Is VFIAX right for me?

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Topic Author
staxchips
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Joined: Mon Mar 23, 2020 8:02 pm

Is VFIAX right for me?

Post by staxchips » Mon Mar 23, 2020 8:10 pm

Goodevening!

My plan is to deposit $25k in a fund that tracks the S&P 500 and make monthly contributions. \

Is the VFIAX the right one for this plan? Is there a limit on how much deposit I can put in?

Element
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Joined: Wed Sep 13, 2017 11:20 am

Re: Is VFIAX right for me?

Post by Element » Mon Mar 23, 2020 8:33 pm

Yes it is the correct fund if you are tracking only the S&P 500.

Are you contributing to a Roth or taxable account? If it's the Roth, you can only contribute a max of $6K per year. I don't believe there is a limit in a taxable account though. Good luck!

Topic Author
staxchips
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Re: Is VFIAX right for me?

Post by staxchips » Mon Mar 23, 2020 9:13 pm

Should I just deposit my $25k in VFIAX and make monthly contributions in a traditional IRA/401k?

I just really wanna lock in cheap SP500 prices with my $25k now and make make monthly contributions at the same time for the next 20-30 years

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JoMoney
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Re: Is VFIAX right for me?

Post by JoMoney » Mon Mar 23, 2020 9:19 pm

That's the fund I use.
It's the specific fund Warren Buffett used in his bet against the hedge funds
http://longbets.org/362/
It's the fund Warren Buffett suggested for his wife's bequest:
https://www.berkshirehathaway.com/letters/2013ltr.pdf
... What I advise here is essentially identical to certain
instructions I’ve laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife’s
benefit. (I have to use cash for individual bequests, because all of my Berkshire shares will be fully distributed to
certain philanthropic organizations over the ten years following the closing of my estate.) My advice to the trustee
could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P
500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to
those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee
managers.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

HomeStretch
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Re: Is VFIAX right for me?

Post by HomeStretch » Mon Mar 23, 2020 9:26 pm

If you are or will be contributing to a Taxable account and tax deferred accounts (IRA, 401k), consider using different funds in each type of account to avoid inadvertent wash sales if you tax loss harvest in the Taxable account (which is a distinct possibility right now). Consider VTSAX (Vanguard U.S. Total Stock Market) for your Taxable account and a S&P 500 fund for the IRA/401k (if available).

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1789
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Re: Is VFIAX right for me?

Post by 1789 » Mon Mar 23, 2020 9:27 pm

I think you got this. I agree putting 25k in for VFIAX is a great idea.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

Topic Author
staxchips
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Re: Is VFIAX right for me?

Post by staxchips » Mon Mar 23, 2020 11:17 pm

I am in the military and would really love to take advantage of the employer match in our TSP (thrift savings plan).

Can i deposit 25k in VFIAX then roll it over to TSP?

annu
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Re: Is VFIAX right for me?

Post by annu » Mon Mar 23, 2020 11:41 pm

Man, first thanks for serving.
The stock prices while good, are not comparable to walmart 30% off deals. Unless you thought 2017/2018 ( the prices webare seeing now), were a great deal, all we have now is 2019/2020 to compare with.
The rise back to same levels, might not happen quick, and it may not be same market segments. It is said here a lot, but make an investment policy, and stick to it.
If you have a mortgage or any debt, this might be a great opportunity to make a dent in it, by paying off or making extra payments.

Also maximize your 401k or other tax advantages contributions and also plan for an emergency fund. Search for wiki+bogleheads in google, you will find many useful links, https://www.bogleheads.org/wiki/Main_Page
By the way if you still feel you need to make a go at great prices, tech is one area might be quicker to bounce, as not much besides supply chain issues at this point is impacted, look into vangaurd etf VUG, https://investor.vanguard.com/etf/profile/VUG
Its top 10 holdings ( msft, aapl, Google, Facebook, amazon and more) are around 42% of the total holdings.
For a quick gain( not recommending) but some of my family also wanted to buy individual stocks of the big 5, as they are all great deal right now, I pushed them to VUG, as it is atleast a lot broader then few tech stocks. Only reason I mentioned VUG as tech is what folks think of when talking great deal, things like microsoft, amazon etc.

Fishing50
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Re: Is VFIAX right for me?

Post by Fishing50 » Tue Mar 24, 2020 8:17 am

staxchips wrote:
Mon Mar 23, 2020 11:17 pm
I am in the military and would really love to take advantage of the employer match in our TSP (thrift savings plan).

