10k to invest in brokerage account/ looking for advice

[nhpdude]

I'm 19 and new to this forum; I have maxed out my roth IRA for this year; I want to invest my summer internship money to a brokerage account.
I opened an account at fidelity; which funds do you think is best option for me; as I'd like for this money to grow for 20+ years.
I'd like to consider something that's portable; and not many tax consequences prior to withdrawal of funds 20 years later.
In addition as they are interest rate cut's expected should I consider investing in a small cap fund?
I've heard small caps perform well after interest rate cuts.

[WAROB]

I’d do something like 50/50 in SPAXX and FSKAX. Don’t over-complicate it. You’re young and may need these funds sometime in the near future. Build up an appetite for riding fluctuation in value up and down, figure out your risk tolerance.

[steadyosmosis]

(reply removed)

[DIYtrixie]

I'd like for this money to grow for 20+ years.
I'd like to consider something that's portable; and not many tax consequences prior to withdrawal of funds 20 years later.

VTI all the way.

[Kagord]

My son, when 19, put the max in a Roth IRA in VTI, that's what some of his friends were doing, he won't be touching for at least 40 years where it and any appreciation will be able to be used used tax free. The rest he put in a money market in taxable, which he used for college expenses.

[breakfastinbed]

I guess it depends on how "much" this money is to you - I'm assuming this is a decent amount, relatively speaking, and not something you'd like to risk.

If so, the safe, responsible choice that allows you to learn about the market in a way you are very unlikely to regret, while still gaining decent returns, would be to invest 100% in FSKAX (Fidelity Total Market Index Fund). It's probably Fidelity's single best fund; people here will recommend VTI (Vanguard Total Stock Market ETF), because they're Bogleheads, and that is also a reasonable choice, but I'd still vote for FSKAX.

If you would like to diversity a bit, you could instead invest 70% into FSKAX, and 30% into an international fund (here, FTIHX, or Fidelity Total International Index Fund). Either is reasonable.

The riskier approach would be to invest some/all of it into a small cap value fund, like AVUV (Avantis US Small Cap Value ETF). This fund, over the long term (decades) will likely outperform any of the other funds listed, but will be more volatile - AVUV dropped almost 3% today.

Overall, FSKAX, or another total market index fund/ETF, would be my recommendation. Total stock market is probably the single index fund no one ever wishes they had less of in exchange for something else.

Finally, my main advice is to first do research on stocks for awhile before buying anything. You have a lot to learn.

[nhpdude]

Thanks.

If I invest in VOO instead of VTI will that be similar in returns and tax consequences?

[bonesly]

f I invest in VOO instead of VTI will that be similar in returns and tax consequences?

Yes, since the total market is about 80% dominated by large-caps, the performance is very similar (at least of late). They also both have very similar tax-efficiency in a Taxable account.

I'm 19 and new to this forum; I have maxed out my roth IRA for this year; I want to invest my summer internship money to a brokerage account.
I opened an account at fidelity; which funds do you think is best option for me; as I'd like for this money to grow for 20+ years.
I'd like to consider something that's portable; and not many tax consequences prior to withdrawal of funds 20 years later.

I'm 19 and new to this forum
Welcome!

I'd like for this money to grow for 20+ years.
-- Stocks have the best growth potential if you have a time-frame of 10+ years, so 20+ years does suggest stocks. 100% stocks is a bumpy ride though (highest volatility of about ±20%). Historical average annual return and associated standard deviation for stocks, bonds, and cash is show below for a specific time period.

NYU Data Set 1928-2017
Stocks: 11.5% ± 19.5%
10y T-Bonds: 5.2% ± 7.7%
3mo T-Bills: 3.4% ± 3.0%

I'd like to consider something that's portable
-- Using an ETF like VTI or VOO or ITOT is likely the most portable. Since ETFs trade like a stock they can be held at pretty much any brokerage. Holding a mutual fund like FXAIX may or may not be transferrable "in-kind" to an alternative brokerage from Fidelity.

and not many tax consequences prior to withdrawal of funds 20 years later.
-- This relates to Tax-Efficient Fund Placement. The synopsis of that is that you ideally want only stocks in your Taxable and Tax-Free Roth IRA/401k accounts, while your Tax-Deferred Traditional IRA/401k accounts hold all your required bonds, as well as the balance of stocks to meet your desired Asset Allocation.

