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Does anyone have any experience with the tax-managed Vanguard funds? I'm looking to build a portfolio in a normal (ie. not IRA/401(k)) account, and I'm wondering if it's worth looking into these. Looking at their past performance vs. the "regular" accounts, it seems like they don't do much better, but coming off the recession I'm sure that darn near all funds would have losses that they were still carrying forward to mask their actual tax hit. Anyone with some (pre-recession) perspective on this? Specifically I'm looking at Vangard's 500 index vs. the TM Growth and Income vs. TM Capital Appreciation (any input on the difference between the latter two is also appreciated), which is VFIAX, VTGLX, and VTCLX respectively. I'm also between the Small cap and TM small cap, VSMAX and VTMSX. Finally, is there a "correct" weight for small vs. large cap? Market is roughly 20/80, but is it good to mirror that or better to overweight small? I'm 27 and my time horizon is large - we're basically treating this as a retirement account.
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May 2, 2011 21:52
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T0MSERV0 posted:Finally, is there a "correct" weight for small vs. large cap? Market is roughly 20/80, but is it good to mirror that or better to overweight small? I'm 27 and my time horizon is large - we're basically treating this as a retirement account. Do you have tax advantaged accounts as well? You really shouldn't be splitting asset allocations into taxable and tax advantaged. You have one asset allocation, with funds split between. Personally, I have read that Vanguard Total Stock Market is very tax efficient, and forms a big chunk of asset allocation, so I have my taxable funds in that currently. If I am ever lucky enough to have >30% of investments in taxable accounts, I would have to re-think things. e: here's a bogleheads discussion - http://www.bogleheads.org/forum/viewtopic.php?p=1035742&sid=bfd78cd02ab4ed2482564cd0e6780842
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May 2, 2011 22:15
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gvibes posted:Do you have tax advantaged accounts as well? You really shouldn't be splitting asset allocations into taxable and tax advantaged. You have one asset allocation, with funds split between. Personally, I have read that Vanguard Total Stock Market is very tax efficient, and forms a big chunk of asset allocation, so I have my taxable funds in that currently. If I am ever lucky enough to have >30% of investments in taxable accounts, I would have to re-think things. Thanks for the bogglehead thread - I'll get it read and may come back with additional questions. As for your questions, yes I do have tax advantaged accounts, but my circumstances are weird. The taxable account is grossly over-sized compared to what I've gotten into tax advantaged accounts (like 10X), and because of that were I to split the allocations between them I'd end up with 100% of my dedicated retirement accounts in a single asset class. I'm not wild about having all my protected assets riding in a REIT fund (not actually looking at this, just an example) because of tax sheltering, so I'm treating the taxable account as its own animal. Also, I realize that the difference between your standard index fund and a tax-advantaged fund is minor - both are on the very efficient end of the tax spectrum, so I'm not terribly worried about it either way, but I'm just looking for perspective. I've read a lot of opinions from both for and against TM sides, but most of them were comparing tax advantaged mutual funds to the market in general or something that would make the comparison a lot more stark. I'm trying to dig into the minutia between 2 funds that are basically the same thing, just with different tax strategies. Thanks for your help, in any case.
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May 3, 2011 04:12
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The Bogleheads article compares tax-managed to non tax-managed equivalents from a tax liability perspective. It made my head hurt, so I didn't look at it in detail. Large cap stocks in general are pretty tax efficient, so you could perhaps just use your tax-advantaged accounts for holding bonds, and keep the other 90% in equities, if that works with your risk profile.
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May 3, 2011 17:19
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I recommend avoiding the tax managed funds entirely. The 5 yr redemption fee is not worth it and the tax benefits is no longer relevant now that there is a wide availability of tax efficient index funds and ETF's. Vanguard ETF's provide tax benefits not only to the ETF holders but to the open end index fund holders of the same share class. For every tax managed fund, there is a better index fund or ETF to choose from, imo.