Can i deposit 25k in VFIAX then roll it over to TSP?
VFIAX is perfect for your taxable account. It's tax efficient fund you can hold forever with dividends taxed at 15% and it doesn't distribute capital gains. We have IWB (Russell 1000) shares from 2004 we'll probably never sell that are still up 137% today.

TSP is separate, you need to fund it from payroll contributions. Strongly consider Roth TSP contributions as a young service member at the lower part of the pay scale or even a married service member up to 0-5 because you are in the 12% tax bracket. Traditional makes sense for some junior service members who can qualify for savers tax credit.

Best of Luck!
It's perfectly legal, go ask the IRS, they'll say the same thing. I actually feel stupid telling you this, I'm sure you would've investigated the matter yourself. Andy Dufresne

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grabiner
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Re: Is VFIAX right for me?

Post by grabiner » Tue Mar 24, 2020 11:50 am

staxchips wrote:
Mon Mar 23, 2020 11:17 pm
I am in the military and would really love to take advantage of the employer match in our TSP (thrift savings plan).

Can i deposit 25k in VFIAX then roll it over to TSP?
You can max out your Roth TSP contributions, and put $19,000 per year in the TSP C fund (which tracks the same index), and $6000 in your Roth IRA.

You might also want exposure to the rest of the market, using the S and I funds for some of your TSP stock holdings (or putting the entire TSP in an L fund and the Roth IRA in a Vanguard Target Retirement fund, which would manage the allocation for you).
Wiki David Grabiner

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ruralavalon
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Location: Illinois

Re: Is VFIAX right for me?

Post by ruralavalon » Tue Mar 24, 2020 1:15 pm

Welcome to the forum :) .

staxchips wrote:
Mon Mar 23, 2020 8:10 pm
Goodevening!

My plan is to deposit $25k in a fund that tracks the S&P 500 and make monthly contributions. \

Is the VFIAX the right one for this plan? Is there a limit on how much deposit I can put in?
staxchips wrote:
Mon Mar 23, 2020 9:13 pm
Should I just deposit my $25k in VFIAX and make monthly contributions in a traditional IRA/401k?

I just really wanna lock in cheap SP500 prices with my $25k now and make make monthly contributions at the same time for the next 20-30 years
staxchips wrote:
Mon Mar 23, 2020 11:17 pm
I am in the military and would really love to take advantage of the employer match in our TSP (thrift savings plan).

Can i deposit 25k in VFIAX then roll it over to TSP?
In an IRA you can contribute up to $6k annually if under age 50, or $7k annually if age 50 or more, and use Vanguard 500 Index Fund Admiral Shares (VFIAX). If married filing jointly your spouse could also contribute to an IRA.

In a taxable brokerage account you can buy an unlimited amount of Vanguard 500 Index Fund Admiral Shares (VFIAX).

In your TSP you can use the C Fund, which is a S&P 500 index fund. You can contribute up to $19.5k annually to your TSP if under age 50, or $26k annually if age 50 or more. Contributions must come from payroll deductions.
Last edited by ruralavalon on Tue Mar 24, 2020 1:19 pm, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

bloom2708
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Re: Is VFIAX right for me?

Post by bloom2708 » Tue Mar 24, 2020 1:19 pm

Put some in your checking account and then up your TSP contributions. The smaller check is replaced by cash from your $25k.

Put $6k in each Roth IRA (2020) if you are married.

Your bonds can be in the G fund in the TSP. Roth and Taxable can be S&P 500 index or Total US market index funds.

Now is a great time to learn about investing. TSP, Roths, HSA, Taxable/brokerage. Use your tax advantaged first.
"People want confirmation, not advice" Unknown | "We are here to provoke thoughtfulness, not agree with you" Unknown | Four words: Whole food, plant based

Topic Author
staxchips
Posts: 13
Joined: Mon Mar 23, 2020 8:02 pm

Re: Is VFIAX right for me?

Post by staxchips » Wed Mar 25, 2020 4:11 pm

Thank you for the replies.

I really like the idea of setting up an investment account and just buy $25k worth of SPY when the time is right.

BUT,

Whenever I decide to pull those gains out 20/30/40/50 years from now, i’ll be taxed again.

Once for buying shares with post-tax income.
Second, for withdrawing gains on a non-retirement account.


Retirement accounts are nice but I absolutely HATE how there is a max lump-sum contribution.

I want to be able to buy as much SPY shares as I want and contribute every month as much as I want.

