Can someone help me purchase my first mutual fund?

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thelateinvestor43
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Can someone help me purchase my first mutual fund?

Post by thelateinvestor43 » Tue Nov 26, 2019 7:12 am

I put $1k in my Roth Ira on Fidelity and now I wanted to begin ordering my first mutual fund. I purchased the FSKAX Total Marker Index fund, but only put $400 in it for now because I want to be able to also purchase a Total Bond and maybe Total International fund.

I haven't placed ORDER yet.

So I'll have $600 left to order my other funds?

Can you adjust the percentages across the funds after purchasing them? For example, allocate more or less to each fund of the $1k total?

Grt2bOutdoors
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Re: Can someone help me purchase my first mutual fund?

Post by Grt2bOutdoors » Tue Nov 26, 2019 7:14 am

I would recommend you start with one fund. Use the Total Stock Market Index, purchase the other funds as you add more money to your retirement account.
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livesoft
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Re: Can someone help me purchase my first mutual fund?

Post by livesoft » Tue Nov 26, 2019 7:15 am

Do you mean your second mutual fund? It seems you already own $400 of FSKAX.
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thelateinvestor43
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Re: Can someone help me purchase my first mutual fund?

Post by thelateinvestor43 » Tue Nov 26, 2019 7:20 am

livesoft wrote:
Tue Nov 26, 2019 7:15 am
Do you mean your second mutual fund? It seems you already own $400 of FSKAX.
I did hit the PLACE ORDER button yet. Am I doing it right?

thanks

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RickBoglehead
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Re: Can someone help me purchase my first mutual fund?

Post by RickBoglehead » Tue Nov 26, 2019 7:23 am

thelateinvestor43 wrote:
Tue Nov 26, 2019 7:12 am
I put $1k in my Roth Ira on Fidelity and now I wanted to begin ordering my first mutual fund. I purchased the FSKAX Total Marker Index fund, but only put $400 in it for now because I want to be able to also purchase a Total Bond and maybe Total International fund.

I haven't placed ORDER yet.

So I'll have $600 left to order my other funds?

Can you adjust the percentages across the funds after purchasing them? For example, allocate more or less to each fund of the $1k total?
I'd suggest picking up the phone and having a Fidelity Rep walk you through the process.

With only $1,000, buying multiple holdings isn't really worth it.

Once you buy, if you want to reallocate across funds, that requires you sell one fund and buy another fund. In a Roth IRA, there are no taxes generated from selling, but to reallocate $1,000 is not worth doing.

With only $1,000, why aren't you buying a Target Date fund, which includes a mix of stock and bond holdings targeted to your retirement date?

Have you read the Boglehead Wiki?
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thelateinvestor43
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Re: Can someone help me purchase my first mutual fund?

Post by thelateinvestor43 » Tue Nov 26, 2019 7:45 am

RickBoglehead wrote:
Tue Nov 26, 2019 7:23 am
thelateinvestor43 wrote:
Tue Nov 26, 2019 7:12 am
I put $1k in my Roth Ira on Fidelity and now I wanted to begin ordering my first mutual fund. I purchased the FSKAX Total Marker Index fund, but only put $400 in it for now because I want to be able to also purchase a Total Bond and maybe Total International fund.

I haven't placed ORDER yet.

So I'll have $600 left to order my other funds?

Can you adjust the percentages across the funds after purchasing them? For example, allocate more or less to each fund of the $1k total?
I'd suggest picking up the phone and having a Fidelity Rep walk you through the process.

With only $1,000, buying multiple holdings isn't really worth it.

Once you buy, if you want to reallocate across funds, that requires you sell one fund and buy another fund. In a Roth IRA, there are no taxes generated from selling, but to reallocate $1,000 is not worth doing.

With only $1,000, why aren't you buying a Target Date fund, which includes a mix of stock and bond holdings targeted to your retirement date?

Have you read the Boglehead Wiki?
Yes, I've been reading the wiki, but I don't plan on ONLY $1k. I am going to max it to $6k for 2019, I'm just DCAing I guess.

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Re: Can someone help me purchase my first mutual fund?

Post by lakpr » Tue Nov 26, 2019 7:50 am

I wouldn't bother with investment in bonds until your portfolio balance reaches at least $50k, preferably $100k. Below this balance, adding bonds and international stocks is just adding unnecessary noise.

I liken it to taking the expressway to your destination. Get there first as fast as possible, then you can start to slice and dice.

FSKAX by itself is a great fund. I would lump sum the $6000 in it as soon as possible, not dollar cost average

Edit: the second point I want to say is that, bonds do not belong in Roth accounts. The growth in those accounts is all tax free, why do you want to constrain such tax free growth with bonds? Pack it with only equities

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thelateinvestor43
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Re: Can someone help me purchase my first mutual fund?

Post by thelateinvestor43 » Tue Nov 26, 2019 7:59 am

lakpr wrote:
Tue Nov 26, 2019 7:50 am
I wouldn't bother with investment in bonds until your portfolio balance reaches at least $50k, preferably $100k. Below this balance, adding bonds and international stocks is just adding unnecessary noise.

I liken it to taking the expressway to your destination. Get there first as fast as possible, then you can start to slice and dice.

FSKAX by itself is a great fund. I would lump sum the $6000 in it as soon as possible, not dollar cost average

Edit: the second point I want to say is that, bonds do not belong in Roth accounts. The growth in those accounts is all tax free, why do you want to constrain such tax free growth with bonds? Pack it with only equities
Thanks Lakpr! Then I can just start my brokerage at Fidelity with the money above my $6K limit? I have in the higher tens of thousands to mess with, but I really only want to maybe mess with $10k at the moment. I'm a little afraid as I'm new to all this, but my moneys making 0.05% in a savings for the last 5 years or more.

Heck even a bond fund should make more than 0.05% right?

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Re: Can someone help me purchase my first mutual fund?

Post by lakpr » Tue Nov 26, 2019 8:06 am

Yes, Fidelity is a great brokerage, and the feedback from this forum is that it has excellent customer service, even better than Vanguard. But in taxable accounts, for tax efficiency reasons, I suggest you buy ETFs, specifically Vanguard ETFs, instead of Fidelity mutual funds.

