individual stocks performance vs ETF

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Topic Author
mk1039
Posts: 38
Joined: Thu Jun 05, 2014 6:06 pm

individual stocks performance vs ETF

Post by mk1039 » Sun Oct 20, 2019 10:17 pm

i have around 20 different stocks of mostly stable large cap with different amounts in it. i noticed that my overall performance is somewhat close to etf SCHX (little bit here there).

i was wondering, is it better to have my money simply in SCHX instead of spreading across 20 different stock (buy and sell is free in my case)....so i was looking at fee for SCHX and i see its expense ratio 0.03% .

my question is, is this 0.03% the only amount charged as fee for ETF per quarter ? for example. if i have 100k in my brokerage account in SCHX, my quarterly fee will be $30 per quarter ? obviously i don't pay this fee with individual stocks purchase...thanks

hoaius7
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Joined: Wed Sep 11, 2019 9:27 am

Re: individual stocks performance vs ETF

Post by hoaius7 » Sun Oct 20, 2019 11:09 pm

- The 0.03% is the expense fee for a year.
- I also plan to build a portfolio of 20 stocks by myself but I think it's a hard work. I think it will distract me from my main job.

mega317
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Re: individual stocks performance vs ETF

Post by mega317 » Sun Oct 20, 2019 11:29 pm

What happens if one of those stocks implodes unexpectedly? Accounting scandal or something. You're down ~5%. I can't imagine someone with 100k should care about $30 per year. And yes that's a lot more work for more risk and very little additional upside if you're tracking a cheap index fund.

Topic Author
mk1039
Posts: 38
Joined: Thu Jun 05, 2014 6:06 pm

Re: individual stocks performance vs ETF

Post by mk1039 » Mon Oct 21, 2019 12:12 am

Thanks guys for replying. instead of Schwab U.S. Large-Cap ETF (SCHX), what do you guys think about Fidelity ZERO Large Cap Index Fund (FNILX)...seems like a new player introduced at the end year 2018 with ZERO fee ?

MotoTrojan
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Re: individual stocks performance vs ETF

Post by MotoTrojan » Mon Oct 21, 2019 1:04 am

mk1039 wrote:
Mon Oct 21, 2019 12:12 am
Thanks guys for replying. instead of Schwab U.S. Large-Cap ETF (SCHX), what do you guys think about Fidelity ZERO Large Cap Index Fund (FNILX)...seems like a new player introduced at the end year 2018 with ZERO fee ?
Lots of other threads on it but not be a great option in taxable; ETFs are much more tax-efficient (except at Vanguard where they are equivalent) and 0.03% annually is insignificant. Also securities lending can generate returns in that realm, let alone any tracking error from their in-house index (that is why the ER is 0%), so it may be a wash anyways.

Is this in an IRA? Otherwise you'll pay taxes to sell your current positions too.

ITOT and VTI would be other options for total US market exposure (small-caps too).

Topic Author
mk1039
Posts: 38
Joined: Thu Jun 05, 2014 6:06 pm

Re: individual stocks performance vs ETF

Post by mk1039 » Mon Oct 21, 2019 2:46 am

MotoTrojan wrote:
Mon Oct 21, 2019 1:04 am

Is this in an IRA? Otherwise you'll pay taxes to sell your current positions too.
This is for personal taxable account.

NoblesvilleIN
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Re: individual stocks performance vs ETF

Post by NoblesvilleIN » Mon Oct 21, 2019 8:57 am

I also own individual stocks in my taxable account. My goal with them is income (dividends) without selling. But I also have to be honest and make sure that I'm not deluding myself. To that end, I built a spreadsheet last June (end of 2nd quarter), comparing the stocks I own to SPY. Why SPY? There is a calculator on a website that lets you input a stock, your purchase date and compare it to the returns of SPY: https://www.dividendchannel.com/drip-re ... alculator/. I put those numbers into a spreadsheet and compared the total of all my stocks value on 6/30/19 to what the value could have been had I just invested in SPY on the same dates as I purchased the stocks (over a period of 9 years). I also calculated what the dividend income from SPY would have been and compared it to the dividends that I actually received. It was easy to have those values because I have a tracking spreadsheet that I update every quarter for the value of the stocks I own and the income produced. I found that my taxable account could have been about 5% larger with SPY, but the income (dividends) was more than 50% greater with the individual stocks than with SPY. Since my goal is income without selling and not growth (total return), I am satisfied with my results. As a side note, I did not try to calculate what the fees of SPY would have been versus the actual commissions (a grand total of only $270.64) that I have paid over the 9 years that I have had a taxable account.

If you want to keep owning individual stock, may I suggest you perform the same exercise (it took me a couple of hours to build the spreadsheet). You have to be honest with yourself if you are going to own individual stocks instead of index funds.

retiredjg
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Re: individual stocks performance vs ETF

Post by retiredjg » Mon Oct 21, 2019 9:24 am

mk1039 wrote:
Sun Oct 20, 2019 10:17 pm
my question is, is this 0.03% the only amount charged as fee for ETF per quarter ? for example. if i have 100k in my brokerage account in SCHX, my quarterly fee will be $30 per quarter ? obviously i don't pay this fee with individual stocks purchase...thanks
An expense ratio is per year, not per quarter. And it is never taken out of your account. It is taken out of the fund daily.

