Retirement investing - starting out

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
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Topic Author
ldav07
Posts: 8
Joined: Sun Feb 25, 2018 9:02 pm

Retirement investing - starting out

Post by ldav07 »

Hey all,

Came across this site while searching out info on different investment brokers. After reading a bunch of the threads, I figured this would be a great place to hopefully get some investing insight. I'm in my mid 20's and have decided it's overdue that I get rolling on retirement investing. I currently don't have the opportunity of an employer matched 401k, so I've decided to go with a Roth IRA, self directed. A couple questions:

1) When it comes to brokers, I have it narrowed down to either Vanguard or Schwab. The more I look into them, it really seems like a personal preference. For those of you that have used both, are there any major reasons you would recommend one over the other?

2) I have read up on the 3-fund portfolio idea and really like the simplicity of it, are there any "starter funds" you would recommend for someone just starting out? Percentage of stocks vs bonds to hold? Just trying to figure out how best to get set up...

Thanks for any help or insight, really appreciate it! Looking forward to learning a bunch from this site!
Grt2bOutdoors
Posts: 25625
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Retirement investing - starting out

Post by Grt2bOutdoors »

Just starting out? Read this: https://www.etf.com/docs/IfYouCan.pdf

Starter funds - Vanguard Target Retirement Funds. Pick the fund that most closely approximates the time you anticipate retiring, then just contribute to it, keep on contributing to it even if the share price declines (the market is like a yo-yo, the sooner you accept that the easier your investing life will become). Read the books listed in that document up above, you will never need to visit a financial adviser because you will know more than 90% of them.

Welcome!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
gostars
Posts: 439
Joined: Mon Oct 09, 2017 7:53 pm

Re: Retirement investing - starting out

Post by gostars »

Welcome to the forums.

Vanguard, Schwab, and Fidelity are all good options for brokerages, and yes, it is personal preference. Many of us feel that Schwab and Fidelity provide a superior web interface and superior customer service while still offering funds in keeping with the Boglehead philosophy. Some prefer Vanguard because they like Vanguard's structure (built to serve the owners of their funds, rather than shareholders). Personally, for a low-value account, I would start with Schwab. Schwab's funds have lower costs than both, and no minimum investments. Vanguard and Fidelity both have higher fees until you get into the $10,000+ range per fund, which can take several years if you're just getting started. Schwab will also give you a free $100 just for opening an account if you use the link at https://www.schwab.com/public/schwab/nn ... spect.html .

Just starting out, I would start with one of the Schwab Target Index Funds, probably Schwab Target 2055 Index Fund (SWYJX). It's very aggressive right now (93.5% stocks), which is what you want when you're 35-40 years away from retirement. It will automatically adjust down as you get closer to retirement and need more stability. The expense ratio is .08%, lower than any other target date fund you would be able to purchase as an individual investor.
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steve roy
Posts: 1855
Joined: Thu May 13, 2010 5:16 pm

Re: Retirement investing - starting out

Post by steve roy »

I would say a Vanguard Target Date Fund would fill the bill nicely. (You're young, so an age-appropriate TD fund would get you a broadly diversified asset allocation 90% stocks/10% bonds.)

I've been tucking money away into different mutual funds for decades. Like many here, I've made investing missteps. Since I'm on the cusp of geezerhood, my current asset allocation is 35% bonds/65% bonds, but I'll be shifting to 30% stocks/70% bonds in the next few months. (30/70 is my target allocation but everything as slipped over the past couple of years.)

Nobody knows what the "ideal" asset allocation is, because there isn't one, except in retrospect. A half-dozen years ago, the 401(k) Plan in which I participated switched to Vanguard as the Plan administrator, and VG put all participants into an age-appropriate Target Date Fund. Mine was TD2015, and it's performed better than any other asset allocation I've concocted on my own.

Moral: Develop an investment plan (stocks/bonds), execute it and don't look back.

https://www.bogleheads.org/wiki/Getting_started
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Tyler Aspect
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Joined: Mon Mar 20, 2017 10:27 pm
Location: California
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Re: Retirement investing - starting out

Post by Tyler Aspect »

ldav07 wrote: Sun Feb 25, 2018 10:16 pm Hey all,

Came across this site while searching out info on different investment brokers. After reading a bunch of the threads, I figured this would be a great place to hopefully get some investing insight. I'm in my mid 20's and have decided it's overdue that I get rolling on retirement investing. I currently don't have the opportunity of an employer matched 401k, so I've decided to go with a Roth IRA, self directed. A couple questions:

1) When it comes to brokers, I have it narrowed down to either Vanguard or Schwab. The more I look into them, it really seems like a personal preference. For those of you that have used both, are there any major reasons you would recommend one over the other?
Vanguard has better money market fund options than Schwab. But it is possible to build a good portfolio at Schwab.

2) I have read up on the 3-fund portfolio idea and really like the simplicity of it, are there any "starter funds" you would recommend for someone just starting out? Percentage of stocks vs bonds to hold? Just trying to figure out how best to get set up...

