Is an investment account the best choice for me (new guy)

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randydimera
Posts: 59
Joined: Mon Nov 06, 2017 9:28 pm

Re: Is an investment account the best choice for me (new guy)

Post by randydimera » Sat Nov 11, 2017 8:26 am

BL wrote:
Sat Nov 11, 2017 12:39 am
randydimera wrote:
Fri Nov 10, 2017 8:52 pm
Can someone tell me about the federal money market on my account? It keeps giving me the option to send money to it, do I need to do this?
I have the mutual fund division, not the newer brokerage that all new investors are given. However, I do believe you have it go to their default mm and when you see it there online, you can do a transfer (sell and buy) to the desired fund or funds.

Once you have it in the desired fund (be sure you choose online statements so you don't get charged for low account numbers), then perhaps it is time to have Vanguard pull your entire investment from EJ (transfer in kind). Once you have it there, you can sell when you have figured out when it is the best time. Now that you have some clues, you need to research Kiddie tax as well as how income affects you college funding, etc. Always double check what we tell you, so you know it for sure. We are just a bunch of folks who have learned a lot, but may not always be correct, even though we like to pay it back since we have benefited so much from Bogleheads.

I also recommend you get a tax program and play "what-if" games with it with various Capital Gains, etc. You really learn a lot about taxes by doing your own, even if you should decide to have someone prepare it for you. Doing it by paper with forms and Pub 17 or page instructions from IRS.gov is an even better way to learn it.

I suggest you get a recommended book or two such as Boglehead's Guide to Investing and share it with your mother when you have finished it. Here is a free pdf booklet you can start with:
https://www.etf.com/docs/IfYouCan.pdf

Although I like the simplicity of an all-in-one fund such as Life Strategy, it may not be ideal in taxable for the long haul. Perhaps one or 2 stock funds (that would be 3k in each of Total Stock and total international) would be a permanent start, and either bonds or bank CDs for the 20% fixed income would be suitable. That is basically the 3-fund portfolio as is LS. Selling PEPSI when the time is right and buying a total US stock fund would be exchanging a single un-diversified fund for a fund made up of several thousand US companies.
Yeah it would be super cool if I learned how to do my own t axes instead of having an H&R block person do it for me. And yeah I read that book already, great book and I learned a good amount from it, thanks!

student
Posts: 1329
Joined: Fri Apr 03, 2015 6:58 am

Re: Is an investment account the best choice for me (new guy)

Post by student » Sat Nov 11, 2017 8:29 am

randydimera wrote:
Sat Nov 11, 2017 8:26 am
BL wrote:
Sat Nov 11, 2017 12:39 am
randydimera wrote:
Fri Nov 10, 2017 8:52 pm
Can someone tell me about the federal money market on my account? It keeps giving me the option to send money to it, do I need to do this?
I have the mutual fund division, not the newer brokerage that all new investors are given. However, I do believe you have it go to their default mm and when you see it there online, you can do a transfer (sell and buy) to the desired fund or funds.

Once you have it in the desired fund (be sure you choose online statements so you don't get charged for low account numbers), then perhaps it is time to have Vanguard pull your entire investment from EJ (transfer in kind). Once you have it there, you can sell when you have figured out when it is the best time. Now that you have some clues, you need to research Kiddie tax as well as how income affects you college funding, etc. Always double check what we tell you, so you know it for sure. We are just a bunch of folks who have learned a lot, but may not always be correct, even though we like to pay it back since we have benefited so much from Bogleheads.

I also recommend you get a tax program and play "what-if" games with it with various Capital Gains, etc. You really learn a lot about taxes by doing your own, even if you should decide to have someone prepare it for you. Doing it by paper with forms and Pub 17 or page instructions from IRS.gov is an even better way to learn it.

I suggest you get a recommended book or two such as Boglehead's Guide to Investing and share it with your mother when you have finished it. Here is a free pdf booklet you can start with:
https://www.etf.com/docs/IfYouCan.pdf

Although I like the simplicity of an all-in-one fund such as Life Strategy, it may not be ideal in taxable for the long haul. Perhaps one or 2 stock funds (that would be 3k in each of Total Stock and total international) would be a permanent start, and either bonds or bank CDs for the 20% fixed income would be suitable. That is basically the 3-fund portfolio as is LS. Selling PEPSI when the time is right and buying a total US stock fund would be exchanging a single un-diversified fund for a fund made up of several thousand US companies.
Yeah it would be super cool if I learned how to do my own t axes instead of having an H&R block person do it for me. And yeah I read that book already, great book and I learned a good amount from it, thanks!
There is no reason not to do it yourself unless you have a complicated tax situation. I suggest using software.

randydimera
Posts: 59
Joined: Mon Nov 06, 2017 9:28 pm

Re: Is an investment account the best choice for me (new guy)

Post by randydimera » Sat Nov 11, 2017 8:37 am

ruralavalon wrote:
Sat Nov 11, 2017 7:31 am
randydimera wrote:
Fri Nov 10, 2017 11:57 pm
Can I just put down 5k right now and maybe next week put another 5k in? Or is it better to go all in off the bat?
It probably makes no difference.

It was always my policy to invest whenever I had extra money to invest, rather than wait around for a possible better time.