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May 3, 2011 17:28
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80k posted:I recommend avoiding the tax managed funds entirely. The 5 yr redemption fee is not worth it and the tax benefits is no longer relevant now that there is a wide availability of tax efficient index funds and ETF's. Vanguard ETF's provide tax benefits not only to the ETF holders but to the open end index fund holders of the same share class. For every tax managed fund, there is a better index fund or ETF to choose from, imo.
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May 3, 2011 17:31
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gvibes posted:I think Vanguard just got rid of the redemption fees. in that case they are fine choices but likely no better than equivalent index funds.
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May 3, 2011 17:48
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80k posted:in that case they are fine choices but likely no better than equivalent index funds. I think that was the point of the boggleheads article posted above. Rather, what it said was there is some advantage depending on which TM fund you were attempting to replace. However, the advantages were in all cases less than one percent and in some as low as .01 percent.
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May 3, 2011 18:34
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fivetwo posted:Income is about 75k. I contribute 11%, so with match that's 16%. The TSP is designed to force individuals to low risk, low maintenance, long term investments. It discourages market timing due to the limited options and limited moves. I wouldn't worry about it too much. To retire with a 13 salary would require only about ~50% of your income come from the TSP. Also, remember that to live at 100% of your income level would at a maximum require only 89% since you aren't contributing to your 401K. Given that ~30% (of a signficantly higher salary) is guaranteed and would be inflation adjusted, you are at ~60% remaining without accounting for SS.
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May 3, 2011 19:23
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Murgos posted:I think that was the point of the boggleheads article posted above. Rather, what it said was there is some advantage depending on which TM fund you were attempting to replace. However, the advantages were in all cases less than one percent and in some as low as .01 percent. then i suggest you first decide on the best exposure. Then decide TM or not. For instance: - for broad international exposure do you want inclusion of Canada and/or emerging markets? If so, then MSCI EAFE index is not the one for you. And if that is the case, then the Tax Managed International is not suitable for you. If you want the EAFE index, then you can choose between the developed market index fund or the tax managed international fund. Do that for every asset class and never let the tax managed funds affect your choice of index. If the index you want matches the tax managed fund (i.e. you want S&P500 and can therefore choose tax managed growth and income), then go for the tax managed growth and income. I do feel that in most cases, the tax managed funds do not follow the best index. I'd rather use the MSCI broad market for US stocks over the S&P500 and the FTSE or ACWI offerings over the EAFE for international. So the decision to avoid the tax managed funds is an easy decision for me. Don't forget admiral shares availability for index funds at $10k balance for many of the index funds, which is not the case for the tax managed funds (need $50k): so there may be a cost advantage to the index funds still.
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May 3, 2011 19:28
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80k posted:Don't forget admiral shares availability for index funds at $10k balance for many of the index funds, which is not the case for the tax managed funds (need $50k): so there may be a cost advantage to the index funds still. In addition to dropping the 5 year redemption fees, Vanguard is fixing the high minimums as well Vanguard posted:Also, effective May 13, the funds’ fees will essentially be reduced in the higher-priced investor share classes to so-called “admiral” level pricing, which will make them more competitive with ETFs. (Minimums on the admiral share classes are being reduced from $100,000 to $10,000.) After following the math in the articles, it looks like it's not a bad idea to swap out the small cap index fund I was going to use with the TM one, but other than that the rest make a small enough difference/function differently enough that it's not worth it. Thanks for the help.
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May 3, 2011 20:56
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T0MSERV0 posted:In addition to dropping the 5 year redemption fees, Vanguard is fixing the high minimums as well ok, apparently I have some catching up to do.
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May 3, 2011 21:17
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I'm 23 years old and I've got a decent job which would allow me to put $100 or so each paycheck to whatever. I've got about $9k in a savings account after a year, and my company matches up to my 4% 401k contribution. I want to make sure I don't hesitate and end up investing money later than I would have liked to. My parents recommend bonds, which seems logical since I'd be able to decide if I want to re-invest that money or use it when the bonds mature. To be fair, I know quite little about investment, and I don't realistically even know how to browse and purchase bonds (I assume I could go to my bank for that though).