Young investor portfolio:
60% US stock - ticker symbol VTI
20% International stock - ticker symbol VXUS
20% US bond - ticker symbol BND
With these ETF choices you do not need a starter fund. You can just purchase whole number of shares that comes close to the target percentages.

Thanks for any help or insight, really appreciate it! Looking forward to learning a bunch from this site!
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.
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Watty
Posts: 28860
Joined: Wed Oct 10, 2007 3:55 pm

Re: Retirement investing - starting out

Post by Watty »

ldav07 wrote: Sun Feb 25, 2018 10:16 pm 2) I have read up on the 3-fund portfolio idea and really like the simplicity of it, are there any "starter funds" you would recommend for someone just starting out? Percentage of stocks vs bonds to hold? Just trying to figure out how best to get set up...
Here are some wikis that might help;

https://www.bogleheads.org/wiki/Paying_ ... _investing

https://www.bogleheads.org/wiki/Lazy_portfolios
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Sandtrap
Posts: 19591
Joined: Sat Nov 26, 2016 5:32 pm
Location: Hawaii No Ka Oi - white sandy beaches, N. Arizona 1 mile high.

Re: Retirement investing - starting out

Post by Sandtrap »

ldav07 wrote: Sun Feb 25, 2018 10:16 pm Hey all,

Came across this site while searching out info on different investment brokers. After reading a bunch of the threads, I figured this would be a great place to hopefully get some investing insight. I'm in my mid 20's and have decided it's overdue that I get rolling on retirement investing. I currently don't have the opportunity of an employer matched 401k, so I've decided to go with a Roth IRA, self directed. A couple questions:

1) When it comes to brokers, I have it narrowed down to either Vanguard or Schwab. The more I look into them, it really seems like a personal preference. For those of you that have used both, are there any major reasons you would recommend one over the other?

2) I have read up on the 3-fund portfolio idea and really like the simplicity of it, are there any "starter funds" you would recommend for someone just starting out? Percentage of stocks vs bonds to hold? Just trying to figure out how best to get set up...

Thanks for any help or insight, really appreciate it! Looking forward to learning a bunch from this site!
Welcome :D

1. Vanguard for vast stable of in-house low cost index funds. (Schwab does not have as extensive a selection of their own funds).
1. Schwab for excellent customer service if you need that. Physical branches for "face to face" if you need that.
2.>>>>>>>> Your journey begins here>>>
>>>>>>>
GETTING STARTED
https://www.bogleheads.org/wiki/Getting_started
Bogle Philosophy
https://www.bogleheads.org/wiki/Bogleh ... hilosophy
Here are links to the wiki's "Getting Started" and "Investing Startup Kit" pages:
https://www.bogleheads.org/wiki/Getting_started
https://www.bogleheads.org/wiki/Bogleh ... rt-up_kit
Define General Investment Goals and Objectives (what is your plan?)
https://www.bogleheads.org/wiki/Invest ... statement
Outline of Investing
https://www.bogleheads.org/wiki/Outline_of_investing
Outline of Financial Planning (with links)
https://www.bogleheads.org/wiki/Outlin ... _planning
Funding Priority (what do I do first?)
https://www.bogleheads.org/wiki/Priori ... vestments
Tax Efficient Fund Placement
https://www.bogleheads.org/wiki/Tax-ef ... _placement
Risk Tolerance (what is your "sleep factor"?)
https://www.bogleheads.org/wiki/Risk_tolerance
Asset Allocation (what is right for you?)
https://www.bogleheads.org/wiki/Asset_allocation
Emergency Fund
https://www.bogleheads.org/wiki/Emergency_fund

Suggested Reading List
https://www.bogleheads.org/RecommendedReading.php
Forum Library of Investing Advice with links
https://www.bogleheads.org/wiki/Main_Page

Free Reading: "If You Can" by Bernstein
https://www.google.com/url?sa=t&rct=j& ... -SB3S580I5

Aloha
j :D
Wiki Bogleheads Wiki: Everything You Need to Know
Topic Author
ldav07
Posts: 8
Joined: Sun Feb 25, 2018 9:02 pm

Re: Retirement investing - starting out

Post by ldav07 »

Wow, thanks for all the replies and links. Really appreciate it everyone! I definitely have some reading to do...

So it sounds like a lot of you suggest at the beginning to just contribute into a single Target Date Fund instead of individual index funds? Just because of simplicity?

I definitely want to be more aggressive and don't mind the risk of a high percentage of stocks
gostars
Posts: 439
Joined: Mon Oct 09, 2017 7:53 pm

Re: Retirement investing - starting out

Post by gostars »

Simplicity, and because if you're invested at Vanguard or Fidelity, you pay higher fees on mutual funds until you hit $10,000 in the fund and gain access to the lower-cost version.

Target date funds for 2050 and beyond are quite heavy in stocks. There are some differences from one fund provider to the next, but they all have the same basic concept.
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