Just go ahead and invest all at once, get it over with and get on with life.
I have a quick question, will I get a dividend check going straight to my bank account every quarter or is that just something that happens for single stocks? Or is it something that I wont see any money unless I sell? Also when I sell do I have to sell it all?

randydimera
Posts: 59
Joined: Mon Nov 06, 2017 9:28 pm

Re: Is an investment account the best choice for me (new guy)

Post by randydimera » Sat Nov 11, 2017 9:03 am

BL wrote:
Sat Nov 11, 2017 12:39 am
randydimera wrote:
Fri Nov 10, 2017 8:52 pm
Can someone tell me about the federal money market on my account? It keeps giving me the option to send money to it, do I need to do this?
I have the mutual fund division, not the newer brokerage that all new investors are given. However, I do believe you have it go to their default mm and when you see it there online, you can do a transfer (sell and buy) to the desired fund or funds.

Once you have it in the desired fund (be sure you choose online statements so you don't get charged for low account numbers), then perhaps it is time to have Vanguard pull your entire investment from EJ (transfer in kind). Once you have it there, you can sell when you have figured out when it is the best time. Now that you have some clues, you need to research Kiddie tax as well as how income affects you college funding, etc. Always double check what we tell you, so you know it for sure. We are just a bunch of folks who have learned a lot, but may not always be correct, even though we like to pay it back since we have benefited so much from Bogleheads.

I also recommend you get a tax program and play "what-if" games with it with various Capital Gains, etc. You really learn a lot about taxes by doing your own, even if you should decide to have someone prepare it for you. Doing it by paper with forms and Pub 17 or page instructions from IRS.gov is an even better way to learn it.

I suggest you get a recommended book or two such as Boglehead's Guide to Investing and share it with your mother when you have finished it. Here is a free pdf booklet you can start with:
https://www.etf.com/docs/IfYouCan.pdf

Although I like the simplicity of an all-in-one fund such as Life Strategy, it may not be ideal in taxable for the long haul. Perhaps one or 2 stock funds (that would be 3k in each of Total Stock and total international) would be a permanent start, and either bonds or bank CDs for the 20% fixed income would be suitable. That is basically the 3-fund portfolio as is LS. Selling PEPSI when the time is right and buying a total US stock fund would be exchanging a single un-diversified fund for a fund made up of several thousand US companies.
Hmm so you think the life strategy fund i was gonna buy into isnt a good idea? What about if i put money in the life strategy and also do what you said about cds and bonds. Even though i didnt know CD's netted 20% unless im confusing something. And yeah ive learned that if i sell pepsi now that would be a bad thing because of the kiddie tax, but anytime next year and ill be just fine. Its a good stock though and it has done a lot for me, its kind of scary to change sometimes but i gotta do whats good for my wallet. I have 10k~ to put down, and im find not super worrying about a retirement fund till 2019 when i start working a lot, i just want to make some good money right now in a safe and effective way. But i know right when I start worth we are starting a roth ASAP and matching employer 401k

student
Posts: 1329
Joined: Fri Apr 03, 2015 6:58 am

Re: Is an investment account the best choice for me (new guy)

Post by student » Sat Nov 11, 2017 9:09 am

randydimera wrote:
Sat Nov 11, 2017 8:37 am
ruralavalon wrote:
Sat Nov 11, 2017 7:31 am
randydimera wrote:
Fri Nov 10, 2017 11:57 pm
Can I just put down 5k right now and maybe next week put another 5k in? Or is it better to go all in off the bat?
It probably makes no difference.

It was always my policy to invest whenever I had extra money to invest, rather than wait around for a possible better time.

Just go ahead and invest all at once, get it over with and get on with life.
I have a quick question, will I get a dividend check going straight to my bank account every quarter or is that just something that happens for single stocks? Or is it something that I wont see any money unless I sell? Also when I sell do I have to sell it all?
You can choose to reinvest the dividend or have it deposit to your account electronically or other arrangements.

student
Posts: 1329
Joined: Fri Apr 03, 2015 6:58 am

Re: Is an investment account the best choice for me (new guy)

Post by student » Sat Nov 11, 2017 9:10 am

randydimera wrote:
Sat Nov 11, 2017 9:03 am
BL wrote:
Sat Nov 11, 2017 12:39 am
randydimera wrote:
Fri Nov 10, 2017 8:52 pm
Can someone tell me about the federal money market on my account? It keeps giving me the option to send money to it, do I need to do this?
I have the mutual fund division, not the newer brokerage that all new investors are given. However, I do believe you have it go to their default mm and when you see it there online, you can do a transfer (sell and buy) to the desired fund or funds.

Once you have it in the desired fund (be sure you choose online statements so you don't get charged for low account numbers), then perhaps it is time to have Vanguard pull your entire investment from EJ (transfer in kind). Once you have it there, you can sell when you have figured out when it is the best time. Now that you have some clues, you need to research Kiddie tax as well as how income affects you college funding, etc. Always double check what we tell you, so you know it for sure. We are just a bunch of folks who have learned a lot, but may not always be correct, even though we like to pay it back since we have benefited so much from Bogleheads.

I also recommend you get a tax program and play "what-if" games with it with various Capital Gains, etc. You really learn a lot about taxes by doing your own, even if you should decide to have someone prepare it for you. Doing it by paper with forms and Pub 17 or page instructions from IRS.gov is an even better way to learn it.