The reason is that Vanguard has a patent filed since 2003, that pretty much erases capital gains in its funds and ETFs. That patent expires at the end of 2023, until then other firms cannot copy that technique. Bloomberg news ran an article on this in June 2019, you can locate that article by googling the phrase "Vanguard patent".

And of course, buying ETFs at Fidelity is commission fee now.

Edited to add: in your taxable account, do not forget to turn off dividend auto reinvestment, and serve the tracking basis to Spec ID. To keep your sanity during tax filing. With auto dividend reinvestment, you will have to keep track of tiny purchases of the fund through dividends, the complexity is not worth it.
Last edited by lakpr on Tue Nov 26, 2019 8:11 am, edited 1 time in total.

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thelateinvestor43
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Re: Can someone help me purchase my first mutual fund?

Post by thelateinvestor43 » Tue Nov 26, 2019 8:10 am

lakpr wrote:
Tue Nov 26, 2019 8:06 am
Yes, Fidelity is a great brokerage, and the feedback from this forum is that it has excellent customer service, even better than Vanguard. But in taxable accounts, for tax efficiency reasons, I suggest you buy ETFs, specifically Vanguard ETFs, instead of Fidelity mutual funds.

The reason is that Vanguard has a patent filed since 2003, that pretty much erases capital gains in its funds and ETFs. That patent expires at the end of 2023, until then other firms cannot copy that technique. Bloomberg news ran an article on this in June 2019, you can locate that article by googling the phrase "Vanguard patent".

And of course, buying ETFs at Fidelity is commission fee now.
Thanks for your input and help!

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Re: Can someone help me purchase my first mutual fund?

Post by Chrono Triggered » Tue Nov 26, 2019 8:26 am

thelateinvestor43 wrote:
Tue Nov 26, 2019 7:59 am
Then I can just start my brokerage at Fidelity with the money above my $6K limit? I have in the higher tens of thousands to mess with, but I really only want to maybe mess with $10k at the moment.
Do you have access to other tax-deferred accounts, such as a 401k or HSA? Tax-deferred space should be maxed out first before taxable investing occurs.

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Re: Can someone help me purchase my first mutual fund?

Post by Daryl » Tue Nov 26, 2019 8:31 am

thelateinvestor43 wrote:
Tue Nov 26, 2019 7:59 am
Then I can just start my brokerage at Fidelity with the money above my $6K limit? I have in the higher tens of thousands to mess with, but I really only want to maybe mess with $10k at the moment.
I'm assuming the $6K that you've already contributed is your 2019 Roth IRA contribution. If you are married, you could make another $6K contribution into your spouse's Roth IRA. If you are single, then you can wait about 6 weeks and then make your next contribution at the beginning of 2020.

Just wanted to add a quick reminder that there are no guarantees in investing, and a lot of us will experience significant swings in our investment account balance, sometimes over a very short period of time. Those swings can look like a valley or a cliff. One of the best things that can happen right now is that you put all of your money in the market and it subsequently drops 20-25%. it is much better to learn how you'll react in this situation when you have $10K invested as opposed to $1M. I fully expect the value of my investment portfolio to decline by an amount equal to my gross annual salary during the next "bear market".

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Re: Can someone help me purchase my first mutual fund?

Post by kelway » Tue Nov 26, 2019 8:36 am

lakpr wrote:
Tue Nov 26, 2019 7:50 am
I wouldn't bother with investment in bonds until your portfolio balance reaches at least $50k, preferably $100k. Below this balance, adding bonds and international stocks is just adding unnecessary noise.
Personally, I'd consider the price to book of international equities vs domestic and be sure to diversify into international equities. For another perspective to the OP: have you considered a brokerage like M1 that makes it very easy to invest 'just' $1000 into a fully-diversified portfolio? I don't so much buy the threshold values where it makes sense to diversify. If I had to pick one area of the market that is "expensive", it's clearly large domestic as monopolized by the total market funds. Putting all eggs into that basket at any time is dubious.

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Re: Can someone help me purchase my first mutual fund?

Post by Daryl » Tue Nov 26, 2019 9:09 am

kelway wrote:
Tue Nov 26, 2019 8:36 am
If I had to pick one area of the market that is "expensive", it's clearly large domestic as monopolized by the total market funds. Putting all eggs into that basket at any time is dubious.
Trying to find the "expensive" and "cheap" securities is really, really tough, so instead of looking for the needle in the haystack, I recommend buying the haystack. This is consistent with my personal portfolio.

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Re: Can someone help me purchase my first mutual fund?

Post by ruralavalon » Tue Nov 26, 2019 1:54 pm

thelateinvestor43 wrote:
Tue Nov 26, 2019 7:12 am
I put $1k in my Roth Ira on Fidelity and now I wanted to begin ordering my first mutual fund. I purchased the FSKAX Total Marker Index fund, but only put $400 in it for now because I want to be able to also purchase a Total Bond and maybe Total International fund.

I haven't placed ORDER yet.

So I'll have $600 left to order my other funds?

Can you adjust the percentages across the funds after purchasing them? For example, allocate more or less to each fund of the $1k total?
For the $1,000 in your Roth IRA why not keep it very simple and just use Fidelity® Four-in-One Index (FFNOX) ER 0.11%? It is very diversified with about 60% U.S. stock, 25% international stock, and 15% bonds. Or use an inexpensive Fidelity Freedom Index Fund.

You can exchange funds inside the Roth IRA without any tax consequences.

Just go ahead and contribute the annual maximum of $6k to your IRA. Don't dribble it in using installments, if you have the money available now.

Do you have any other accounts, like a 401k? If so what funds do you use in that account.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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thelateinvestor43
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Re: Can someone help me purchase my first mutual fund?

Post by thelateinvestor43 » Tue Nov 26, 2019 3:02 pm

I have a work 401k, but no match. I've never contributed to it. I'd rather have a brokerage account at Fidelity I think because I can watch what's going on and choose better investments and things.

So I've not got the Roth Ira with $1k and will boost it to $6k in the coming days. I selected ONLY the FSKAX Fidelity Total Market Index fund. Is that ok for now?

lakpr
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Re: Can someone help me purchase my first mutual fund?

