card) who works as a developer somewhere in San Fransisco, CA.

I am debt free, currently earn 145k per year have a good health coverage (which I actually never used in two years, because I am pretty healthy) and recently reached 100k at my bank account (which I accumulated over a period of two years) and which gives me close to zero percentage back. I also have some shares from software companies (which in sum is approximately 10k).

Do not have any home or a car, and my spendings are close to minimum (food, rent). Also I do not expect any upcoming events which will require significant amount of money (wedding/buying a car).


This year I am trying to figure out a reasonable way to generate some money from my savings. I read many many similar question on money stack exchange and here are the answers to the common questions:

  1. What is my risk tolerance? I losing 10k or 20k would not be a big deal for me, although clearly I would like to avoid that.
  2. When do I plan to retire? Not any time soon, actually I would like to do something as long as I live
  3. What is the reason to invest? I do not do this for retirement, college for kids, buying expensive stuff. Mostly the reasons can be divided between get more money to start my own business when I legally can do it and when I know what I am doing and what I want to do (mostly start IT startup) and generate a passive income.
  4. When do you expect to want to use the money you are investing? I would rather divide the investment into parts and invest one part in short term goals (see some return in 2 years) and another one in long term (see results in 5-6 years).

A lot of answers I have seen are focusing on:

  • paying off debts (not applicable to me)
  • contributing to retirement (my company contributes something, also I am not sure how much). Also I am not a US citizen (not sure whether I will get a citizenship and whether I will stay here forever), so I am not sure whether maxing up my 401 is the best option for me.
  • saving money for education for kids. I am also not sure how good is this path, mostly because I am a self-taught developer who learned everything from web and every year the number of resources to learn is getting bigger and bigger thus decreasing the need for college.
  • starting your own business. As far as I understand with my current status in US (H1B visa) I am not legally able to do this. To add to this, I am still not clear as of what to do.
  • Vanguard (not sure why so many people recommend it)

So can anyone would be nice enough to give me some suggestion as of how I can start generate some money from what I currently have. Currently I have zero knowledge about finance/investments but have significant knowledge in math/machine learning/stats/algorithms/programming and willing to learn anything that will make me a better with my funds.

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    For your risk tolerance, are you saying you're willing to tolerate losing 20k in a single year, for the expectation of higher returns? When do you expect to want to use the money you are investing? 1 year? 2-5? 7? More than 10? – ChrisInEdmonton Jan 11 '16 at 14:19
  • @ChrisInEdmonton sorry for being not clear. I 20k per year sounds like too much. What I meant was that if I will lose 20k of the money I have, I would not be totally broken. When do I expect to use the money? I would rather divide that I invest some part in short term goals (see some return in 2 years) and long term (see results in 5-6 years). – random Jan 11 '16 at 17:40
  • Okay, so you have very low risk tolerance and a comparatively short investment horizon. Unfortunately, the result of this is that you are unlikely to see substantial returns on your money. Hopefully, someone can write up an answer but if not, I will try later on. – ChrisInEdmonton Jan 11 '16 at 17:52
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For starting with zero knowledge you certainly did a great job on research as you hit on most of the important points with your question. It seems like you have already saved up around six months of expenses in savings so it is a great time to look into investing.

The hardest part of your question is actually one of the most important details. Investing in a way that minimizes your taxes is generally more important, in the end, than what assets you actually invest in (as long as you invest even semi-reasonably). The problem is that the interaction between your home country's tax system and the U.S. tax system can be complex. It's probably (likely?) still worth maxing out your 401(k) (IRA, SEP, 529 accounts if you qualify) to avoid taxes, but like this question from an Indian investor it may be worth seeing an investment professional about this. If you do, see a fee-based professional preferably one familiar with your country.

If tax-advantaged accounts are not a good deal for you or if you max them out, a discount broker is probably a good second option for someone willing to do a bit of research like you.

With this money investing in broadly-diversified, low fee, index mutual funds or exchange traded funds is generally recommended. Among other benefits, diversified funds make sure that if any particular company fails you don't feel too much pain. The advantages of low fees are fairly obvious and one very good reason why so many people recommend Vanguard on this site.

A common mix for someone your age is mostly stocks (local and international) and some bonds. Though with how you talk about risk you may prefer more bonds. Some people recommend spicing this up a bit with a small amount of real estate (REITs), sometimes even other assets. The right portfolio of the above can change a lot given the person. The above mentioned adviser and/or more research can help here.

If, in the future, you start to believe you will go back to your home country soon that may throw much of this advice out the window and you should definitely reevaluate then. Also, if you are interested in the math/stats behind the above advice "A Random Walk Down Wall Street" is a light read and a good place to start. Investing makes for a very interesting and reasonably profitable math/stats problem.

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I am in a similar situation (sw developer, immigrant waiting for green card, no debt, healthy, not sure if I will stay here forever, only son of aging parents). I am contributing to my 401k to max my employer contribution (which is 3.5%, you should find that out from your HR). I don't have any specific financial goal in my mind, so beside an emergency fund (I was recommended to have at least 6 months worth of salary in cash) I am stashing away 10% of my income which I invest with a notorious robot-adviser. The rate is 80% stocks, 20% bonds, as I don't plan to use those funds anytime soon. Should I go back to my country, I will bring with me (or transfer) the cash, and leave my investments here. The 401K will keep growing and so the investments, and perhaps I will be able to retire earlier than expected. It's quite vague I know, but in the situation we are, it's hard to make definite plans.

protected by Community Sep 25 at 4:08

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