I suggest you get a recommended book or two such as Boglehead's Guide to Investing and share it with your mother when you have finished it. Here is a free pdf booklet you can start with:
https://www.etf.com/docs/IfYouCan.pdf

Although I like the simplicity of an all-in-one fund such as Life Strategy, it may not be ideal in taxable for the long haul. Perhaps one or 2 stock funds (that would be 3k in each of Total Stock and total international) would be a permanent start, and either bonds or bank CDs for the 20% fixed income would be suitable. That is basically the 3-fund portfolio as is LS. Selling PEPSI when the time is right and buying a total US stock fund would be exchanging a single un-diversified fund for a fund made up of several thousand US companies.
Hmm so you think the life strategy fund i was gonna buy into isnt a good idea? What about if i put money in the life strategy and also do what you said about cds and bonds. Even though i didnt know CD's netted 20% unless im confusing something. And yeah ive learned that if i sell pepsi now that would be a bad thing because of the kiddie tax, but anytime next year and ill be just fine. Its a good stock though and it has done a lot for me, its kind of scary to change sometimes but i gotta do whats good for my wallet. I have 10k~ to put down, and im find not super worrying about a retirement fund till 2019 when i start working a lot, i just want to make some good money right now in a safe and effective way. But i know right when I start worth we are starting a roth ASAP and matching employer 401k
It is normal to be scared when you start out. I think a good approach is to pick something board based and forget about it for a couple of years.

randydimera
Posts: 59
Joined: Mon Nov 06, 2017 9:28 pm

Re: Is an investment account the best choice for me (new guy)

Post by randydimera » Sat Nov 11, 2017 9:16 am

student wrote:
Sat Nov 11, 2017 9:09 am
randydimera wrote:
Sat Nov 11, 2017 8:37 am
ruralavalon wrote:
Sat Nov 11, 2017 7:31 am
randydimera wrote:
Fri Nov 10, 2017 11:57 pm
Can I just put down 5k right now and maybe next week put another 5k in? Or is it better to go all in off the bat?
It probably makes no difference.

It was always my policy to invest whenever I had extra money to invest, rather than wait around for a possible better time.

Just go ahead and invest all at once, get it over with and get on with life.
I have a quick question, will I get a dividend check going straight to my bank account every quarter or is that just something that happens for single stocks? Or is it something that I wont see any money unless I sell? Also when I sell do I have to sell it all?
You can choose to reinvest the dividend or have it deposit to your account electronically or other arrangements.
When that option came up I put reinvest the dividend because there was only 2 options. 1 was to deposit money in a money market and the other was reinvest. I didnt see anything about electronically depositing

student
Posts: 1329
Joined: Fri Apr 03, 2015 6:58 am

Re: Is an investment account the best choice for me (new guy)

Post by student » Sat Nov 11, 2017 9:24 am

randydimera wrote:
Sat Nov 11, 2017 9:16 am
student wrote:
Sat Nov 11, 2017 9:09 am
randydimera wrote:
Sat Nov 11, 2017 8:37 am
ruralavalon wrote:
Sat Nov 11, 2017 7:31 am
randydimera wrote:
Fri Nov 10, 2017 11:57 pm
Can I just put down 5k right now and maybe next week put another 5k in? Or is it better to go all in off the bat?
It probably makes no difference.

It was always my policy to invest whenever I had extra money to invest, rather than wait around for a possible better time.

Just go ahead and invest all at once, get it over with and get on with life.
I have a quick question, will I get a dividend check going straight to my bank account every quarter or is that just something that happens for single stocks? Or is it something that I wont see any money unless I sell? Also when I sell do I have to sell it all?
You can choose to reinvest the dividend or have it deposit to your account electronically or other arrangements.
When that option came up I put reinvest the dividend because there was only 2 options. 1 was to deposit money in a money market and the other was reinvest. I didnt see anything about electronically depositing
Some places allow you to choose to have the check sent to you. I guess Vanguard does not allow this.

randydimera
Posts: 59
Joined: Mon Nov 06, 2017 9:28 pm

Re: Is an investment account the best choice for me (new guy)

Post by randydimera » Sat Nov 11, 2017 9:26 am

student wrote:
Sat Nov 11, 2017 9:24 am
randydimera wrote:
Sat Nov 11, 2017 9:16 am
student wrote:
Sat Nov 11, 2017 9:09 am
randydimera wrote:
Sat Nov 11, 2017 8:37 am
ruralavalon wrote:
Sat Nov 11, 2017 7:31 am

It probably makes no difference.

It was always my policy to invest whenever I had extra money to invest, rather than wait around for a possible better time.