Post by lakpr » Tue Nov 26, 2019 3:17 pm

thelateinvestor43 wrote:
Tue Nov 26, 2019 3:02 pm
I have a work 401k, but no match. I've never contributed to it. I'd rather have a brokerage account at Fidelity I think because I can watch what's going on and choose better investments and things.

So I've not got the Roth Ira with $1k and will boost it to $6k in the coming days. I selected ONLY the FSKAX Fidelity Total Market Index fund. Is that ok for now?
Not having match is no excuse to not contribute to 401k. It is an excellent tool for tax deferral, and by not participating in the 401k plan, you are essentially choosing to pay 30% (if I include state taxes in most states) tax rate to have an extra $19k in your hand. You could have the Roth IRA funded essentially for free, had you participated in the 401k ($19000 * 0.3 = $5700, only $300 less than the maximum).

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Re: Can someone help me purchase my first mutual fund?

Post by kelway » Tue Nov 26, 2019 3:35 pm

Daryl wrote:
Tue Nov 26, 2019 9:09 am
kelway wrote:
Tue Nov 26, 2019 8:36 am
If I had to pick one area of the market that is "expensive", it's clearly large domestic as monopolized by the total market funds. Putting all eggs into that basket at any time is dubious.
Trying to find the "expensive" and "cheap" securities is really, really tough, so instead of looking for the needle in the haystack, I recommend buying the haystack. This is consistent with my personal portfolio.
Yeah, we agree.. I'm not speaking of finding cheap stocks... I'm speaking of the global haystack and not finding any needles.

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Re: Can someone help me purchase my first mutual fund?

Post by HomeStretch » Tue Nov 26, 2019 3:39 pm

It’s great that you are starting to invest! Put the entire $6k in if you have it.

You should be saving annually at least 15% of gross income. An employer 401k (assuming it’s a decent plan) and IRA are good places to start. Invest your savings according to your asset allocation. You need to have some equities in your portfolio to keep up with inflation. Leaving your savings in an account paying 0.05% means your savings are losing value due to inflation.

For feedback on your portfolio, consider posting your financial information in the format found here:
https://www.bogleheads.org/wiki/Asking_ ... _questions

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Re: Can someone help me purchase my first mutual fund?

Post by yogesh » Tue Nov 26, 2019 3:43 pm

If you find this too difficult then
- Open Fidelity Brokerage Account: Just buy VT ETF
- Or open Fidelity GO, choose balanced or growth and keep contributing to it
Emergency: FDIC | Taxable: VTMFX | Retirement: TR2040

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Re: Can someone help me purchase my first mutual fund?

Post by ruralavalon » Tue Nov 26, 2019 3:59 pm

thelateinvestor43 wrote:
Tue Nov 26, 2019 3:02 pm
I have a work 401k, but no match. I've never contributed to it. I'd rather have a brokerage account at Fidelity I think because I can watch what's going on and choose better investments and things.
What is your tax bracket? What funds are offered in your 401k plan?

If any decent funds are offered in your employer's 401k plan then it's probably a mistake to skip the tax advantages of a 401k.


thelateinvestor43 wrote:
Tue Nov 26, 2019 3:02 pm
So I've not got the Roth Ira with $1k and will boost it to $6k in the coming days. I selected ONLY the FSKAX Fidelity Total Market Index fund. Is that ok for now?
That's OK for now.

But I still think a good balanced fund like Fidelity® Four-in-One Index (FFNOX) ER 0.11% is better than just OK.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: Can someone help me purchase my first mutual fund?

Post by dboeger1 » Tue Nov 26, 2019 4:11 pm

There's no point to DCA'ing a relatively small first contribution. OP, you yourself said you plan to max out your IRA contributions to the tune of $6k+ per year, so you're already be going to buying in intervals as the money comes in anyway. Trying to DCA that $6k amount any further is just noise, and you'll most likely quickly realize time in the market is key. And even if the market tanks after your initial investment, you will have many years in your career to buy low and sell high. Now is the time to develop good habits. Just put the $6k in and learn the live with it. Realistically, some of the worst drops in history would lop like $3k off of that, and only temporarily, with expected gains over the long term. If you're capable of putting $6k in per year, I doubt a temporary loss of $3k would register to you. And that's the unlikely case. The likely case is you'll make money and be happy about it.

People who worry about DCA usually do so because they have a large lump sum that they want to invest but aren't comfortable doing it all at once.

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thelateinvestor43
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Re: Can someone help me purchase my first mutual fund?

Post by thelateinvestor43 » Tue Nov 26, 2019 5:33 pm

dboeger1 wrote:
Tue Nov 26, 2019 4:11 pm
There's no point to DCA'ing a relatively small first contribution. OP, you yourself said you plan to max out your IRA contributions to the tune of $6k+ per year, so you're already be going to buying in intervals as the money comes in anyway. Trying to DCA that $6k amount any further is just noise, and you'll most likely quickly realize time in the market is key. And even if the market tanks after your initial investment, you will have many years in your career to buy low and sell high. Now is the time to develop good habits. Just put the $6k in and learn the live with it. Realistically, some of the worst drops in history would lop like $3k off of that, and only temporarily, with expected gains over the long term. If you're capable of putting $6k in per year, I doubt a temporary loss of $3k would register to you. And that's the unlikely case. The likely case is you'll make money and be happy about it.

People who worry about DCA usually do so because they have a large lump sum that they want to invest but aren't comfortable doing it all at once.
The only reason (more or less) that I can afford to put $6k is because I DO have a "larger" amount of inheritance from the sale of my grandmother's house that I received almost 6 figures from, but not quite. Right now, I have a 2nd part time cleaning job also and put that money into savings too. But THAT'S why I want to DCA for at least a few or more more years if I can. My income is only in the 12% tax bracket.

dboeger1
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Re: Can someone help me purchase my first mutual fund?

