Beginner looking for guided investment service

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Topic Author
Chziime
Posts: 5
Joined: Wed May 13, 2020 10:08 am

Beginner looking for guided investment service

Post by Chziime » Wed May 13, 2020 10:19 am

Hi all,

I just turned 31 years old, and I live alone in a cheap apartment near Princeton, New Jersey, no plans for marriage or kids, but potentially a house in a few years. I work as a freelance corporate videographer, have no debts, and have some money saved up...

200K in Marcus Online Savings (1.3% APY in Coronatimes)
20K in a Wealthfront Traditional IRA (medium-risk allowal)
Wealthfront SEP-IRA, funds soon to be added depending on tax report

Reading on this forum and listening to friends, I'd like to consider a 3-fund portfolio, but don't know how to go about it. It seems that Vanguard Personal Advisor Services is a popular option for people who don't want to do everything on their own, which frankly, I don't. Given my situation, is this worth pursuing over Wealthfront? If so, could they advise and even set up a 3-fund portfolio for me?

Another service I read about is PlanVision... though, that's probably more DIY after some initial guidance, yeah?

As you can probably tell, I am uneducated in the realm of finance. I'd appreciate it if you kept acronyms to a minimum :happy Thank you for any advice.

mhalley
Posts: 8222
Joined: Tue Nov 20, 2007 6:02 am

Re: Beginner looking for guided investment service

Post by mhalley » Wed May 13, 2020 11:46 am

Welcome to the forum. Vanguard pas will most likely setup a 4 fund portfolio, as they believe intl bonds should be part of your portfolio. I have used plan vision and was pleased, but I don’t think his service is what you are looking for. Setting up a 3fund portfolio is pretty easy. Transfer your money in kind to vanguard, figure out what you want your aa to be, and buy the funds. Transferring it over and just putting it into the target retirement fund with your desired aa and glide path is another option. It will give a similar aa to the pas and you won’t have the 0.3% fee. Another option is going with pas, learn, then in a quarter or 2 cancel it and diy.
Read about aa and 3 fund here
https://www.bogleheads.org/wiki/Asset_allocation

https://www.bogleheads.org/wiki/Asset_a ... e_accounts

https://www.bogleheads.org/wiki/Three-fund_portfolio

whereskyle
Posts: 707
Joined: Wed Jan 29, 2020 10:29 am

Re: Beginner looking for guided investment service

Post by whereskyle » Wed May 13, 2020 11:59 am

Chziime wrote:
Wed May 13, 2020 10:19 am
Hi all,

I just turned 31 years old, and I live alone in a cheap apartment near Princeton, New Jersey, no plans for marriage or kids, but potentially a house in a few years. I work as a freelance corporate videographer, have no debts, and have some money saved up...

200K in Marcus Online Savings (1.3% APY in Coronatimes)
20K in a Wealthfront Traditional IRA (medium-risk allowal)
Wealthfront SEP-IRA, funds soon to be added depending on tax report

Reading on this forum and listening to friends, I'd like to consider a 3-fund portfolio, but don't know how to go about it. It seems that Vanguard Personal Advisor Services is a popular option for people who don't want to do everything on their own, which frankly, I don't. Given my situation, is this worth pursuing over Wealthfront? If so, could they advise and even set up a 3-fund portfolio for me?

Another service I read about is PlanVision... though, that's probably more DIY after some initial guidance, yeah?

As you can probably tell, I am uneducated in the realm of finance. I'd appreciate it if you kept acronyms to a minimum :happy Thank you for any advice.
In my view, building the ideal portfolio for a 31 yo is very easy. 1. Set aside 6 months of expenses. 2. Put the rest of your non-expenses/vacation $ into VTSAX. 3. If you would like to hold international equities as well, put some $ into VTIAX. 4. If you'd like to hold a lot of international (i.e., according to its value in the global market as a whole), forget steps one and two and just put your money into VTWAX. 5. If you want to own bonds (say, 30% if you're really risk-averse at your age, 10% if you're following industry standard at your age, or 0% if you want the best chance at a higher return and can stomach the greatest amount of volatility), put that portion of your money in VBMFX. 6. As time goes on, any money you no longer want to expose to near-term stock-market risk in VTSAX/VTIAX/VTWAX, sell and put in VBMFX.