Just go ahead and invest all at once, get it over with and get on with life.
I have a quick question, will I get a dividend check going straight to my bank account every quarter or is that just something that happens for single stocks? Or is it something that I wont see any money unless I sell? Also when I sell do I have to sell it all?
You can choose to reinvest the dividend or have it deposit to your account electronically or other arrangements.
When that option came up I put reinvest the dividend because there was only 2 options. 1 was to deposit money in a money market and the other was reinvest. I didnt see anything about electronically depositing
Some places allow you to choose to have the check sent to you. I guess Vanguard does not allow this.
You'd think it would. Maybe im just blind, hopefully someone else can weigh in on what im missing

student
Posts: 1329
Joined: Fri Apr 03, 2015 6:58 am

Re: Is an investment account the best choice for me (new guy)

Post by student » Sat Nov 11, 2017 9:33 am

randydimera wrote:
Sat Nov 11, 2017 9:26 am
student wrote:
Sat Nov 11, 2017 9:24 am
randydimera wrote:
Sat Nov 11, 2017 9:16 am
student wrote:
Sat Nov 11, 2017 9:09 am
randydimera wrote:
Sat Nov 11, 2017 8:37 am


I have a quick question, will I get a dividend check going straight to my bank account every quarter or is that just something that happens for single stocks? Or is it something that I wont see any money unless I sell? Also when I sell do I have to sell it all?
You can choose to reinvest the dividend or have it deposit to your account electronically or other arrangements.
When that option came up I put reinvest the dividend because there was only 2 options. 1 was to deposit money in a money market and the other was reinvest. I didnt see anything about electronically depositing
Some places allow you to choose to have the check sent to you. I guess Vanguard does not allow this.
You'd think it would. Maybe im just blind, hopefully someone else can weigh in on what im missing
According to this, they can send you a check.

https://personal.vanguard.com/us/conten ... omain=true

User avatar
ruralavalon
Posts: 11679
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Is an investment account the best choice for me (new guy)

Post by ruralavalon » Sat Nov 11, 2017 9:37 am

randydimera wrote:
Sat Nov 11, 2017 8:37 am
ruralavalon wrote:
Sat Nov 11, 2017 7:31 am
randydimera wrote:
Fri Nov 10, 2017 11:57 pm
Can I just put down 5k right now and maybe next week put another 5k in? Or is it better to go all in off the bat?
It probably makes no difference.

It was always my policy to invest whenever I had extra money to invest, rather than wait around for a possible better time.

Just go ahead and invest all at once, get it over with and get on with life.
I have a quick question, will I get a dividend check going straight to my bank account every quarter or is that just something that happens for single stocks? Or is it something that I wont see any money unless I sell? Also when I sell do I have to sell it all?
You have the options of automatic reinvestment of dividends, or putting the dividends in a money market fund and paying out to a checking account.

My suggestion is to just automatically reinvest the dividends in the same fund, and so keeping that money invested, growing and compounding rather than spending the money. Reinvested dividends have historically been about half of a fund's total return, about equal to share appreciation.

When you do sell a fund you do not have to sell it all. You don't even have to see whole shares, you can sell part of a share.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

randydimera
Posts: 59
Joined: Mon Nov 06, 2017 9:28 pm

Re: Is an investment account the best choice for me (new guy)

Post by randydimera » Sat Nov 11, 2017 10:09 am

ruralavalon wrote:
Sat Nov 11, 2017 9:37 am
randydimera wrote:
Sat Nov 11, 2017 8:37 am
ruralavalon wrote:
Sat Nov 11, 2017 7:31 am
randydimera wrote:
Fri Nov 10, 2017 11:57 pm
Can I just put down 5k right now and maybe next week put another 5k in? Or is it better to go all in off the bat?
It probably makes no difference.

It was always my policy to invest whenever I had extra money to invest, rather than wait around for a possible better time.

Just go ahead and invest all at once, get it over with and get on with life.
I have a quick question, will I get a dividend check going straight to my bank account every quarter or is that just something that happens for single stocks? Or is it something that I wont see any money unless I sell? Also when I sell do I have to sell it all?
You have the options of automatic reinvestment of dividends, or putting the dividends in a money market fund and paying out to a checking account.

My suggestion is to just automatically reinvest the dividends in the same fund, and so keeping that money invested, growing and compounding rather than spending the money. Reinvested dividends have historically been about half of a fund's total return, about equal to share appreciation.

When you do sell a fund you do not have to sell it all. You don't even have to see whole shares, you can sell part of a share.
Will it still tell me how much is made or how much is reinvested so I can keep track of the growth on the fund? Also when the day comes and I do sell, do I pay based on my tax bracket in taxes? Therefore should I sell before I get my job in 2019? Should I sell in 2018 before April in 2019 if that's where I pay taxes on the returns. Because the whole things gonna get taxes anyway right?
Also, so a money market is a place for returns to be and u can get that sent to your bank if you wanted? I was confused on what that was but that cleared it up thanks

User avatar
ruralavalon
Posts: 11679
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Is an investment account the best choice for me (new guy)

Post by ruralavalon » Sat Nov 11, 2017 10:51 am

randydimera wrote:
Sat Nov 11, 2017 10:09 am
ruralavalon wrote:
Sat Nov 11, 2017 9:37 am
randydimera wrote:
Sat Nov 11, 2017 8:37 am
ruralavalon wrote:
Sat Nov 11, 2017 7:31 am
randydimera wrote:
Fri Nov 10, 2017 11:57 pm
Can I just put down 5k right now and maybe next week put another 5k in? Or is it better to go all in off the bat?
It probably makes no difference.

It was always my policy to invest whenever I had extra money to invest, rather than wait around for a possible better time.

Just go ahead and invest all at once, get it over with and get on with life.
I have a quick question, will I get a dividend check going straight to my bank account every quarter or is that just something that happens for single stocks? Or is it something that I wont see any money unless I sell? Also when I sell do I have to sell it all?
You have the options of automatic reinvestment of dividends, or putting the dividends in a money market fund and paying out to a checking account.