Atoramos fucked around with this message at 15:07 on May 5, 2011 |
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May 5, 2011 15:05
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The first thing you need to do is start investing 4% of each paycheck into your company's 401(k). If you don't, you are basically giving away money. All bonds probably isn't a good strategy at your age. What sort of funds are available in your company's 401(k)?
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May 5, 2011 15:15
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gvibes posted:The first thing you need to do is start investing 4% of each paycheck into your company's 401(k). If you don't, you are basically giving away money. I already do full matching into Fidelity. I'm in their 'Fidelity Advisor Freedom 2050 Fund - Class A' investment plan which I was told scales the investments as I age to match what would be expected, and so far it's got $15k in savings [half of that is from company profit sharing]. I'm curious about investments outside my 401k so the money is available in increments as I age, or if I should be just pouring more into that 401k. Also, while I know my 4%+4% of matching only comes out to 8% savings, my company profit sharing brings me well over 10% savings-per-year. Also I'm paying a mortgage rather than rent and while I know I shouldn't consider that 'savings' after reading the home buying thread, I bought while the market was so low I pay barely more than I did for an apartment so its hard to consider it anything but. Atoramos fucked around with this message at 15:28 on May 5, 2011 |
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May 5, 2011 15:21
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I was looking into I-Series savings bonds. They seem pretty decent given that you can cash them in with no penalty after 5 years. They're also guaranteed not to lose value with inflation. My question is this: Are there any IRAs from any institution that will let you invest in US savings bonds? (not treasury notes, savings bonds) I already looked at the IRS web site and they say savings bonds are okay with them in an IRA... but I have yet to find one institution that will actually let you buy them for an IRA. Thanks!
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May 5, 2011 15:25
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Atoramos posted:I already do full matching into Fidelity. I'm in their 'Fidelity Advisor Freedom 2050 Fund - Class A' investment plan which I was told scales the investments as I age to match what would be expected, and so far it's got $15k in savings [half of that is from company profit sharing]. I'm curious about investments outside my 401k so the money is available in increments as I age, or if I should be just pouring more into that 401k. Also, while I know my 4%+4% of matching only comes out to 8% savings, my company profit sharing brings me well over 10% savings-per-year. Also I'm paying a mortgage rather than rent and while I know I shouldn't consider that 'savings' after reading the home buying thread, I bought while the market was so low I pay barely more than I did for an apartment so its hard to consider it anything but. What do you mean by "outside my 401k so the money is available in increments as I age"? When do you expect to need this money?
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May 5, 2011 16:11
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gvibes posted:Great, that's a good start. Well since I have that Fidelity account set up, and I'm not going to change the contributions going into that 401k, I figured I would like to do something with the money that's otherwise just doing nothing in the bank. My parents have put money into accounts with the intention of that becoming my eventual children's college fund, so that's yet another thing I'm not currently worrying about. I would like to invest a good portion of the 9k that's in my bank, while having it be somewhat accessible while invested, because it's all the money I have put away for life's costly surprises. I can assume that I'll be alright for a while, and if something really dramatic happens in the next few years I have the safety net of older middle-class parents to catch me, but in the next five years or so I'll probably be starting a family and it would be great to have even more in the bank.