You can google all of the ticker symbols and find out exactly what they are, but these are the core components of a lazy, total-market portfolio. You should also read The Little Book of Common Sense Investing. You will learn there that the most important driver of your returns is costs. Wealthfront charges fees that you can reduce by more than half by doing what I describe above. It is not very hard, and it yields wonderful results. That's why we do it.
Last edited by whereskyle on Wed May 13, 2020 12:10 pm, edited 1 time in total.
"I am better off than he is – for he knows nothing, and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle

sycotik
Posts: 28
Joined: Thu Mar 04, 2010 4:51 am

Re: Beginner looking for guided investment service

Post by sycotik » Wed May 13, 2020 12:07 pm

mhalley wrote:
Wed May 13, 2020 11:46 am
Welcome to the forum. Vanguard pas will most likely setup a 4 fund portfolio, as they believe intl bonds should be part of your portfolio. I have used plan vision and was pleased, but I don’t think his service is what you are looking for. Setting up a 3fund portfolio is pretty easy. Transfer your money in kind to vanguard, figure out what you want your aa to be, and buy the funds. Transferring it over and just putting it into the target retirement fund with your desired aa and glide path is another option. It will give a similar aa to the pas and you won’t have the 0.3% fee. Another option is going with pas, learn, then in a quarter or 2 cancel it and diy.
Read about aa and 3 fund here
https://www.bogleheads.org/wiki/Asset_allocation

https://www.bogleheads.org/wiki/Asset_a ... e_accounts

https://www.bogleheads.org/wiki/Three-fund_portfolio
Agreed. If I was in your shoes (which I was a few years back), I would put the money in a Target date fund. That way you have time in the market. Then you can always change that once you read up on the boglehead books. I can't stress that enough (at least in my scenario). They are not long, and it is written for a non-investor to understand (I did have to look up a few words and their meaning, but I am a hillbilly so that was expected). I was brought up in a family that had savings accounts and bonds only. I was the first to venture out into the market. Those books helped tremendously. After I read those, I was pretty confident to do my own 3 fund portfolio, which I did. I have since switched away from the 3 fund, but it was invaluable to me to actually understand what I was doing.

Good luck OP.

pkcrafter
Posts: 14016
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

Re: Beginner looking for guided investment service

Post by pkcrafter » Wed May 13, 2020 12:55 pm

Welcome to the forum,
Chziime wrote:
Wed May 13, 2020 10:19 am
Hi all,

I just turned 31 years old, and I live alone in a cheap apartment near Princeton, New Jersey, no plans for marriage or kids, but potentially a house in a few years. I work as a freelance corporate videographer, have no debts, and have some money saved up...

200K in Marcus Online Savings (1.3% APY in Coronatimes)
20K in a Wealthfront Traditional IRA (medium-risk allowal)
Wealthfront SEP-IRA, funds soon to be added depending on tax report

What do you mean by adding funds depending on tax report?

Reading on this forum and listening to friends, I'd like to consider a 3-fund portfolio, but don't know how to go about it.

We will help with this and everything else you need to know.

It seems that Vanguard Personal Advisor Services is a popular option for people who don't want to do everything on their own, which frankly, I don't.

I strongly believe every individual is responsible for knowing how to handle his/her own money. If you don't it could cost you 10s of thousands of dollars over your investing lifetime. It really isn't difficult once you've learned some fundamentals. Learn a bit, then decide if you want advisor services. Vanguard has target retirement funds and lifestrategy funds with are all in one and don't require any hands on adjustments.

https://www.bogleheads.org/wiki/Vanguar ... ment_funds

https://www.bogleheads.org/wiki/Asset_allocation


Given my situation, is this worth pursuing over Wealthfront? If so, could they advise and even set up a 3-fund portfolio for me?