My suggestion is to just automatically reinvest the dividends in the same fund, and so keeping that money invested, growing and compounding rather than spending the money. Reinvested dividends have historically been about half of a fund's total return, about equal to share appreciation.

When you do sell a fund you do not have to sell it all. You don't even have to see whole shares, you can sell part of a share.
Will it still tell me how much is made or how much is reinvested so I can keep track of the growth on the fund? Also when the day comes and I do sell, do I pay based on my tax bracket in taxes? Therefore should I sell before I get my job in 2019? Should I sell in 2018 before April in 2019 if that's where I pay taxes on the returns. Because the whole things gonna get taxes anyway right?
Also, so a money market is a place for returns to be and u can get that sent to your bank if you wanted? I was confused on what that was but that cleared it up thanks
They will tell you how much the dividend is at the same time it is reinvested.

When your income is very low you won't be paying tax on the dividends. Later, when you have significant income such as from a job, you will be taxed on some dividends whether or not they are reinvested or paid to you and spent.

I was referring to a mutual fund like Vanguard Prime Money Market Fund (VMMXX) or Vanguard Federal Money Market Fund (VMFXX), which pay dividend interest similar to a bank account.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

randydimera
Posts: 59
Joined: Mon Nov 06, 2017 9:28 pm

Re: Is an investment account the best choice for me (new guy)

Post by randydimera » Sat Nov 11, 2017 12:51 pm

ruralavalon wrote:
Sat Nov 11, 2017 10:51 am
randydimera wrote:
Sat Nov 11, 2017 10:09 am
ruralavalon wrote:
Sat Nov 11, 2017 9:37 am
randydimera wrote:
Sat Nov 11, 2017 8:37 am
ruralavalon wrote:
Sat Nov 11, 2017 7:31 am

It probably makes no difference.

It was always my policy to invest whenever I had extra money to invest, rather than wait around for a possible better time.

Just go ahead and invest all at once, get it over with and get on with life.
I have a quick question, will I get a dividend check going straight to my bank account every quarter or is that just something that happens for single stocks? Or is it something that I wont see any money unless I sell? Also when I sell do I have to sell it all?
You have the options of automatic reinvestment of dividends, or putting the dividends in a money market fund and paying out to a checking account.

My suggestion is to just automatically reinvest the dividends in the same fund, and so keeping that money invested, growing and compounding rather than spending the money. Reinvested dividends have historically been about half of a fund's total return, about equal to share appreciation.

When you do sell a fund you do not have to sell it all. You don't even have to see whole shares, you can sell part of a share.
Will it still tell me how much is made or how much is reinvested so I can keep track of the growth on the fund? Also when the day comes and I do sell, do I pay based on my tax bracket in taxes? Therefore should I sell before I get my job in 2019? Should I sell in 2018 before April in 2019 if that's where I pay taxes on the returns. Because the whole things gonna get taxes anyway right?
Also, so a money market is a place for returns to be and u can get that sent to your bank if you wanted? I was confused on what that was but that cleared it up thanks
They will tell you how much the dividend is at the same time it is reinvested.

When your income is very low you won't be paying tax on the dividends. Later, when you have significant income such as from a job, you will be taxed on some dividends whether or not they are reinvested or paid to you and spent.

I was referring to a mutual fund like Vanguard Prime Money Market Fund (VMMXX) or Vanguard Federal Money Market Fund (VMFXX), which pay dividend interest similar to a bank account.
So VMMXX and VMFXX is where money can go if you click the option and that acts as a bank account? So money doesn't go back to your actual bank account just to the money market funds? So if I want the money in person for a purchase or so on, there will be an option to have money market funds sent to my actual checking account at my actual bank?
Sorry if I'm confusing jus trying to understand

User avatar
BL
Posts: 7334
Joined: Sun Mar 01, 2009 2:28 pm

Re: Is an investment account the best choice for me (new guy)

Post by BL » Sat Nov 11, 2017 1:28 pm

randydimera wrote:
Sat Nov 11, 2017 9:03 am
BL wrote:
Sat Nov 11, 2017 12:39 am
randydimera wrote:
Fri Nov 10, 2017 8:52 pm
Can someone tell me about the federal money market on my account? It keeps giving me the option to send money to it, do I need to do this?
I have the mutual fund division, not the newer brokerage that all new investors are given. However, I do believe you have it go to their default mm and when you see it there online, you can do a transfer (sell and buy) to the desired fund or funds.

Once you have it in the desired fund (be sure you choose online statements so you don't get charged for low account numbers), then perhaps it is time to have Vanguard pull your entire investment from EJ (transfer in kind). Once you have it there, you can sell when you have figured out when it is the best time. Now that you have some clues, you need to research Kiddie tax as well as how income affects you college funding, etc. Always double check what we tell you, so you know it for sure. We are just a bunch of folks who have learned a lot, but may not always be correct, even though we like to pay it back since we have benefited so much from Bogleheads.

I also recommend you get a tax program and play "what-if" games with it with various Capital Gains, etc. You really learn a lot about taxes by doing your own, even if you should decide to have someone prepare it for you. Doing it by paper with forms and Pub 17 or page instructions from IRS.gov is an even better way to learn it.