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May 5, 2011 16:31
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People are going to say not to invest with any money you see yourself wanting to have in the next 3 years. I think you could realistically lose 40% of it in that time span (or have it return 40%+) it has happened before, and recently at that. I believe there are tax sheltered college investment accounts out there if you want to go down that route. But, that money would have to be spent on college-related things or be subject to a tax penalty. I don't know any details about these accounts but I think they're out there. Look them up. If you really want to get that money invested, you will likely want to invest in a fund that is tax efficient. This generally means non-divident paying stocks.. Bonds are generally tax inefficient. The popular choice is the Vanguard Total World Stock Index Fund (VTWSX). If it were me, I would personally keep a good chunk of emergency cash in the bank just in case, even if you do have parents to fall back on if necessary. Maybe it's a silly pride thing? I don't know. I like the security of knowing for certain that I can go 6+ months on my own if I absolutely had to. e: general rule is to firstly have a safety cash fund in the bank, then put enough into 401(k) to get company match, then max ROTH IRA ($5k/yr), then max company 401(k), then open a taxable account. Money in the stock market should not be considered a safety fund. spf3million fucked around with this message at 23:23 on May 5, 2011 |
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May 5, 2011 23:19
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I've been self-employed for the last couple of years, and as such all of my retirement savings for those years has been in a SEP-IRA. I believe it is a traditional IRA (rather than a Roth) as my wife and my joint income was just over the top cutoff for a Roth (although I'm still not sure if you can have a Roth SEP-IRA, or if that was the discussion between a Roth and a SEP). However, I'll be starting work at a small firm this year, and most, if not all, of my income will be through their firm. They offer 3% matching for the 401k. My questions is, after the 3%, should I continue to put that money into the 401k, or should I invest it in a traditional IRA account (assuming we remain above the Roth cutoff)? Is there much of a difference (other than choice of investment options)? Also, assuming for some sad reason we make less this year and I can qualify for a Roth IRA, is it worth, or even possible, to convert my previous SEP-IRA account into the Roth IRA. From my understanding I'd pay taxes on the funds merged into the Roth IRA, but after that they are treated the same as the new contributions to the Roth IRA. Further, as my yearly income is somewhat flexible based on the work I can grab from clients, assuming my wife and I bounce over and under the cutoff a couple of times, is it worth trying to continue merging the accounts or should I just invest in the Roth IRA when possible and a traditional IRA when not? Finally, is this all something I can figure out for myself with a reasonable investment of time? I've used financial advisors in the past, and while I've tried to become more proactive and personally involved with our finances ovwe the last couple of years, just writing all of these questions makes me want to run back to an expert.
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May 5, 2011 23:49
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Voodoofly posted:My questions is, after the 3%, should I continue to put that money into the 401k, or should I invest it in a traditional IRA account (assuming we remain above the Roth cutoff)? Is there much of a difference (other than choice of investment options)? Concerning ROTH vs traditional IRA, I personally like to diversify my retirement accounts to include both traditional (pretax) accounts and after-tax (ROTH) accounts because you never really know what your income and tax bracket will be when you retire. I aim for about 60% in ROTH and 40% in pre-tax accounts between my ROTH IRA, company's traditional 401(k) and company's ROTH 401(k) options. Everyone has to make their own decisions but I feel like diversity is good when investing and this is another way to make your retirement income more diversified. So in your case, assuming your work 401(k) is a traditional pre-tax account, I would try to get some money into a ROTH when possible. Granted you will have to pay taxes on this so consider whether you think you will pay a higher tax rate now or when you're retired. I don't know if it is possible to transfer from a SEP IRA to a ROTH IRA. Disclaimer: I'm not a financial advisor, just a guy like you trying to figure it out as I go.
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May 6, 2011 00:01
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Just a quick note: since Roth income limits are based on MAGI and it sounds like you're right on the edge, you can ensure that you're eligible by upping your pre-tax retirement account contributions. Wasn't an issue when you were putting money into an IRA because of the overall annual IRA contribution cap, but now that you'll have access to a 401(k), you can push your MAGI below the contribution limits with extra contribution to that and then be able to save the full 5k to a Roth if you wish.
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May 6, 2011 00:47
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Thanks for the replies. Another question, as I've never actually used a 401(k) (all my old firms did zero matching and had poo poo options): Is there a way to retroactively add to a 401(k)? Assuming I did the 3% matching and threw the rest in an IRA at the end of the year, but at the end of the year realized I might be eligible for the Roth IRA using your manipulation vis a vis the 401(k) contributions. Is that an option? Previously I've always saved the money each year and invested in the IRA when I did my taxes (so that I could figure out how much I had to save and all the fun tax juggling issues). Like I said above, a significant portion of my salary will be based on the amount of work I do for my own clients versus the firm's clients, and it is drat near impossible for me to estimate that amount right now. I'm also pretty sure that additional income from my own clients will be reflected in bonuses, rather than adjustments to my base salary, so it won't qualify for the 3% matching (if that somehow makes a difference).