I don't know, but it's unlikely they would offer the 3 funds we would recommend.

viewtopic.php?f=10&t=88005

As you can probably tell, I am uneducated in the realm of finance. I'd appreciate it if you kept acronyms to a minimum :happy Thank you for any advice.

Ok, you are now uneducated, but you've come to a place where that can easily be changed. You have a SEP IRA and an individual IRA, so that's a good start.

We have lots of resources here if you decide you want to get in the game.


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

michaelingp
Posts: 309
Joined: Tue Jan 17, 2017 8:46 pm

Re: Beginner looking for guided investment service

Post by michaelingp » Wed May 13, 2020 2:19 pm

sycotik wrote:
Wed May 13, 2020 12:07 pm


Agreed. If I was in your shoes (which I was a few years back), I would put the money in a Target date fund.
Agreed. My kids are about the age of the OP, have significant income, but no interest in learning about investing. This is what I advise them. I've talked to them lately, and while they are concerned about their jobs and their friends' jobs, none of them are the least interested in what the stock market is doing. That's the BH way.

Jack FFR1846
Posts: 11740
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: Beginner looking for guided investment service

Post by Jack FFR1846 » Wed May 13, 2020 2:34 pm

Investing ain't rocket science.

You can do it yourself. If you want to slowly get into it, get a Vanguard target date fund. Then learn more. You'll realize that you can have exactly what's in the target date fund by buying the underlying funds and save more than half the cost. At that point, you can leave it as is or rebalance once a year. There's not much more to it. I spend all of 15 minutes a year on $2.5M invested.
Bogle: Smart Beta is stupid

Topic Author
Chziime
Posts: 5
Joined: Wed May 13, 2020 10:08 am

Re: Beginner looking for guided investment service

Post by Chziime » Wed May 13, 2020 6:27 pm

What do you mean by adding funds depending on tax report?

Once my accountant processes my tax return (I pay quarterly estimated taxes) and finds my 2019 net income, I'll know the maximum amount I'm able to deposit into the SEP-IRA for 2019's tax deductions.

Hm... thank you all. So if I start a Vanguard target date fund for now, should I just put all of the money (save for personal funds) from my savings account into this fund? What about the money I have in the Wealthfront IRA, would I eventually transfer that over to Vanguard?

mhalley
Posts: 8222
Joined: Tue Nov 20, 2007 6:02 am

Re: Beginner looking for guided investment service

Post by mhalley » Wed May 13, 2020 7:10 pm

Sure, transferring money in the ira is a good idea. I am not a fan of blended funds in taxable accounts, but depending on your tax bracket it might be ok, but you lose the ability to tax loss harvest. Whether to put the taxable money in a tr fund also depends on your goal for the money. As a general rule of thumb, stock funds are better in taxable accounts and Roth accounts, and bond funds in tax deferred accounts. Money needed within 5 years should be saved, not invested.

nanameg
Posts: 164
Joined: Fri Mar 20, 2020 10:57 am

Re: Beginner looking for guided investment service

Post by nanameg » Wed May 13, 2020 8:30 pm

sycotik wrote:
Wed May 13, 2020 12:07 pm
mhalley wrote:
Wed May 13, 2020 11:46 am
Welcome to the forum. Vanguard pas will most likely setup a 4 fund portfolio, as they believe intl bonds should be part of your portfolio. I have used plan vision and was pleased, but I don’t think his service is what you are looking for. Setting up a 3fund portfolio is pretty easy. Transfer your money in kind to vanguard, figure out what you want your aa to be, and buy the funds. Transferring it over and just putting it into the target retirement fund with your desired aa and glide path is another option. It will give a similar aa to the pas and you won’t have the 0.3% fee. Another option is going with pas, learn, then in a quarter or 2 cancel it and diy.
Read about aa and 3 fund here
https://www.bogleheads.org/wiki/Asset_allocation