I suggest you get a recommended book or two such as Boglehead's Guide to Investing and share it with your mother when you have finished it. Here is a free pdf booklet you can start with:
https://www.etf.com/docs/IfYouCan.pdf

Although I like the simplicity of an all-in-one fund such as Life Strategy, it may not be ideal in taxable for the long haul. Perhaps one or 2 stock funds (that would be 3k in each of Total Stock and total international) would be a permanent start, and either bonds or bank CDs for the 20% fixed income bond part would be suitable. That is basically the 3-fund portfolio as is LS. Selling PEPSI when the time is right and buying a total US stock fund would be exchanging a single un-diversified fund for a fund made up of several thousand US companies.
Hmm so you think the life strategy fund i was gonna buy into isnt a good idea? What about if i put money in the life strategy and also do what you said about cds and bonds. Even though i didnt know CD's netted 20% unless im confusing something. And yeah ive learned that if i sell pepsi now that would be a bad thing because of the kiddie tax, but anytime next year and ill be just fine. Its a good stock though and it has done a lot for me, its kind of scary to change sometimes but i gotta do whats good for my wallet. I have 10k~ to put down, and im find not super worrying about a retirement fund till 2019 when i start working a lot, i just want to make some good money right now in a safe and effective way. But i know right when I start worth we are starting a roth ASAP and matching employer 401k
A couple of comments/corrections.
First, the 20% in fixed income is the amount suggested for bonds, which is fixed income, but so is CD, money market, savings accounts, etc. No, you don't get anywhere near that for income from bonds/CDs, and rarely from stock funds, either.

I probably added confusion by suggesting other than LS. Until you start earning quite a bit of money, LS is fine. There would probably be minimal tax cost to sell within a few years, so it would be fine to start out with it and think about it when you are approaching a higher tax bracket (25-28% tax). Still, I see no harm in buying just Total Stock market with 3-5k and putting the rest into (breakable) CDs at Ally Bank, for example, except for keeping a thousand or whatever in your local bank for super quick access in emergencies. That would give you a chance to watch what happens to a stock fund and see how you feel about putting more into it after seeing it crash sometime. Not sure how closely you have been watching PEPSI go up and down. Selling PEPSI might be more of a concern if you wait until you reach the higher tax bracket since you have a lot of that to pay 15% CG tax on.

PEPSI is great, but anything can happen to an individual company to bring it to its knees. Just consider Enron, which was going great until it wasn't. Some oil companies had an eco disaster, and had to pay out big reparations. The economy, a public relations nightmare, a fantastic new competitor, Coke suddenly hits the jackpot, any un-imagined event or circumstance could hit an individual company. That is why Bogleheads recommend an index fund that has thousands of companies and where one disaster won't take it down nearly so much. Even so, a stock market crash could hit and knock fund values in half and not recover for a few years. Investing is not a sure thing, and high gains could mean high risk. Still, it is one of the few ways to grow your money, and most of us feel some risk is worth it. Just don't plan on getting rich from it, because then you are probably taking to much risk (meaning you could lose a lot!).

randydimera
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Re: Is an investment account the best choice for me (new guy)

Post by randydimera » Sat Nov 11, 2017 2:07 pm

BL wrote:
Sat Nov 11, 2017 1:28 pm
randydimera wrote:
Sat Nov 11, 2017 9:03 am
BL wrote:
Sat Nov 11, 2017 12:39 am
randydimera wrote:
Fri Nov 10, 2017 8:52 pm
Can someone tell me about the federal money market on my account? It keeps giving me the option to send money to it, do I need to do this?
I have the mutual fund division, not the newer brokerage that all new investors are given. However, I do believe you have it go to their default mm and when you see it there online, you can do a transfer (sell and buy) to the desired fund or funds.

Once you have it in the desired fund (be sure you choose online statements so you don't get charged for low account numbers), then perhaps it is time to have Vanguard pull your entire investment from EJ (transfer in kind). Once you have it there, you can sell when you have figured out when it is the best time. Now that you have some clues, you need to research Kiddie tax as well as how income affects you college funding, etc. Always double check what we tell you, so you know it for sure. We are just a bunch of folks who have learned a lot, but may not always be correct, even though we like to pay it back since we have benefited so much from Bogleheads.

I also recommend you get a tax program and play "what-if" games with it with various Capital Gains, etc. You really learn a lot about taxes by doing your own, even if you should decide to have someone prepare it for you. Doing it by paper with forms and Pub 17 or page instructions from IRS.gov is an even better way to learn it.

I suggest you get a recommended book or two such as Boglehead's Guide to Investing and share it with your mother when you have finished it. Here is a free pdf booklet you can start with:
https://www.etf.com/docs/IfYouCan.pdf

Although I like the simplicity of an all-in-one fund such as Life Strategy, it may not be ideal in taxable for the long haul. Perhaps one or 2 stock funds (that would be 3k in each of Total Stock and total international) would be a permanent start, and either bonds or bank CDs for the 20% fixed income bond part would be suitable. That is basically the 3-fund portfolio as is LS. Selling PEPSI when the time is right and buying a total US stock fund would be exchanging a single un-diversified fund for a fund made up of several thousand US companies.
Hmm so you think the life strategy fund i was gonna buy into isnt a good idea? What about if i put money in the life strategy and also do what you said about cds and bonds. Even though i didnt know CD's netted 20% unless im confusing something. And yeah ive learned that if i sell pepsi now that would be a bad thing because of the kiddie tax, but anytime next year and ill be just fine. Its a good stock though and it has done a lot for me, its kind of scary to change sometimes but i gotta do whats good for my wallet. I have 10k~ to put down, and im find not super worrying about a retirement fund till 2019 when i start working a lot, i just want to make some good money right now in a safe and effective way. But i know right when I start worth we are starting a roth ASAP and matching employer 401k
A couple of comments/corrections.
First, the 20% in fixed income is the amount suggested for bonds, which is fixed income, but so is CD, money market, savings accounts, etc. No, you don't get anywhere near that for income from bonds/CDs, and rarely from stock funds, either.