Post by dboeger1 » Tue Nov 26, 2019 6:33 pm

thelateinvestor43 wrote:
Tue Nov 26, 2019 5:33 pm
The only reason (more or less) that I can afford to put $6k is because I DO have a "larger" amount of inheritance from the sale of my grandmother's house that I received almost 6 figures from, but not quite. Right now, I have a 2nd part time cleaning job also and put that money into savings too. But THAT'S why I want to DCA for at least a few or more more years if I can. My income is only in the 12% tax bracket.
Right, but in this case, the IRA contribution limits are more or less forcing you to DCA on an annual basis (I mean, you could just invest it all in a taxable account now, but you may very well have your reasons for wanting to stick to an IRA or DCA early on to get your feet wet). My point is not that you shouldn't DCA, it's that there's no need to take it to any extent further than what the IRA contribution limits are already making you do. Why invest $1k every 2 months? Or $500 every 1 month? Or $250 bi-monthly? Or daily? Hourly? By the minute? See my point? Why not take it to its logical extreme and get into HFT? At least there, they use speed to gain an actual trading advantage. You're just guessing.

I'm not trying to discourage you from investing. In fact, there are many Bogleheads who are staunchly opposed to DCA in general, and I'm not one of them. You may not be ready, in terms of emotions, information, and/or understanding, to lump sum invest the whole thing today, so I think DCA is fine. But if you think buying every 30 seconds for the next 12 years is somehow better for you than putting in $6k at the beginning of each year, you're kind of missing the point. Time in the market. Look at any compound interest chart. Long-term investing is where the money's at. Giving your investments plenty of time to grow is the single most important thing you can do.

I don't actually know how old you are or how much you earn (you may have mentioned it but I forgot). But I get the feeling you're relatively young and just starting out. You will probably get raises throughout your life, maybe own a home, and someday your portfolio will be much bigger than it is today, especially if you continue prioritizing savings and investments. Splitting up your first $6k is splitting hairs. I remember my first IRA contribution like it was yesterday. I believe it was $5k in VFFVX, a target-date fund. Several years later, I now have something like $150k in IRAs. Do you really think DCA of the first $5k would have made much difference (actually, I'd have less)? You're just starting out. This is the beginning of the accumulation phase for you. Just put what you can in there. It almost doesn't even matter if you leave it in a money market fund. Investment gains are almost irrelevant until you reach $100k balance. That's when you can start worrying about lowering expense ratios, DCA vs. lump sum, US vs. international, etc. Until then, it's kind of like deciding between Rice Krispies or Frosted Flakes for your toddler. It's not going to be the deciding factor in where they go to college.

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thelateinvestor43
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Re: Can someone help me purchase my first mutual fund?

Post by thelateinvestor43 » Tue Nov 26, 2019 7:11 pm

dboeger1 wrote:
Tue Nov 26, 2019 6:33 pm
thelateinvestor43 wrote:
Tue Nov 26, 2019 5:33 pm
The only reason (more or less) that I can afford to put $6k is because I DO have a "larger" amount of inheritance from the sale of my grandmother's house that I received almost 6 figures from, but not quite. Right now, I have a 2nd part time cleaning job also and put that money into savings too. But THAT'S why I want to DCA for at least a few or more more years if I can. My income is only in the 12% tax bracket.
Right, but in this case, the IRA contribution limits are more or less forcing you to DCA on an annual basis (I mean, you could just invest it all in a taxable account now, but you may very well have your reasons for wanting to stick to an IRA or DCA early on to get your feet wet). My point is not that you shouldn't DCA, it's that there's no need to take it to any extent further than what the IRA contribution limits are already making you do. Why invest $1k every 2 months? Or $500 every 1 month? Or $250 bi-monthly? Or daily? Hourly? By the minute? See my point? Why not take it to its logical extreme and get into HFT? At least there, they use speed to gain an actual trading advantage. You're just guessing.

I'm not trying to discourage you from investing. In fact, there are many Bogleheads who are staunchly opposed to DCA in general, and I'm not one of them. You may not be ready, in terms of emotions, information, and/or understanding, to lump sum invest the whole thing today, so I think DCA is fine. But if you think buying every 30 seconds for the next 12 years is somehow better for you than putting in $6k at the beginning of each year, you're kind of missing the point. Time in the market. Look at any compound interest chart. Long-term investing is where the money's at. Giving your investments plenty of time to grow is the single most important thing you can do.

I don't actually know how old you are or how much you earn (you may have mentioned it but I forgot). But I get the feeling you're relatively young and just starting out. You will probably get raises throughout your life, maybe own a home, and someday your portfolio will be much bigger than it is today, especially if you continue prioritizing savings and investments. Splitting up your first $6k is splitting hairs. I remember my first IRA contribution like it was yesterday. I believe it was $5k in VFFVX, a target-date fund. Several years later, I now have something like $150k in IRAs. Do you really think DCA of the first $5k would have made much difference (actually, I'd have less)? You're just starting out. This is the beginning of the accumulation phase for you. Just put what you can in there. It almost doesn't even matter if you leave it in a money market fund. Investment gains are almost irrelevant until you reach $100k balance. That's when you can start worrying about lowering expense ratios, DCA vs. lump sum, US vs. international, etc. Until then, it's kind of like deciding between Rice Krispies or Frosted Flakes for your toddler. It's not going to be the deciding factor in where they go to college.
I'm not young. 46

KlangFool
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Re: Can someone help me purchase my first mutual fund?

Post by KlangFool » Tue Nov 26, 2019 7:17 pm

thelateinvestor43 wrote:
Tue Nov 26, 2019 5:33 pm
dboeger1 wrote:
Tue Nov 26, 2019 4:11 pm
There's no point to DCA'ing a relatively small first contribution. OP, you yourself said you plan to max out your IRA contributions to the tune of $6k+ per year, so you're already be going to buying in intervals as the money comes in anyway. Trying to DCA that $6k amount any further is just noise, and you'll most likely quickly realize time in the market is key. And even if the market tanks after your initial investment, you will have many years in your career to buy low and sell high. Now is the time to develop good habits. Just put the $6k in and learn the live with it. Realistically, some of the worst drops in history would lop like $3k off of that, and only temporarily, with expected gains over the long term. If you're capable of putting $6k in per year, I doubt a temporary loss of $3k would register to you. And that's the unlikely case. The likely case is you'll make money and be happy about it.

