DCA or admiral fund?

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RevFran
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DCA or admiral fund?

Post by RevFran » Tue Sep 10, 2019 7:59 am

I am planning to put some money into the Vanguard International Growth Fund--ultimately, $50,000-$60,000. The ER for Admiral (50,000 minimum) is .32%; for Investor Shares .45%. Am I better off: putting $50,000 in all at once, to be Admiral shares from the get-go, or DCAing over, say, 18 months, ultimately converting to Admiral when I reach $50,000? The money would be in a 2.3% savings account over that period.

UpperNwGuy
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Re: DCA or admiral fund?

Post by UpperNwGuy » Tue Sep 10, 2019 8:05 am

If it were me, I would invest it all immediately. DCA is a psychological crutch.

dbr
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Re: DCA or admiral fund?

Post by dbr » Tue Sep 10, 2019 8:12 am

Why would you DCA? A serious question: did you read somewhere or think for some reason that you would want to DCA?

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vineviz
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Re: DCA or admiral fund?

Post by vineviz » Tue Sep 10, 2019 8:15 am

UpperNwGuy wrote:
Tue Sep 10, 2019 8:05 am
If it were me, I would invest it all immediately.
Me too, but I’d also choose a better fund with lower expense.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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Sandtrap
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Re: DCA or admiral fund?

Post by Sandtrap » Tue Sep 10, 2019 8:18 am

Admiral Shares over Investor Shares
j :D
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retiredjg
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Re: DCA or admiral fund?

Post by retiredjg » Tue Sep 10, 2019 8:21 am

I would NOT DCA and I would pick a lower cost (and broader) fund. Why the interest in the growth fund?

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RevFran
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Re: DCA or admiral fund?

Post by RevFran » Tue Sep 10, 2019 8:25 am

To reply to the question "why DCA": $50,000 is a lot of money for me (this will represent maybe 1/4 of my international holdings). Though I don't want to try to to time the market, it also seems wiser to put a little bit in at a time than all on one day, ie in case I hit massive international growth highs on that one day.

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RevFran
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Re: DCA or admiral fund?

Post by RevFran » Tue Sep 10, 2019 8:27 am

I am open to being talked into a different international fund. Most of my international money is in Vanguard international index and Dodge and Cox international -- Vanguard International Growth seems like it'd give a little juice.

retiredjg
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Re: DCA or admiral fund?

Post by retiredjg » Tue Sep 10, 2019 8:42 am

RevFran wrote:
Tue Sep 10, 2019 8:27 am
I am open to being talked into a different international fund. Most of my international money is in Vanguard international index and Dodge and Cox international -- Vanguard International Growth seems like it'd give a little juice.
It appears you are chasing yield. When growth funds fall into a slump, that fund will give you a little push in the wrong direction too. What do you plan to do with it then?

Are you aware the growth stocks are already included in the total international index?

retiredjg
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Re: DCA or admiral fund?

Post by retiredjg » Tue Sep 10, 2019 8:44 am

RevFran wrote:
Tue Sep 10, 2019 8:25 am
To reply to the question "why DCA": $50,000 is a lot of money for me (this will represent maybe 1/4 of my international holdings). Though I don't want to try to to time the market, it also seems wiser to put a little bit in at a time than all on one day, ie in case I hit massive international growth highs on that one day.
Timing the market is exactly what you would be doing. However, if you are unable to invest this as a lump sum, put in a big chunk and get the rest in within 6 months. Taking 18 months to get $50k into the market is far too long.

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Wiggums
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Re: DCA or admiral fund?

Post by Wiggums » Tue Sep 10, 2019 8:49 am

I prefer to lump sum investing and would purchase the Admiral Shares since you have the minimum required.

Good luck to you...

dbr
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Re: DCA or admiral fund?

Post by dbr » Tue Sep 10, 2019 8:50 am

RevFran wrote:
Tue Sep 10, 2019 8:25 am
To reply to the question "why DCA": $50,000 is a lot of money for me (this will represent maybe 1/4 of my international holdings). Though I don't want to try to to time the market, it also seems wiser to put a little bit in at a time than all on one day, ie in case I hit massive international growth highs on that one day.
I would suggest that once it makes sense to a person to be in a certain investment, then one should follow the plan of being in that investment. DCA just means that you aren't doing what you already decided is the right plan. More than that, once you are invested you will be fully exposed to the risk of that investment forever after. You don't save anything by setting aside a short time of not being there.

I think in general that if there is concern about the risk the place to address that is to back up and make sure the plan is what you really want.

An important question is where is this money now. If it is in other stock funds, then you are making a change that has no effect on the overall risk of your holdings. If this is a significant shift of money from low risk holdings such as cash or bonds, then you might consider whether you want the shift to a higher risk portfolio, but if that is what has been decided there is simply no reason not to implement the plan.

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Wiggums
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Re: DCA or admiral fund?

Post by Wiggums » Tue Sep 10, 2019 8:51 am

dbr wrote:
Tue Sep 10, 2019 8:50 am
RevFran wrote:
Tue Sep 10, 2019 8:25 am
To reply to the question "why DCA": $50,000 is a lot of money for me (this will represent maybe 1/4 of my international holdings). Though I don't want to try to to time the market, it also seems wiser to put a little bit in at a time than all on one day, ie in case I hit massive international growth highs on that one day.
I would suggest that once it makes sense to a person to be in a certain investment, then one should follow the plan of being in that investment. DCA just means that you aren't doing what you already decided is the right plan. More than that, once you are invested you will be fully exposed to the risk of that investment forever after. You don't save anything by setting aside a short time of not being there.

I think in general that if there is concern about the risk the place to address that is to back up and make sure the plan is what you really want.

An important question is where is this money now. If it is in other stock funds, then you are making a change that has no effect on the overall risk of your holdings. If this is a significant shift of money from low risk holdings such as cash or bonds, then you might consider whether you want the shift to a higher risk portfolio, but if that is what has been decided there is simply no reason not to implement the plan.
Well said, DBR

retiredjg
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Re: DCA or admiral fund?

Post by retiredjg » Tue Sep 10, 2019 8:57 am

dbr wrote:
Tue Sep 10, 2019 8:50 am
I would suggest that once it makes sense to a person to be in a certain investment, then one should follow the plan of being in that investment. DCA just means that you aren't doing what you already decided is the right plan. More than that, once you are invested you will be fully exposed to the risk of that investment forever after. You don't save anything by setting aside a short time of not being there.
Well said!

RevFran, dollar cost averaging is what happens when you invest as you make money - investing from your salary on a regular basis. Sometimes you pay a little more, sometimes a little less.

Somehow, people have gotten the idea that you gain some benefit by saving up money and then DCAing into the market or using the DCA method if you have a lump sum to invest. There is no financial benefit.

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Stinky
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Re: DCA or admiral fund?

Post by Stinky » Tue Sep 10, 2019 9:03 am

retiredjg wrote:
Tue Sep 10, 2019 8:44 am

However, if you are unable to invest this as a lump sum, put in a big chunk and get the rest in within 6 months. Taking 18 months to get $50k into the market is far too long.
Agreed with this.

Investing now is the best approach. What's above is second choice, but if it's all that you can psychologically tolerate, that could be right for you.
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RevFran
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Re: DCA or admiral fund?

Post by RevFran » Tue Sep 10, 2019 9:24 am

Thank you, this has all been very helpful!

Jack FFR1846
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Re: DCA or admiral fund?

Post by Jack FFR1846 » Tue Sep 10, 2019 9:33 am

Dump it all into VTI right now.

How's that for a clear recommendation?
Bogle: Smart Beta is stupid

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