I probably added confusion by suggesting other than LS. Until you start earning quite a bit of money, LS is fine. There would probably be minimal tax cost to sell within a few years, so it would be fine to start out with it and think about it when you are approaching a higher tax bracket (25-28% tax). Still, I see no harm in buying just Total Stock market with 3-5k and putting the rest into (breakable) CDs at Ally Bank, for example, except for keeping a thousand or whatever in your local bank for super quick access in emergencies. That would give you a chance to watch what happens to a stock fund and see how you feel about putting more into it after seeing it crash sometime. Not sure how closely you have been watching PEPSI go up and down. Selling PEPSI might be more of a concern if you wait until you reach the higher tax bracket since you have a lot of that to pay 15% CG tax on.

PEPSI is great, but anything can happen to an individual company to bring it to its knees. Just consider Enron, which was going great until it wasn't. Some oil companies had an eco disaster, and had to pay out big reparations. The economy, a public relations nightmare, a fantastic new competitor, Coke suddenly hits the jackpot, any un-imagined event or circumstance could hit an individual company. That is why Bogleheads recommend an index fund that has thousands of companies and where one disaster won't take it down nearly so much. Even so, a stock market crash could hit and knock fund values in half and not recover for a few years. Investing is not a sure thing, and high gains could mean high risk. Still, it is one of the few ways to grow your money, and most of us feel some risk is worth it. Just don't plan on getting rich from it, because then you are probably taking to much risk (meaning you could lose a lot!).
Thank you so much for your input and I understand most of what you say. I'm gonna sell Pepsi next year because I turn 24 and therefore won't be in the kiddie tax anymore right? So I was gonna sell it at the first of the year, which I cna do right because you oonly gst taxed at the end of the year with the tax for it? Or would I get taxed in 2019 for my 2018 year? Just a bit confused on that.
Also I am a bit confused on what you mean by a total stock market. I was gonna put 8-10k in LS and I have a few thousand remaining I can experiment with. Couldn't I put a couple thousand, maybe 3k in whatever it is you are suggesting once I understand it and just have LS and the stock you're suggesting? Or would that mess up the whole diversity in my portfolio?
But yeah I plan on getting rid of Pepsi next year because I'll be 24 and can sell all of it and pay like no tax!
Sorry for a lot of questions, Ty again for being patient

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Re: Is an investment account the best choice for me (new guy)

Post by ruralavalon » Sat Nov 11, 2017 2:25 pm

Please don't "experiment", that can be very risky.

When you have sold the Pepsi stock, I suggest that you keep it simple and stick with the very broadly diversified, low expense ratio Vanguard LifeStrategy Growth Fund (VASGX) ER 0.15%. I suggest that you simply add more to that fund.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: Is an investment account the best choice for me (new guy)

Post by randydimera » Sat Nov 11, 2017 2:46 pm

ruralavalon wrote:
Sat Nov 11, 2017 2:25 pm
Please don't "experiment", that can be very risky.

When you have sold the Pepsi stock, I suggest that you keep it simple and stick with the very broadly diversified, low expense ratio Vanguard LifeStrategy Growth Fund (VASGX) ER 0.15%. I suggest that you simply add more to that fund.
What about taxes on it, should I be worried about that? For the fund atleast

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Re: Is an investment account the best choice for me (new guy)

Post by ruralavalon » Sat Nov 11, 2017 3:03 pm

randydimera wrote:
Sat Nov 11, 2017 2:46 pm
ruralavalon wrote:
Sat Nov 11, 2017 2:25 pm
Please don't "experiment", that can be very risky.

When you have sold the Pepsi stock, I suggest that you keep it simple and stick with the very broadly diversified, low expense ratio Vanguard LifeStrategy Growth Fund (VASGX) ER 0.15%. I suggest that you simply add more to that fund.
What about taxes on it, should I be worried about that? For the fund atleast
What was your tax bracket, both federal and state, for 2015 and 2016?

From what you describe (about your graduation date, summer internship and then graduate school), your tax bracket will be very low for 2017 and 2018, then relatively low for 2019. Correct?

Here are calculators you can use to determine/estimate your federal tax bracket. First determine your "taxable income". money chimp, "Tax Calculator". Then use your "taxable income" to determine your "tax bracket". moneychimp, "Federal Tax Brackets".
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

randydimera
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Re: Is an investment account the best choice for me (new guy)

Post by randydimera » Sat Nov 11, 2017 3:22 pm

ruralavalon wrote:
Sat Nov 11, 2017 3:03 pm
randydimera wrote:
Sat Nov 11, 2017 2:46 pm
ruralavalon wrote:
Sat Nov 11, 2017 2:25 pm
Please don't "experiment", that can be very risky.