People who worry about DCA usually do so because they have a large lump sum that they want to invest but aren't comfortable doing it all at once.
The only reason (more or less) that I can afford to put $6k is because I DO have a "larger" amount of inheritance from the sale of my grandmother's house that I received almost 6 figures from, but not quite. Right now, I have a 2nd part time cleaning job also and put that money into savings too. But THAT'S why I want to DCA for at least a few or more more years if I can. My income is only in the 12% tax bracket.
thelateinvestor43,

Do you know that you may qualify for tax credits if you contribute to Trad. 401k? Especially in your case with the inheritance and you do not need your salary income to pay your bills.

With the tax credits, besides not paying taxes, the government may pay you.

https://www.irs.gov/credits-deductions/ ... tax-credit

https://www.bogleheads.org/wiki/Saver%27s_credit

KlangFool

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Re: Can someone help me purchase my first mutual fund?

Post by ruralavalon » Tue Nov 26, 2019 7:27 pm

thelateinvestor43 wrote:
Tue Nov 26, 2019 7:12 am
I put $1k in my Roth Ira on Fidelity and now I wanted to begin ordering my first mutual fund. I purchased the FSKAX Total Marker Index fund, but only put $400 in it for now because I want to be able to also purchase a Total Bond and maybe Total International fund.

I haven't placed ORDER yet.

So I'll have $600 left to order my other funds?

Can you adjust the percentages across the funds after purchasing them? For example, allocate more or less to each fund of the $1k total?
thelateinvestor43 wrote:
Tue Nov 26, 2019 3:02 pm
I have a work 401k, but no match. I've never contributed to it. I'd rather have a brokerage account at Fidelity I think because I can watch what's going on and choose better investments and things.

So I've not got the Roth Ira with $1k and will boost it to $6k in the coming days. I selected ONLY the FSKAX Fidelity Total Market Index fund. Is that ok for now?
thelateinvestor43 wrote:
Tue Nov 26, 2019 5:33 pm
The only reason (more or less) that I can afford to put $6k is because I DO have a "larger" amount of inheritance from the sale of my grandmother's house that I received almost 6 figures from, but not quite. Right now, I have a 2nd part time cleaning job also and put that money into savings too. But THAT'S why I want to DCA for at least a few or more more years if I can. My income is only in the 12% tax bracket.
thelateinvestor43 wrote:
Tue Nov 26, 2019 7:11 pm
I'm not young. 46
Starting at age 46, the most important investing decision you can make is to establish a high rate of contributions to investing, emphasizing contributions to tax-advantaged accounts.

Could you please list the funds offered in the 401k, giving fund names, tickers and expense ratios? Please see this for information needed and format: "Asking Portfolio Questions". Please simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.

If any decent funds are offered in your employer's 401k plan then it's a mistake to skip the tax advantages of a 401k, even in the 12% tax bracket.

Here is a general account funding priority that usually works well for many people (when there is no high interest debt or HSA use):
1) Contribute to the work-based plans (401k, 403b, 457, SIMPLE IRA, TSP, etc.) enough to get the full employer match (the match is like free money, your best possible investment);
2) Contribute the maximum to an IRA, traditional or Roth (or backdoor Roth technique), depending on eligibility and personal circumstances;
3) Contribute the remainder of the maximum employee contribution to the work-based accounts; and
4) Contribute to a taxable investing account.

"If the company plan offers good, low-cost funds, it may be preferable to contribute to the company plan before contributing to an IRA." Please see the wiki article "Prioritizing investments".

I suggest that you read one or two books on investing. Wiki article, "Books: recommendations and reviews". Also take a look at the Boglehead’s wiki, the "getting started" link I give below. A quick education for a beginning investor is Dr. Bernstein's free, short, on-line book, "If You Can".
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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thelateinvestor43
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Re: Can someone help me purchase my first mutual fund?

Post by thelateinvestor43 » Tue Nov 26, 2019 7:49 pm

ruralavalon wrote:
Tue Nov 26, 2019 7:27 pm
thelateinvestor43 wrote:
Tue Nov 26, 2019 7:12 am
I put $1k in my Roth Ira on Fidelity and now I wanted to begin ordering my first mutual fund. I purchased the FSKAX Total Marker Index fund, but only put $400 in it for now because I want to be able to also purchase a Total Bond and maybe Total International fund.

I haven't placed ORDER yet.

So I'll have $600 left to order my other funds?

Can you adjust the percentages across the funds after purchasing them? For example, allocate more or less to each fund of the $1k total?
thelateinvestor43 wrote:
Tue Nov 26, 2019 3:02 pm
I have a work 401k, but no match. I've never contributed to it. I'd rather have a brokerage account at Fidelity I think because I can watch what's going on and choose better investments and things.

So I've not got the Roth Ira with $1k and will boost it to $6k in the coming days. I selected ONLY the FSKAX Fidelity Total Market Index fund. Is that ok for now?
thelateinvestor43 wrote:
Tue Nov 26, 2019 5:33 pm
The only reason (more or less) that I can afford to put $6k is because I DO have a "larger" amount of inheritance from the sale of my grandmother's house that I received almost 6 figures from, but not quite. Right now, I have a 2nd part time cleaning job also and put that money into savings too. But THAT'S why I want to DCA for at least a few or more more years if I can. My income is only in the 12% tax bracket.
thelateinvestor43 wrote:
Tue Nov 26, 2019 7:11 pm
I'm not young. 46
Starting at age 46, the most important investing decision you can make is to establish a high rate of contributions to investing, emphasizing contributions to tax-advantaged accounts.

Could you please list the funds offered in the 401k, giving fund names, tickers and expense ratios? Please see this for information needed and format: "Asking Portfolio Questions". Please simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.

If any decent funds are offered in your employer's 401k plan then it's a mistake to skip the tax advantages of a 401k, even in the 12% tax bracket.

Here is a general account funding priority that usually works well for many people (when there is no high interest debt or HSA use):
1) Contribute to the work-based plans (401k, 403b, 457, SIMPLE IRA, TSP, etc.) enough to get the full employer match (the match is like free money, your best possible investment);
2) Contribute the maximum to an IRA, traditional or Roth (or backdoor Roth technique), depending on eligibility and personal circumstances;
3) Contribute the remainder of the maximum employee contribution to the work-based accounts; and
4) Contribute to a taxable investing account.

"If the company plan offers good, low-cost funds, it may be preferable to contribute to the company plan before contributing to an IRA." Please see the wiki article "Prioritizing investments".

