Reddit reviews Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School

If you don't want to make a career out of trading, a helpful rule of thumb is a 90 / 10 principle popularized by Andrew Hallam in his text Millionaire Teacher: Stick 90% of your capital in tax sheltered, virtually passive forms of investment like index mutual funds or ETFs with an IRA wrapper and stick the other 10% in whatever investment vehicle you want to learn.

For example, I put 90% of my capital in a batch of index funds and ETFs predicated on John Bogle's suggestion of "your age in bonds, the rest in common stock" index funds and ETFs by way of an account with Vanguard for my IRA and my company's 403(b) program. Vanguard makes this really easy through their target retirement funds, which automatically adjust the ratio of stock / bonds over time. I'm really interested in value investing; so, I take long positions in individual stock that meets the criteria Benjamin Graham identified in Security Analysis and The Intelligent Investor with the other 10% of my capital via a brokerage account with TD Ameritrade--this isn't tax sheltered like my retirement accounts but it's basically an ongoing education in investing since TD Ameritrade offers a ton of instructional materials on topics like options, commodities, etc. and I want to see my money grow.

Let's take a look at what this could look like for your situation. Starting with $5k and doing something like what I'm doing, you would:

1. Open an account with Vanguard or whomever else you want to deal with for your IRA and invest $4500 there. If you follow that same rule of thumb I mentioned from Bogle, you could stick 18% of that in a bond ETF like BND, i.e. $810. Of course, you'll have to purchase in units equivalent to the going rate of the ETF shares, which $83.22 at present. So, you'd have to go with 10 shares for a total of $832.20 invested. Then, you could stick the rest in a total stock market ETF like VTI, whose going rate is $103.50 at present. To invest 82% of your available $4500, or $3690, you would need to buy 35 shares for a total of $3685.50 invested. But maybe all this seems way too complex to keep track of year after year; so, you could instead just invest all $4500 in a one-stop-shop composite index fund like Vanguard's Target Retirement 2035, which currently features a ratio pretty close to what you want between bonds and stock and will automatically adjust for you over time.
   
   
2. Open an account with pretty much any other decent brokerage, study up, and invest your remaining cash in whatever you want to learn how to do. $500 is not going to buy you much stock, but you could pull off a few options plays with that amount of cash. The key here is to provide a context where you basically force yourself to learn how to invest by having an actual stake in the game. A lot of people advocate paper trading, i.e. executing trades with fake money but real stock market numbers, as a way to learn how to invest; however, we all behave differently when our actual money is at stake. It's better to learn with actual money, even if it's not much. As I mentioned before, I personally like TD Ameritrade because they provide a lot of instructional content; however, your mileage may vary.
   
   Any follow up questions?