In addition as they are interest rate cut's expected should I consider investing in a small cap fund?
I've heard small caps perform well after interest rate cuts.

I'm not aware of any credible research that shows a correlation between interest rate changes and small-cap stock performance. Do you have a peer-reviewed research paper you can link? Without a statistically sound paper that's been accepted by the finance theorists, I would be wary of any "hot tips" that you get from news media or investor blogs.

There is a very well known correlation between bonds (not stocks) and interest rate changes in that the duration of a bond fund drives the magnitude of the change in NAV opposite the direction of an interest rate change (e.g., a fund with 6-year duration will gain +6% if the underlying bond rates are subjected to a -1% cut in interest rates).

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Since you're new to this forum (and you didn't cite a desired asset allocation), I'll strongly recommend you take the time to learn about investing by starting with the five introductory topics in Wiki Main Page (left side) under "Getting Started for US Investors":
1) Getting started - Start here.
2) Investment philosophy - Our investment principles.
3) Investing start-up kit - A top-down approach to start investing.
4) Investment policy statement - Identify your investment objectives and how you plan to meet them.
5) Prioritizing investments - Choosing where to save your investing money, such as an employer's retirement plan or a savings account.

That should give you some ideas about planning for your far-off retirement as well as the idea of separating your retirement portfolio from your non-retirement portfolio (at least in a spreadsheet). Your non-retirement portfolio might be for mid-term purchases that are 5-15 years out (like new car, transition to a new locale for career start, down-payment for a home, new/replacement appliances, fancy vacations, etc.). Determining an appropriate target asset allocation for each of your portfolios, based each portfolio's time-frame and your personal risk-tolerance is the roadmap that determines what funds you should likely be holding and tax-efficient placement guides which account types you should hold them in.

[ladycat]

VOO (S&P 500 etf) is an excellent choice.
Because the amount you have available to invest right now is modest, and ETFs can be purchased only in whole shares, you could also consider SPLG (SPDR Portfolio S&P 500 ETF).
VOO is about $500 per share, while SPLG is about $65 per share. You may be able to purchase an amount of shares closer to your target using a lower cost per share ETF.

[rockstar]

VOO and/or I Bonds.

[bonesly]

VOO (S&P 500 etf) is an excellent choice.
Because the amount you have available to invest right now is modest, and ETFs can be purchased only in whole shares, you could also consider SPLG (SPDR Portfolio S&P 500 ETF). VOO is about $500 per share, while SPLG is about $65 per share. You may be able to purchase an amount of shares closer to your target using a lower cost per share ETF.

When ETFs first came about, many brokerages only allowed purchase in whole shares, but that's not the case at Vanguard if you buy Vanguard ETFs, and I'm pretty sure you can purchase fractional shares (your ETF order can be placed in dollars rather than in whole shares) at Fidelity as well. Not sure about Schwab. Those are the three brokerages most often discussed here, but the constraint of only whole shares on ETFs only applies to brokerages that do not allow fractional share purchases.

Edit to add:
Schwab only allows fractional shares from the S&P-500 suite of companies ($5 min slice, $50K limit per transaction, no more than 30 companies). ETFs are limited to whole shares.

Fidelity has $1 minimum slices with no restrictions.

Vangaurd also has $1 minimum slices, but only for Vanguard ETFs.

[ruralavalon]

Thanks.

If I invest in VOO instead of VTI will that be similar in returns and tax consequences?

The tax consequences will be simiar, both are very tax-efficient and good choices for a taxable brokerage account.

[welderwannabe]

At your age, and with a horizon of 20+ years, put 100% of it in FSKAX Fidelity® Total Market Index Fund.

Sure you could do a total market ETF instead, but at a .015% expense ratio for this mutual fund, there is no reason to do so.

Keep it simple. At your age, I dont think you need bonds or money markets. 100% stock. Check back in 20 years when you're 40.