I suggest that you read one or two books on investing. Wiki article, "Books: recommendations and reviews". Also take a look at the Boglehead’s wiki, the "getting started" link I give below. A quick education for a beginning investor is Dr. Bernstein's free, short, on-line book, "If You Can".
The thing also I don't like about a 401k is that you're taxed later in life when you may need more money. I don't make a lot of money right now and don't have a lot of my check to put into a 401k. I do have almost 6 figures in the savings, but I heard that the 401k contributions have to come from your payroll. I also have a second part time job. I'm in the 12% tax bracket.

So yes, I'll be able to right off the contributions now and get a little more on my return, but then I won't get all the money when I'm older, I'l have to pay taxes on distributions like it's a paycheck. Am I wrong?

I also was thinking of the taxable and an etf instead because I think it would be a little more exciting and hands on rather than the 401 that I really only see once a year or so?

I don't know anything about my 401k, save that they told me it doesn't have a match though. I'll have to look into it a lttle more.


I don't know ....

KlangFool
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Re: Can someone help me purchase my first mutual fund?

Post by KlangFool » Tue Nov 26, 2019 8:01 pm

thelateinvestor43 wrote:
Tue Nov 26, 2019 7:49 pm

So yes, I'll be able to right off the contributions now and get a little more on my return, but then I won't get all the money when I'm older, I'l have to pay taxes on distributions like it's a paycheck. Am I wrong?
thelateinvestor43,

Why do you think that you have a greater income at retirement versus now?

<<but then I won't get all the money when I'm older,>>

1) How much taxes would you pay if you withdraw 12K per year?

2) If your annual withdrawal is less than your current gross income, why would you pay more taxes?

3) Why would you withdraw all your money in one year?

4) If you do not contribute, you pay taxes on your income now. If you contribute, you deferred your taxes and pay fewer taxes when you withdraw during retirement.

KlangFool

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dogagility
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Re: Can someone help me purchase my first mutual fund?

Post by dogagility » Tue Nov 26, 2019 8:11 pm

thelateinvestor43 wrote:
Tue Nov 26, 2019 7:12 am
I put $1k in my Roth Ira on Fidelity and now I wanted to begin ordering my first mutual fund. I purchased the FSKAX Total Marker Index fund, but only put $400 in it for now because I want to be able to also purchase a Total Bond and maybe Total International fund.
I haven't placed ORDER yet.
So I'll have $600 left to order my other funds?
Can you adjust the percentages across the funds after purchasing them? For example, allocate more or less to each fund of the $1k total?
Hi LateInvestor,
You've started several threads all related to the same topic of investing your money. Respectfully, I think you will get better, more holistic advice if you keep all of your questions within a single thread.
Please use this format: https://www.bogleheads.org/wiki/Asking_ ... _questions
:beer
Taking "risk" since 1995.

dboeger1
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Re: Can someone help me purchase my first mutual fund?

Post by dboeger1 » Tue Nov 26, 2019 8:13 pm

thelateinvestor43 wrote:
Tue Nov 26, 2019 7:11 pm
I'm not young. 46
In that case, every additional year it takes you to DCA represents a greater portion of the time you have left to take advantage of compounding growth. Think of it this way. What if you were 66 years old instead of 46? Would you still be thinking about DCA'ing the money in $6k at a time? You might not even be alive long enough to see it hit the account. If you were 26, on the other hand, yes, DCA would potentially give up substantial gains due to how much the power of compounding would grow savings put away that early... but at least the 26-year-old has some time to figure things out and get comfortable before it becomes a critical need.

You're smack-dab in the middle. On the one hand, you can stick to your IRA contribution limits for the first months or year if that's what it'll take for you to get comfortable investing. But on the other, you don't have forever to sit around and wait to get this money working for you. Putting $1k in at a time is like debating whether to slap or kick the water out of a sinking boat, when what you really want is a bucket, before the 66-year-old version of you needs an industrial-grade pump. It's commendable that you're getting started, but if now's not the right time to put your first $6k in, then when is?

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Re: Can someone help me purchase my first mutual fund?

Post by KyleAAA » Tue Nov 26, 2019 8:15 pm

You're doing it right! Since this is an IRA you'll be able to transfer money between the funds without tax consequences.

3504PIR
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Re: Can someone help me purchase my first mutual fund?

Post by 3504PIR » Tue Nov 26, 2019 8:52 pm

yogesh wrote:
Tue Nov 26, 2019 3:43 pm
If you find this too difficult then
- Open Fidelity Brokerage Account: Just buy VT ETF
- Or open Fidelity GO, choose balanced or growth and keep contributing to it
Why are you making this more complicated for the OP. He is on the right track.

And more importantly, why are you encouraging him to buy VT with a commission at Fidelity when they have dozens of commission free etfs of their own?

Lou354
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Re: Can someone help me purchase my first mutual fund?

Post by Lou354 » Tue Nov 26, 2019 9:13 pm

Some 401k plans offer a Roth option, where you make contributions with after-tax money and the growth is tax-free. Does your 401k plan have a Roth option?

For money that you decide to keep in a savings account, you can get around 2% interest in an online high yield savings account, which is a lot better than 0.05%.

yogesh
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Re: Can someone help me purchase my first mutual fund?

Post by yogesh » Tue Nov 26, 2019 10:19 pm

3504PIR wrote:
Tue Nov 26, 2019 8:52 pm
yogesh wrote:
Tue Nov 26, 2019 3:43 pm
If you find this too difficult then
- Open Fidelity Brokerage Account: Just buy VT ETF
- Or open Fidelity GO, choose balanced or growth and keep contributing to it
Why are you making this more complicated for the OP. He is on the right track.

And more importantly, why are you encouraging him to buy VT with a commission at Fidelity when they have dozens of commission free etfs of their own?
All stocks and ETFs are now free to trade at Fidelity.
VT or VTI in taxable would be free, less cap gains
Emergency: FDIC | Taxable: VTMFX | Retirement: TR2040

3504PIR
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Re: Can someone help me purchase my first mutual fund?