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ruralavalon
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Location: Illinois

Re: Is VFIAX right for me?

Post by ruralavalon » Wed Mar 25, 2020 4:54 pm

staxchips wrote:
Wed Mar 25, 2020 4:11 pm
Thank you for the replies.

I really like the idea of setting up an investment account and just buy $25k worth of SPY when the time is right.

BUT,

Whenever I decide to pull those gains out 20/30/40/50 years from now, i’ll be taxed again.

Once for buying shares with post-tax income.
Second, for withdrawing gains on a non-retirement account.


Retirement accounts are nice but I absolutely HATE how there is a max lump-sum contribution.

I want to be able to buy as much SPY shares as I want and contribute every month as much as I want.
What is your age?

What is your tax bracket, both federal and state? What is your tax filing status?

About how much (in dollars) do you believe that you may be able to contribute annually to investing (total, all accounts)?

Do you have any self-employment income?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Topic Author
staxchips
Posts: 13
Joined: Mon Mar 23, 2020 8:02 pm

Re: Is VFIAX right for me?

Post by staxchips » Wed Mar 25, 2020 5:03 pm

I am 25 years old, military employment.

48k a year salary after taxes. $4k+ per month after taxes
22% tax bracket
No self-employment income.

I can make a lump-sum contribution of 20-$25k.

I can make $1000 monthly contributions.

I am a very good saver.

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ruralavalon
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Location: Illinois

Re: Is VFIAX right for me?

Post by ruralavalon » Wed Mar 25, 2020 9:17 pm

staxchips wrote:
Mon Mar 23, 2020 8:10 pm
Goodevening!

My plan is to deposit $25k in a fund that tracks the S&P 500 and make monthly contributions. \

Is the VFIAX the right one for this plan? Is there a limit on how much deposit I can put in?
staxchips wrote:
Mon Mar 23, 2020 11:17 pm
I am in the military and would really love to take advantage of the employer match in our TSP (thrift savings plan).

Can i deposit 25k in VFIAX then roll it over to TSP?
staxchips wrote:
Wed Mar 25, 2020 4:11 pm
Thank you for the replies.

I really like the idea of setting up an investment account and just buy $25k worth of SPY when the time is right.

BUT,

Whenever I decide to pull those gains out 20/30/40/50 years from now, i’ll be taxed again.

Once for buying shares with post-tax income.
Second, for withdrawing gains on a non-retirement account.


Retirement accounts are nice but I absolutely HATE how there is a max lump-sum contribution.

I want to be able to buy as much SPY shares as I want and contribute every month as much as I want.
staxchips wrote:
Wed Mar 25, 2020 5:03 pm
I am 25 years old, military employment.

48k a year salary after taxes. $4k+ per month after taxes
22% tax bracket
No self-employment income.

I can make a lump-sum contribution of 20-$25k.

I can make $1000 monthly contributions.

I am a very good saver.
It is great that you are a good saver. At age 24 The most important investing decision you can make is to establish a high rate of contributions to investing.

You can contribute up to $19.5k annually to your TSP account. You can contribute up to $6k annually to a Roth IRA. That's a total of $25.5k annually, much more than the annual $12k ($1k monthly) which you mention.

Be absolutely certain to take advantage of the employer match in the TSP. Also it is very important to make maximum possible use of tax-advantaged accounts, as a priority ahead of contributions to a taxable brokerage account. Wiki article "Prioritizing Investments" .

There is no annual limit on how much you can contribute to a taxable brokerage account.

By the way you can still contribute $6k to an IRA for tax year 2019 (any time before tax day 2020), and then another $6k to the IRA for tax year 2020, for a total of $12k now. That's about 1/2 of your $20-25k lump sum available now.

If you want it all in a S&P 500 index fund, then you can use the C Fund in the TSP account and use Vanguard 500 Index Fund Admiral Shares (VFIAX) ER 0.04% in the IRA and in the taxable account.

In my opinion those two S&P 500 index funds are good choices for investing in U.S. stocks. SPDR® S&P 500 ETF Trust (SPY) ER 0.095% has a higher expense ratio than either of those two funds, so I suggest not using SPY.

I do think that 100% in stocks is a bad idea. At age 24 I often suggest about 20% of the portfolio in a bond fund in one of the tax-advantaged accounts. In the TSP account that could be the F Fund, or the G Fund, or a combination of both. In the IRA that could be Vanguard Total Bond Market Index Fund (VBTLX) or an intermediate-term bond fund.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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