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May 6, 2011 01:04
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It may differ for different work places, but I believe in my 401(k) you can't add additional money from a bank account for example but you can contribute up to 100% of your paycheck (assuming you're under the $16.5k limit or whatever it is). So I think the only thing you could do would be to try to figure out your tax situation around December then dump a bunch of your income into the 401(k) with your last few paychecks if you needed to. You'd need cash on hand to pay the bills in December but it'd be similar to dumping cash into the 401(k) directly.
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May 6, 2011 01:16
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Any advice or words of wisdom for people saving in one currency who will eventually be spending in another? I'm currently working in the US and most of my money is intended to buy a house in Canada in ~3-5 years. The money is in cash and a short-term bond index fund. I can trade Canadian stocks from my US broker (at a premium), so I could buy a short-term bond index ETF there if I really wanted. I might be able to get a Canadian savings account (yielding 1.5% versus the 1.15% I get in the US) but I think there would be tax implications in Canada. I suppose I have a couple of options: 1) Save entirely in USD and convert I move or need it. I guess this is basically a bet that the USD won't lose significant value over 3-5 years. 2) Dollar cost average into CAD (gradually converting my ~$90k current savings and immediately converting new savings). If I do this I probably won't be able to get as good of an exchange rate because the amounts will be small. Any CAD I convert would probably end up in a savings account as long as the tax situation isn't too onerous because $19 per TSX trade is a lot to be doing regularly. 3) Some combination of #1 and #2. Or something more complicated like a forward contract. Thoughts? laffa fucked around with this message at 01:57 on May 6, 2011 |
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May 6, 2011 01:54
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mister itchy posted:3) Some combination of #1 and #2. Probably the easiest thing to do is to compromise, and convert the currency 1-2 times per year. You're getting the risk reduction of not doing it all in one shot, while at the same time doing large enough amounts of minimize fees. The "Norbert Gambit" is a popular item of discussion on canadian finance blogs as a way to reduce forex fees. Essentially, you take a stoke that's traded on both a US exchange and the TSX, and buy the stock in US dollars. Then you call up your broker, have it "journaled over" to the TSX, and sell it in canadian dollars. It can be a lot cheaper than paying the forex spreads, but of course there's the risk of being exposed to the stock for a few days. Not necessarily worthwhile, but it's something to think about.
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May 6, 2011 06:03
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DuckConference posted:Probably the easiest thing to do is to compromise, and convert the currency 1-2 times per year. You're getting the risk reduction of not doing it all in one shot, while at the same time doing large enough amounts of minimize fees. Ah yeah, I'm familiar with the gambit but totally forgot about it. Probably because I didn't think of doing it at my US broker since all the talk is usually from Canadians. When the time comes to actually convert money I'll run the numbers and look at the pitfalls of doing it down here (I don't - and am apparently not allowed to - have a taxable Canadian brokerage account). That's of course separate from actually getting the CAD into a Canadian savings account. XE.com will ACH it in for free if I convert the currency through them but I think they charge a fee if they're used as an intermediary. Probably cheaper than a wire though. EDIT: By my math, $50k USD at the stock market's last close would buy $47455 CAD via XE.com and $48100 CAD by selling/buying RIMM (after commissions). Savings of $645 CAD, not too shabby as long as I don't get bit by volatility and Fidelity will let me do it. laffa fucked around with this message at 08:10 on May 6, 2011 |
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May 6, 2011 07:37
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Is the TSP worth it ever (https://www.tsp.gov/index.shtml)? I'd say Roth IRA first, then maybe consider the TSP? There's no match, limited funds, and relatively high costs from what I've seen.
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May 6, 2011 17:56
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I get agency contributions of 1% plus matching an additional 4% for my TSP, but maybe that's just a job related perk for me.