Post by 3504PIR » Wed Nov 27, 2019 12:46 am

yogesh wrote:
Tue Nov 26, 2019 10:19 pm
3504PIR wrote:
Tue Nov 26, 2019 8:52 pm
yogesh wrote:
Tue Nov 26, 2019 3:43 pm
If you find this too difficult then
- Open Fidelity Brokerage Account: Just buy VT ETF
- Or open Fidelity GO, choose balanced or growth and keep contributing to it
Why are you making this more complicated for the OP. He is on the right track.

And more importantly, why are you encouraging him to buy VT with a commission at Fidelity when they have dozens of commission free etfs of their own?
All stocks and ETFs are now free to trade at Fidelity.
VT or VTI in taxable would be free, less cap gains
Thanks for that info, I wasn’t aware and apologize for the tone of my post which I didn’t notice as being as harsh as it looks now when I reread it.

yogesh
Posts: 410
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Re: Can someone help me purchase my first mutual fund?

Post by yogesh » Wed Nov 27, 2019 1:06 am

No worries.
Emergency: FDIC | Taxable: VTMFX | Retirement: TR2040

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thelateinvestor43
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Re: Can someone help me purchase my first mutual fund?

Post by thelateinvestor43 » Wed Nov 27, 2019 6:14 am

I've gotta make a call and see what my 401k has. I think it's through Merrill Edge if that's anything, but I don't think it has a match, but it may. So right now I've got (well in about a week or so) my $6k in the ROTH IRA and have the FSKAX Total Market fund. I have a high tens of thousands sitting in the saving at 0.05%. I'm single by the way and never married.

I'd like to put at least a little of that money from the savings into a taxable to start making a little money, at least above the 0% that I'm currently getting. I don't want to take much risk on it though. I was thinking of maybe $10k into an ETF in the taxable and seeing what happens. or maybe even just $5k for a few months. Someone suggested a money market fund, but I realize you only make about 1.4% in those I think, but it's better than 0.05%.

Anyways, I'll be looking into the 401k and I'm happy that I finally put my first $6k into my Roth, better than NOTHING I guess! Most importantly I've got a little cleaning job a few days a week and put about $140 in savings every week.

Now if I could just take a time machine back 20 years ...... :(

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RickBoglehead
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Re: Can someone help me purchase my first mutual fund?

Post by RickBoglehead » Wed Nov 27, 2019 7:31 am

OP should open a Vanguard brokerage account and put their "high teens of thousands" in Prime Money Market now, or into an Ally Online Savings.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

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thelateinvestor43
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Re: Can someone help me purchase my first mutual fund?

Post by thelateinvestor43 » Wed Nov 27, 2019 7:51 am

RickBoglehead wrote:
Wed Nov 27, 2019 7:31 am
OP should open a Vanguard brokerage account and put their "high teens of thousands" in Prime Money Market now, or into an Ally Online Savings.
I'm at Fidelity though.

fposte
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Re: Can someone help me purchase my first mutual fund?

Post by fposte » Wed Nov 27, 2019 7:58 am

thelateinvestor43 wrote:
Tue Nov 26, 2019 7:49 pm

The thing also I don't like about a 401k is that you're taxed later in life when you may need more money. I don't make a lot of money right now and don't have a lot of my check to put into a 401k. I do have almost 6 figures in the savings, but I heard that the 401k contributions have to come from your payroll. I also have a second part time job. I'm in the 12% tax bracket.
TLI, since you have savings, you could contribute the max your employer allows (80% is a common figure, to allow for taxes) from your paycheck while using your savings to compensate for the lost income. And given your current low tax bracket, it's definitely worth looking to see if there's a Roth 401k option, which would allow those contributions to grow tax-free.

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thelateinvestor43
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Re: Can someone help me purchase my first mutual fund?

Post by thelateinvestor43 » Wed Nov 27, 2019 8:01 am

fposte wrote:
Wed Nov 27, 2019 7:58 am
thelateinvestor43 wrote:
Tue Nov 26, 2019 7:49 pm

The thing also I don't like about a 401k is that you're taxed later in life when you may need more money. I don't make a lot of money right now and don't have a lot of my check to put into a 401k. I do have almost 6 figures in the savings, but I heard that the 401k contributions have to come from your payroll. I also have a second part time job. I'm in the 12% tax bracket.
TLI, since you have savings, you could contribute the max your employer allows (80% is a common figure, to allow for taxes) from your paycheck while using your savings to compensate for the lost income. And given your current low tax bracket, it's definitely worth looking to see if there's a Roth 401k option, which would allow those contributions to grow tax-free.
The only problem is I don't want to tie all the money up until I'm 59.5. I still will look into it though.

fposte
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Re: Can someone help me purchase my first mutual fund?

Post by fposte » Wed Nov 27, 2019 8:10 am

thelateinvestor43 wrote:
Wed Nov 27, 2019 8:01 am
fposte wrote:
Wed Nov 27, 2019 7:58 am
thelateinvestor43 wrote:
Tue Nov 26, 2019 7:49 pm

The thing also I don't like about a 401k is that you're taxed later in life when you may need more money. I don't make a lot of money right now and don't have a lot of my check to put into a 401k. I do have almost 6 figures in the savings, but I heard that the 401k contributions have to come from your payroll. I also have a second part time job. I'm in the 12% tax bracket.
TLI, since you have savings, you could contribute the max your employer allows (80% is a common figure, to allow for taxes) from your paycheck while using your savings to compensate for the lost income. And given your current low tax bracket, it's definitely worth looking to see if there's a Roth 401k option, which would allow those contributions to grow tax-free.
The only problem is I don't want to tie all the money up until I'm 59.5. I still will look into it though.
But you presumably don't want to burn through all of it in 15 years, either. In the meantime, you can put away as much as you can for a while and then stop when you wish, or put in a smaller amount. It's also no bad thing to tie up some money if there's a chance you might be prone to tinkering.

clip651
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Re: Can someone help me purchase my first mutual fund?

Post by clip651 » Wed Nov 27, 2019 8:40 am

thelateinvestor43 wrote:
Wed Nov 27, 2019 6:14 am
I have a high tens of thousands sitting in the saving at 0.05%. I'm single by the way and never married.