Thanks guys for replying. instead of Schwab U.S. Large-Cap ETF (SCHX), what do you guys think about Fidelity ZERO Large Cap Index Fund (FNILX)...seems like a new player introduced at the end year 2018 with ZERO fee ?
You can only hold the zero funds at Fidelity. If you prefer Schwab, just stay there.

bradinsky
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Re: individual stocks performance vs ETF

Post by bradinsky » Mon Oct 21, 2019 9:32 am

As stated upthread, .03% is next to nothing. Inconsequential!

MotoTrojan
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Re: individual stocks performance vs ETF

Post by MotoTrojan » Mon Oct 21, 2019 10:26 am

bradinsky wrote:
Mon Oct 21, 2019 9:32 am
As stated upthread, .03% is next to nothing. Inconsequential!
But selling all of these stocks with gains will not be inconsequential. Start by turning off dividend reinvestment, then plan further.

Silence Dogood
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Re: individual stocks performance vs ETF

Post by Silence Dogood » Mon Oct 21, 2019 11:22 am

OP,

Consider using this format to ask questions about your portfolio.

Also, consider reading the getting started page in the Bogleheads Wiki.

snailderby
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Re: individual stocks performance vs ETF

Post by snailderby » Tue Oct 22, 2019 7:45 am

MotoTrojan wrote:
Mon Oct 21, 2019 10:26 am
bradinsky wrote:
Mon Oct 21, 2019 9:32 am
As stated upthread, .03% is next to nothing. Inconsequential!
But selling all of these stocks with gains will not be inconsequential. Start by turning off dividend reinvestment, then plan further.
+1. 0.03% isn't worth worrying about. And exchanging your individual stocks for a broad market ETF like VTI or ITOT will reduce your individual stock risk. But you should carefully evaluate the tax costs before you proceed.

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grabiner
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Re: individual stocks performance vs ETF

Post by grabiner » Tue Oct 22, 2019 8:16 pm

If your 20 stocks are well-diversified (not too much of your total portfolio in any one stock or any one industry), they should behave much like a stock index. Therefore, it's reasonable to leave them intact if you would have a tax cost for selling, and use index funds for future investments.

If any single stock exceeds 5% of your portfolio, you may want to trim it down. If you are charitably inclined, donating this stock to a charity allows you to avoid the capital-gains tax; otherwise, it is probably worth selling for a capital gain, to avoid the risk.
Wiki David Grabiner

retired@50
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Re: individual stocks performance vs ETF

Post by retired@50 » Tue Oct 22, 2019 8:42 pm

mk1039 wrote:
Sun Oct 20, 2019 10:17 pm
i have around 20 different stocks of mostly stable large cap with different amounts in it. i noticed that my overall performance is somewhat close to etf SCHX (little bit here there).

i was wondering, is it better to have my money simply in SCHX instead of spreading across 20 different stock (buy and sell is free in my case)....so i was looking at fee for SCHX and i see its expense ratio 0.03% .

my question is, is this 0.03% the only amount charged as fee for ETF per quarter ? for example. if i have 100k in my brokerage account in SCHX, my quarterly fee will be $30 per quarter ? obviously i don't pay this fee with individual stocks purchase...thanks
If it were me, I'd find a way to migrate over time to an index fund that holds either the S&P 500 or the total stock market. The chance of one of your 20 stocks having a severe problem or downturn over the remainder of your life is certainly within the realm of possibility. Look at all the Enron type stories from the past... If a company flames out of your S&P 500 fund, you'd barely feel it. If one flames out of your 20 stock portfolio, it would hurt much more. Regards,
Boggle - a game from Parker Brothers. Bogle - investor, founder of Vanguard.

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birdog
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Re: individual stocks performance vs ETF

Post by birdog » Wed Oct 23, 2019 6:19 am

retired@50 wrote:
Tue Oct 22, 2019 8:42 pm
mk1039 wrote:
Sun Oct 20, 2019 10:17 pm
i have around 20 different stocks of mostly stable large cap with different amounts in it. i noticed that my overall performance is somewhat close to etf SCHX (little bit here there).

i was wondering, is it better to have my money simply in SCHX instead of spreading across 20 different stock (buy and sell is free in my case)....so i was looking at fee for SCHX and i see its expense ratio 0.03% .

my question is, is this 0.03% the only amount charged as fee for ETF per quarter ? for example. if i have 100k in my brokerage account in SCHX, my quarterly fee will be $30 per quarter ? obviously i don't pay this fee with individual stocks purchase...thanks
If it were me, I'd find a way to migrate over time to an index fund that holds either the S&P 500 or the total stock market. The chance of one of your 20 stocks having a severe problem or downturn over the remainder of your life is certainly within the realm of possibility. Look at all the Enron type stories from the past... If a company flames out of your S&P 500 fund, you'd barely feel it. If one flames out of your 20 stock portfolio, it would hurt much more. Regards,
Agree. Plus, simpler is better.

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