https://www.bogleheads.org/wiki/Asset_a ... e_accounts

https://www.bogleheads.org/wiki/Three-fund_portfolio
Agreed. If I was in your shoes (which I was a few years back), I would put the money in a Target date fund. That way you have time in the market. Then you can always change that once you read up on the boglehead books. I can't stress that enough (at least in my scenario). They are not long, and it is written for a non-investor to understand (I did have to look up a few words and their meaning, but I am a hillbilly so that was expected). I was brought up in a family that had savings accounts and bonds only. I was the first to venture out into the market. Those books helped tremendously. After I read those, I was pretty confident to do my own 3 fund portfolio, which I did. I have since switched away from the 3 fund, but it was invaluable to me to actually understand what I was doing.

Good luck OP.
Can I ask what you switched to from the 3 fund portfolio?

nanameg
Posts: 164
Joined: Fri Mar 20, 2020 10:57 am

Re: Beginner looking for guided investment service

Post by nanameg » Wed May 13, 2020 8:34 pm

Jack FFR1846 wrote:
Wed May 13, 2020 2:34 pm
Investing ain't rocket science.

You can do it yourself. If you want to slowly get into it, get a Vanguard target date fund. Then learn more. You'll realize that you can have exactly what's in the target date fund by buying the underlying funds and save more than half the cost. At that point, you can leave it as is or rebalance once a year. There's not much more to it. I spend all of 15 minutes a year on $2.5M invested.
Do you use the 3 fund portfolio?

Topic Author
Chziime
Posts: 5
Joined: Wed May 13, 2020 10:08 am

Re: Beginner looking for guided investment service

Post by Chziime » Thu May 14, 2020 3:24 pm

mhalley wrote:
Wed May 13, 2020 7:10 pm
Sure, transferring money in the ira is a good idea. I am not a fan of blended funds in taxable accounts, but depending on your tax bracket it might be ok, but you lose the ability to tax loss harvest. Whether to put the taxable money in a tr fund also depends on your goal for the money. As a general rule of thumb, stock funds are better in taxable accounts and Roth accounts, and bond funds in tax deferred accounts. Money needed within 5 years should be saved, not invested.
That partially why I thought I might need an advisor... How do I know how much of the $225K I save and how much I invest? I don't even have any financial-related lifestyle goals outside of retirement.

mhalley
Posts: 8222
Joined: Tue Nov 20, 2007 6:02 am

Re: Beginner looking for guided investment service

Post by mhalley » Fri May 15, 2020 1:33 pm

If you don’t have any goals outside of retirement, invest the money as part of your retirement asset allocation, keeping in mind you want a 3 to 6 month emergency fund. How much to save for retirement depends on how many years from now you want to retire. See MMM post on the simple math of early retirement. You mention possibly a house in a few years, but an fa isn’t going to tell you whether or not to buy a house. I recall many years ago, We owned a “cheap” house and one day my wife said, you know, I would like to move to a better house. I hadn’t been saving specifically for a house, but had taxable savings so we sold some for the down payment and moved. Fortunately she decided to move during an up market.
https://www.mrmoneymustache.com/2012/01 ... etirement/
A couple of data points from the post: (starting at zero retirement savings)
Saving 15% allows retirement in 43 years. 20=37, 25=32, 30=28, 35%=25 years.

pkcrafter
Posts: 14016
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

Re: Beginner looking for guided investment service

Post by pkcrafter » Fri May 15, 2020 6:45 pm

Chziime wrote:
Thu May 14, 2020 3:24 pm
mhalley wrote:
Wed May 13, 2020 7:10 pm
Sure, transferring money in the ira is a good idea. I am not a fan of blended funds in taxable accounts, but depending on your tax bracket it might be ok, but you lose the ability to tax loss harvest. Whether to put the taxable money in a tr fund also depends on your goal for the money. As a general rule of thumb, stock funds are better in taxable accounts and Roth accounts, and bond funds in tax deferred accounts. Money needed within 5 years should be saved, not invested.
That partially why I thought I might need an advisor... How do I know how much of the $225K I save and how much I invest? I don't even have any financial-related lifestyle goals outside of retirement.