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May 6, 2011 18:34
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anne frank fanfic posted:Is the TSP worth it ever (https://www.tsp.gov/index.shtml)? I'd say Roth IRA first, then maybe consider the TSP? There's no match, limited funds, and relatively high costs from what I've seen. I'm not sure what section of the government you're employed in, but if you're included in the FERS (Federal Employee Retirement System) you should be eligible for up to a 5% match (1:1 if you contribute 5%). I'm not sure what sectors of government employees are covered under that system, but I am. There are a limited number of funds, sure, but they cover all the basics. Also the G-fund is something that exists nowhere else. It is the ultimate form of short-term bond allocation. Its price can never decrease, and yet has an interest rate determined by the current rates of ALL government bonds. The end result is a yield of somewhere around 3% currently. This is absolutely absurd when you think about it, because this is equivalent to around a 10-year bond with the safety of a money market account. You cannot get that anywhere else. As far as costs, I'm not sure where you're getting your information, but the TSP has some of the lowest costs of any investment vehicle. The funds all have an expense ratio of 0.025% or lower. By comparison, Vanguard's Admiral version of its S&P500 fund has an expense ratio of 0.06% (more than twice as much as the TSP's C-Fund). So even if you had a million dollars sitting in the C-fund, your annual expenses would be $250 or less.
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May 6, 2011 18:35
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flowinprose posted:I'm not sure what section of the government you're employed in, but if you're included in the FERS (Federal Employee Retirement System) you should be eligible for up to a 5% match (1:1 if you contribute 5%). I'm not sure what sectors of government employees are covered under that system, but I am. I was misinformed on the costs, I think someone was trying to tell me the lifetime cycle funds weren't worth it for whatever reason. But no, there's no match for a large majority of those who have access to the TSP, so it makes me hesitant to put any money in it unless its after a ROTH IRA.
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May 6, 2011 19:00
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I recently started a career and have been trying to spend some time researching retirement information. I found a lot of good information regarding how much you should be saving and in what order (401k, roth, etc), but I am finding it a bit harder to get some good suggestions as far as how to allocate my money within those funds. Would anyone be able to point me to some resources that address this in some detail? I am looking for an aggressive portfolio as I am only 25 now and have at least 35-40 years until I would be considering retirement. According to the investment analyzer on my company's retirement page, my current allocations are this: Large Cap...............2.00% Large Cap Growth........10.00% Large Cap Value.........7.00% Mid Cap.................21.00% International...........20.00% Emerging Markets........8.00% Real Estate.............6.00% Bonds...................2.00% Cash....................1.00% Small Cap Growth........13.00% Small Cap Value.........10.00% Mid Cap Growth.......... Mid Cap Value........... It is suggesting I change to this: Large Cap............... Large Cap Growth........15.00% Large Cap Value.........18.00% Mid Cap................. International...........31.00% Emerging Markets........ Real Estate.............4.00% Bonds...................3.00% Cash.................... Small Cap Growth........5.00% Small Cap Value.........7.00% Mid Cap Growth..........7.00% Mid Cap Value...........10.00% I am questioning the thoroughness/detail of their analyzer since it currently shows my entire mid cap allocation as simply "mid-cap" instead of breaking it out further into growth/value etc. Basically I am just trying to find some resources that not only show some allocation suggestions, but maybe the why's behind them also? Thanks for any help
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May 7, 2011 02:06
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Edit: Answered my own question
P.D.B. Fishsticks fucked around with this message at 04:24 on May 7, 2011 |
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May 7, 2011 04:19
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anne frank fanfic posted:I was misinformed on the costs, I think someone was trying to tell me the lifetime cycle funds weren't worth it for whatever reason. But no, there's no match for a large majority of those who have access to the TSP, so it makes me hesitant to put any money in it unless its after a ROTH IRA. Are you military or government civilian? I vote against the TSP because for military, it's forced savings. By forced, I mean you legally can't touch it until you separate or retire. Combined with no automation online, dealing with the speed of government, and limited fund selection, it's not worth it to me and I think I can do better without it. However, others praise it for it's extremely low expense rations and the guise of "It's for retirement, why would you touch it now?" Of course, if you get matched funds, start adding to the max matched ASAP.
