Serious Investing for Late 20s (Ages 25-29)

• Investment policy statement: In the late 20s the policy statement starts arbitrating between competing goals: retirement deferrals toward the $24,500 employee limit, a down payment fund, perhaps a wedding. Common mistake: Pooling the house down payment and retirement savings into one allocation, so a market decline lands on money with a purchase date only a year or two away.
• Research sleeve: In the late 20s, income is rising but so are competing goals: a first home down payment, a wedding, perhaps graduate school. Common mistake: Holding down payment money inside the sleeve because the horizon feels long, when the actual need date is within a few years and a drawdown could land right on it.
• Concentration management: Late 20s often mean rising pay, an employer that grants equity, and a first home down payment competing for the same dollars. Common mistake: Counting unvested RSUs and ESPP shares as a separate pot rather than part of total company exposure, so the combined weight of salary and stock tied to one employer is never added up.
• Tax location: In the late 20s marriage can change the Roth IRA picture: the direct contribution phase-out is $153,000 to $168,000 single and $242,000 to $252,000 for joint filers, so a rising salary or a spouse's income can narrow or close direct eligibility. Common mistake: Not rechecking Roth IRA eligibility after a marriage or a raise, then making a direct contribution above the phase-out and creating an excess contribution that has to be corrected.
• Rebalancing: In the late 20s, contribution flow is the main rebalancing tool. Common mistake: Selling a taxable position held just under a year to rebalance, so the gain is taxed as ordinary income when waiting past the one-year mark would have qualified for long-term rates.
• Scenario testing: In the late 20s, scenarios start to include dated, large expenses: a first-home down payment, a wedding, possibly a move. Common mistake: Testing the whole portfolio as one long-horizon pool, so a decline appears survivable even though a share of it is meant for a down payment due in two or three years.
• Security research: In the late 20s income often rises quickly, and equity compensation such as RSUs or an employee stock purchase plan can add a second, unplanned way to own one company. Common mistake: Overweighting the employer's own stock because it feels well understood, when inside familiarity offers no protection against a downturn that would threaten the paycheck and the vested shares together.
• Exit rules: In the late 20s, exit rules have to coexist with a house fund, a wedding or a career change. Common mistake: Using one sell rule for both the down payment fund and retirement accounts, so either house money stays exposed past its deadline or long-term money is sold on short-term worries.

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