You really don't need an advisor because everything you need to know is here or can be answered by a members.

Emergency fund - you live alone and what if something happens where you can't work for a month, or suppose you lose your job?

https://www.bogleheads.org/wiki/Emergency_fund

tax-efficient fund placement

https://www.bogleheads.org/wiki/Tax-eff ... _placement

The 3-fund portfolio - investing does not need to be complicated.

viewtopic.php?f=10&t=88005

Start-up kit

https://www.bogleheads.org/wiki/Boglehe ... art-up_kit

Consider all retirement accounts as one portfolio so you don't duplicate everything.



Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

Topic Author
Chziime
Posts: 5
Joined: Wed May 13, 2020 10:08 am

Re: Beginner looking for guided investment service

Post by Chziime » Fri May 15, 2020 6:48 pm

Okay! Thank you all so much for the help. I've decided to put about 150K of my 200K savings into a target date retirement fund, then do some reading and eventually do a 3-fund portfolio myself.

However, I am having trouble understanding how to set this up with Vanguard. I guess I would open an individual brokerage account and what, invest in that retirement fund? I also don't know how to make the transfer. I have an online savings account, which I didn't see as an option to draw from, through Marcus, and a $20K IRA in Wealthfront.

Would Vanguard help me with all this over the phone? Or could I maybe use PAS just to get my accounts set up, then cancel in a month or so?

Lastly, where do IRAs fit into this? Would I transfer my 20K Wealthfront IRA to the same target date fund, then not have any IRAs at all, just the brokerage account? Are there any benefits to opening an IRA on Vanguard as well and investing into the same funds as the brokerage account?

dukeblue219
Posts: 571
Joined: Fri Jan 29, 2016 12:40 pm

Re: Beginner looking for guided investment service

Post by dukeblue219 » Fri May 15, 2020 6:59 pm

Don't move the existing IRA to what you're calling a brokerage account. If you want to put everything in one place, you'll be putting in an IRA at Vanguard alongside your taxable account (your brokerage account).

Also don't confuse the funds you invest in (like a Target Date fund) with the account itself. I sense some of that from your posts. You can own many funds within one account, and own the same funds in your taxable account and your IRA.

Topic Author
Chziime
Posts: 5
Joined: Wed May 13, 2020 10:08 am

Re: Beginner looking for guided investment service

Post by Chziime » Fri May 15, 2020 7:02 pm

dukeblue219 wrote:
Fri May 15, 2020 6:59 pm
Don't move the existing IRA to what you're calling a brokerage account. If you want to put everything in one place, you'll be putting in an IRA at Vanguard alongside your taxable account (your brokerage account).

Also don't confuse the funds you invest in (like a Target Date fund) with the account itself. I sense some of that from your posts. You can own many funds within one account, and own the same funds in your taxable account and your IRA.
So what I should open at Vanguard is an IRA? I thought there is a $6000/year limit for adding to that, let alone a $150K transfer?

"If you want to put everything in one place, you'll be putting in an IRA at Vanguard alongside your taxable account (your brokerage account)."
What is the difference between the two and why do I have both?

Sorry, this is very confusing to me.

retire57
Posts: 549
Joined: Fri Oct 28, 2016 3:03 pm

Re: Beginner looking for guided investment service

Post by retire57 » Fri May 15, 2020 7:27 pm

Would Vanguard help me with all this over the phone?


Yes. No need to pay for the PAS.

dukeblue219
Posts: 571
Joined: Fri Jan 29, 2016 12:40 pm

Re: Beginner looking for guided investment service

Post by dukeblue219 » Fri May 15, 2020 8:18 pm

Chziime wrote:
Fri May 15, 2020 7:02 pm
dukeblue219 wrote:
Fri May 15, 2020 6:59 pm
Don't move the existing IRA to what you're calling a brokerage account. If you want to put everything in one place, you'll be putting in an IRA at Vanguard alongside your taxable account (your brokerage account).