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May 7, 2011 04:22
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TSP is incredible and you can borrow against it. It's the same as any 401(k) with regards to restrictions - you can for example withdraw from it to fund education or a downpayment. Additionally it is also tax advantaged and comes off the top from your marginal rate. This in and of itself is free money vice trying to save by yourself into a straight taxable account. Finally - the expense ratios are substantially lower, this is no small thing, and it has access to the G fund which is in essence free money; a medium/long term bond fund with 1-day duration.
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May 8, 2011 00:32
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anne frank fanfic posted:I was misinformed on the costs, I think someone was trying to tell me the lifetime cycle funds weren't worth it for whatever reason. But no, there's no match for a large majority of those who have access to the TSP, so it makes me hesitant to put any money in it unless its after a ROTH IRA. Your also misinformed on that whole 'large majority' thing. The large majority of FEDs are FERS employees which get a 1% agency and 3% 1:1 match and 2% 1:2 match (net 5% full match). There have been no new CSRS (the old system) employees since 1986. Yes, Military individuals don't get the same benefits but they also get the benefit of having large amount of non-tax income and can greatly reduce their tax bill through just a few percent of contributions. The TSP is an AMAZING long term retirement financial vehicle. Find me a .025% small cap or international fund. Good loving luck. Yes, if you are day trading, it won't let you do that. But this is the long term investment thread, and you can't really beat the TSP for that.
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May 8, 2011 02:06
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KennyG posted:Your also misinformed on that whole 'large majority' thing. The large majority of FEDs are FERS employees which get a 1% agency and 3% 1:1 match and 2% 1:2 match (net 5% full match). There have been no new CSRS (the old system) employees since 1986. Yes, Military individuals don't get the same benefits but they also get the benefit of having large amount of non-tax income and can greatly reduce their tax bill through just a few percent of contributions. I guess I'll need to look more into the lifecycle funds at least, since I'm more hands off. Thanks for the info.
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May 8, 2011 05:08
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nvm
xaarman fucked around with this message at 21:07 on May 8, 2011 |
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May 8, 2011 20:57
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I posted in the stock thread, but I think I am more fitting in this thread because my level of involvement in day to day business news will not be so high .So after what research and readings I could do, I created a brokerage account with Fidelity and Vanguard. Basically, I have split my assets 1/3 into the Vanguard Total International Stock Index Fund Admiral Shares, 1/3 into Spartan Total Market Index Fund - Investor Class. I don't know what to do with the last 1/3 through? I want to plan for a crash within the next 1-2 year window, god willing there will not be; but I would like to have that 1/3 available should that opportunity come up. Should I just leave it in money market? I was thinking of buying bonds, but I heard they don't pay much now, and it is a time commitment that might not match up with when the market becomes bear again. If the market goes down, will my bond prices maintain it's value that I will be able to invest it again like it it was cash? If my 2/3rd investments so far are misguided, please let me know before it's too late. Femur fucked around with this message at 04:08 on May 10, 2011 |
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May 10, 2011 03:19
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| # ? May 27, 2024 19:10 |
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Femur posted:I posted in the stock thread, but I think I am more fitting in this thread because my level of involvement in day to day business news will not be so high .So after what research and readings I could do, I created a brokerage account with Fidelity and Vanguard. The whole point of bonds is that they *tend* to be strong when stocks *tend* to be weak, and that they have less volatility overall. You invest in bonds to have a lower risk, low correlation asset class balance. So yes, 1/3 international, 1/3 US, and 1/3 bond would be a perfectly good portfolio that would involve nothing more than annual (or even rarer than that) rebalancing to get back to the original proportions. In fact it is even listed as one of the lazy portfolios here: http://www.bogleheads.org/wiki/Lazy_Portfolios
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May 10, 2011 12:31
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