I'd like to put at least a little of that money from the savings into a taxable to start making a little money, at least above the 0% that I'm currently getting. I don't want to take much risk on it though. I was thinking of maybe $10k into an ETF in the taxable and seeing what happens. or maybe even just $5k for a few months. Someone suggested a money market fund, but I realize you only make about 1.4% in those I think, but it's better than 0.05%.
For the money you aren't ready to invest in the stock market yet (which honestly should be most of it until you learn a bit more and make a solid plan that you understand and that is appropriate for you), I would suggest a high yield savings account and/or CDs. Ally Bank is one example of a place with good rates, and there are others as well. Rates are not high right now, but 1.7 to 2% is much better than 0.05%. Aside from your checking account for day to day expenses, none of your money should be at 0.05%.

You will probably want to keep some portion of your inheritance as your emergency fund. A high yield savings account is a good place for an emergency fund.

For the investing end of things, you are doing great by maxing your 2019 Roth for the moment. Keep asking questions here, and do some reading in the wiki here so that you can make a plan for continued investing. You need to get going due to your late start, but you should still take the time to learn and make a good plan that you understand.

best wishes
cj

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ruralavalon
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Re: Can someone help me purchase my first mutual fund?

Post by ruralavalon » Wed Nov 27, 2019 11:33 am

Starting late at age 46 the most important investing decision you can make is to establish a high contribution rate, with contributions to tax-avantaged accounts.

thelateinvestor43 wrote:
Tue Nov 26, 2019 7:49 pm
The thing also I don't like about a 401k is that you're taxed later in life when you may need more money. I don't make a lot of money right now and don't have a lot of my check to put into a 401k. I do have almost 6 figures in the savings, but I heard that the 401k contributions have to come from your payroll. I also have a second part time job. I'm in the 12% tax bracket.

So yes, I'll be able to right off the contributions now and get a little more on my return, but then I won't get all the money when I'm older,
(1) One important thing you are missing is that most people are in a lower tax bracket during retirement. The income tax code is progressive, with a lower tax rate for lower income. Retirement usually means that employment income has ended. Therefore, most people are in a lower tax bracket in retirement and for most people traditional deductible 401k contributions are a benefit.

In addition when you withdraw from your 401k in retirement, the withdrawal income is not all taxed at the marginal tax rate specified for your tax bracket. Some is in the 00% bracket, some in the 10% bracket.

Don't just dismiss the benefit of the tax deduction in the year of contribution. Why skip the 12% tax deduction now, when your tax rate on withdrawals later will be lower?

(2) A second important thing you are missing is the benefit of dividends not being taxed while the mutual fund shares are held in the 401k account. Dividends are more than just income – if they’re reinvested as they should be in a 401k account, they represent a substantial portion of stocks’ long-term total return. "Over the past 81 years, then, reinvested dividend income accounted for approximately 95% of the compound long-term return earned by the companies in the S&P 500.” The Balance (06/25/2019), "The Critical Role of Dividends in Stocks' Long-Term Total Return".

The dividends from mutual fund shares are not taxed and compound tax-deferred while the fund shares are held in your 401k account. If shares of the same fund held in a taxable account, the dividends are taxed each year.

This is why tax-advantaged accounts are so beneficial, and why it's strongly recommended that investors contribute to taxable brokerage accounts only if they are already making the maximum annual contributions to their 401ks and IRAs. Wiki article, "Prioritizing Investments".

. . . . .

You are right that 401k contributions "have to come from your payroll" as a deferral of compensation. You can specify a high contribution rate from your paycheck, and draw from "almost 6 figures in the savings" to pay living expenses you would otherwise have covered from your paycheck. This has the effect of transferring money from your savings into your 401k account.
Last edited by ruralavalon on Wed Nov 27, 2019 11:50 am, edited 2 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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RickBoglehead
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Re: Can someone help me purchase my first mutual fund?

Post by RickBoglehead » Wed Nov 27, 2019 11:36 am

thelateinvestor43 wrote:
Wed Nov 27, 2019 7:51 am
RickBoglehead wrote:
Wed Nov 27, 2019 7:31 am
OP should open a Vanguard brokerage account and put their "high teens of thousands" in Prime Money Market now, or into an Ally Online Savings.
I'm at Fidelity though.
Then out it in a Fidelity Money Market... Checking account is losing you money every day.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

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thelateinvestor43
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Re: Can someone help me purchase my first mutual fund?

Post by thelateinvestor43 » Wed Nov 27, 2019 11:41 am

I have just the FSKAX funded with $1k for now and I just transferred another $5k to my Roth so I'm at my limit. Should I put it all into the FSKAX Total Market Index or should I put a little bit into a Total bond Index? Does it matter with such a low total right now?

Thanks :)

lakpr
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Re: Can someone help me purchase my first mutual fund?

Post by lakpr » Wed Nov 27, 2019 11:42 am

thelateinvestor43 wrote:
Wed Nov 27, 2019 11:41 am
I have just the FSKAX funded with $1k for now and I just transferred another $5k to my Roth so I'm at my limit. Should I put it all into the FSKAX Total Market Index or should I put a little bit into a Total bond Index? Does it matter with such a low total right now?

Thanks :)
Remember, no bond funds in Roth, and also no bonds in your portfolio unless your portfolio size is at least $100k. Not worth the noise ...

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ruralavalon
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Re: Can someone help me purchase my first mutual fund?

Post by ruralavalon » Wed Nov 27, 2019 12:02 pm

Starting late at age 46 the most important investing decision you can make is to establish a high contribution rate, with contributions to tax-avantaged accounts.


thelateinvestor43 wrote:
Wed Nov 27, 2019 11:41 am
I have just the FSKAX funded with $1k for now and I just transferred another $5k to my Roth so I'm at my limit. Should I put it all into the FSKAX Total Market Index or should I put a little bit into a Total bond Index? Does it matter with such a low total right now?

Thanks :)
The decision on what mutual funds to use is much less important than your rate of contributions to your tax-advantaged accounts.

You are concentrating on the wrong issue. Your "almost 6 figures in savings" needs to be invested, and needs to be in a tax-advantaged accounts.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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thelateinvestor43
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Re: Can someone help me purchase my first mutual fund?

Post by thelateinvestor43 » Wed Nov 27, 2019 5:00 pm

Thanks everyone I think I'm getting it!

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