Also don't confuse the funds you invest in (like a Target Date fund) with the account itself. I sense some of that from your posts. You can own many funds within one account, and own the same funds in your taxable account and your IRA.
So what I should open at Vanguard is an IRA? I thought there is a $6000/year limit for adding to that, let alone a $150K transfer?

"If you want to put everything in one place, you'll be putting in an IRA at Vanguard alongside your taxable account (your brokerage account)."
What is the difference between the two and why do I have both?

Sorry, this is very confusing to me.
You want both at Vanguard. This is extremely common. You can move your existing IRA to any other IRA with no issues. You can move your cash in your savings account to a taxable investment account.

The taxable account is just a plain vanilla, buy and sell stocks and mutual funds account. The IRA is a type of account where you can contribute limited amounts each year and can't withdraw it without penalty until retirement, but you'll save on taxes.

sycotik
Posts: 28
Joined: Thu Mar 04, 2010 4:51 am

Re: Beginner looking for guided investment service

Post by sycotik » Thu May 21, 2020 9:32 am

nanameg wrote:
Wed May 13, 2020 8:30 pm
sycotik wrote:
Wed May 13, 2020 12:07 pm
mhalley wrote:
Wed May 13, 2020 11:46 am
Welcome to the forum. Vanguard pas will most likely setup a 4 fund portfolio, as they believe intl bonds should be part of your portfolio. I have used plan vision and was pleased, but I don’t think his service is what you are looking for. Setting up a 3fund portfolio is pretty easy. Transfer your money in kind to vanguard, figure out what you want your aa to be, and buy the funds. Transferring it over and just putting it into the target retirement fund with your desired aa and glide path is another option. It will give a similar aa to the pas and you won’t have the 0.3% fee. Another option is going with pas, learn, then in a quarter or 2 cancel it and diy.
Read about aa and 3 fund here
https://www.bogleheads.org/wiki/Asset_allocation

https://www.bogleheads.org/wiki/Asset_a ... e_accounts

https://www.bogleheads.org/wiki/Three-fund_portfolio
Agreed. If I was in your shoes (which I was a few years back), I would put the money in a Target date fund. That way you have time in the market. Then you can always change that once you read up on the boglehead books. I can't stress that enough (at least in my scenario). They are not long, and it is written for a non-investor to understand (I did have to look up a few words and their meaning, but I am a hillbilly so that was expected). I was brought up in a family that had savings accounts and bonds only. I was the first to venture out into the market. Those books helped tremendously. After I read those, I was pretty confident to do my own 3 fund portfolio, which I did. I have since switched away from the 3 fund, but it was invaluable to me to actually understand what I was doing.

Good luck OP.
Can I ask what you switched to from the 3 fund portfolio?
I just saw this, sorry I did not get back with you earlier. About 3 years ago I decided to get out of international completely. The more I looked into it, the more I did not like it. It is just a personal preference really. Will it pan out, who knows? But for me I just wanted the US market and bonds, and that is what I have today. Alot of US companies have ties overseas as it is really now a global market. 2 more years down the road I may change my mind again, but for me, this was the correct choice (in my mind).

nanameg
Posts: 164
Joined: Fri Mar 20, 2020 10:57 am

Re: Beginner looking for guided investment service

Post by nanameg » Fri May 22, 2020 6:25 am

Thanks. I think I’m going that 2 fund route myself.

RetiredNewbie
Posts: 38
Joined: Sun Dec 10, 2017 7:52 am
Location: Southeast Virginia

Re: Beginner looking for guided investment service

Post by RetiredNewbie » Fri May 22, 2020 7:14 am

The best advice I got when I came here was to read the books that the Bogleheads recommend. Starting with the first one on this page (The Bogleheads' Guide to Investing)…

https://www.bogleheads.org/RecommendedReading.php
Your attitude about risk changes significantly when the bear begins to maul you.

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