When you have sold the Pepsi stock, I suggest that you keep it simple and stick with the very broadly diversified, low expense ratio Vanguard LifeStrategy Growth Fund (VASGX) ER 0.15%. I suggest that you simply add more to that fund.
What about taxes on it, should I be worried about that? For the fund atleast
What was your tax bracket, both federal and state, for 2015 and 2016?

From what you describe (about your graduation date, summer internship and then graduate school), your tax bracket will be very low for 2017 and 2018, then relatively low for 2019. Correct?

Here are calculators you can use to determine/estimate your federal tax bracket. First determine your "taxable income". money chimp, "Tax Calculator". Then use your "taxable income" to determine your "tax bracket". moneychimp, "Federal Tax Brackets".
My tax bracket has always been the lowest since I hagent ever made more than like 5k in a year, maybe 8k. Idk about relatively low for 2019, depending what I start at I don't see it being less than 40k with a masters. Idk what the cut off point is though like is it when I start maki my money or when the tax season comes around?

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BL
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Re: Is an investment account the best choice for me (new guy)

Post by BL » Sat Nov 11, 2017 3:34 pm

Also I am a bit confused on what you mean by a total stock market.
This is the biggest of the 4 funds in LS.

Vanguard Total Stock Market Index Fund Investor Shares (VTSMX)
https://personal.vanguard.com/us/funds/ ... undId=0085

I value the advice of ruralavalon and suggest you do also. None of us know you, or each other, and we all make assumptions that may or may not be totally correct. Avoiding the big mistakes is the most important, and most suggestions on BHs will keep you away from those.
A favorite expression I see here is something like "there are many roads to Dublin" meaning that there may be more than one way to get it done.

As for taxes, all income in a year counts and the 1040 is filed the following year before April 15th. The 15% tax bracket is about 37K taxable income, plus you get one exemption and standard deduction of over 10k per person total. If you get a job later in year after finishing college, you probably won't get near that nearly 50k the first year you work so you would have room for some Capital Gains in there as well. You can Google "tax brackets", "standard deduction" and "personal exemption" and get the exact numbers. I still recommend looking at free Taxcaster and especially getting a tax program on sale and practice.

randydimera
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Re: Is an investment account the best choice for me (new guy)

Post by randydimera » Sat Nov 11, 2017 11:39 pm

Would there ever be a reason to invest in Vanguard Total Stock Mkt Idx Inv instead of the Vanguard LifeStrategy Growth Fund (VASGX) ER 0.15%? Since the number 1 stock fund in VASGX is (VTSMX), when would it be apropriate to put money in VASGX instead of VTSMX? I compared them on the vanguard website and VTSMX just has a higher NAV which i looked up but i am a little confused on what it is and it just has a bit higher numbers from what I see. Anyways is there ever a time that is better? Or even what about VTSAX? (Vanguard Total Stock Mkt Idx Adm) I looked on morning star and it looked pretty strong. Im just researching btw not doing anything without asking first

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Re: Is an investment account the best choice for me (new guy)

Post by grabiner » Sun Nov 12, 2017 12:19 am

randydimera wrote:
Sat Nov 11, 2017 11:39 pm
Would there ever be a reason to invest in Vanguard Total Stock Mkt Idx Inv instead of the Vanguard LifeStrategy Growth Fund (VASGX) ER 0.15%? Since the number 1 stock fund in VASGX is (VTSMX), when would it be apropriate to put money in VASGX instead of VTSMX?
It depends on whether you want a portfolio which manages itself, or to manage your portfolio on your own. If you have several accounts, you can either put them all in all-in-one funds, or manage them separately so that you can choose the best options in each.

A further advantage of holding the individual funds in a taxable account is that you can change your allocation freely. If you buy LifeStrategy Growth, and then decide that you want to hold fewer bonds, or a different type of bonds, or bonds in a different account, you cannot sell just the bonds; you have to sell the whole fund and pay capital-gains tax on the stock gain.
I compared them on the vanguard website and VTSMX just has a higher NAV which i looked up but i am a little confused on what it is and it just has a bit higher numbers from what I see.
The NAV is not relevant for comparing funds. Each fund is sliced into pieces, and the NAV identifies the size of each piece. If the market rises by 10%, a fund with an NAV of $20 will rise to $22, and a fund with an NAV of $40 will rise to $44, so you get the same gain whether you have shares worth $20 or half as many worth $44.
Or even what about VTSAX? (Vanguard Total Stock Mkt Idx Adm) I looked on morning star and it looked pretty strong.
The Admiral share class is better than the Investor share class of the same fund; it has the same holdings, and thus participates in the same market movements, but with lower expenses. If you start with $10K in the fund, you will immediately get Admiral shares; if you have less than $10K, but the balance grows over $10K later, Vanguard will upgrade you, so that you get the benefit of the lower expenses.
David Grabiner

randydimera
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Re: Is an investment account the best choice for me (new guy)

Post by randydimera » Sun Nov 12, 2017 12:30 am

grabiner wrote:
Sun Nov 12, 2017 12:19 am
randydimera wrote:
Sat Nov 11, 2017 11:39 pm
Would there ever be a reason to invest in Vanguard Total Stock Mkt Idx Inv instead of the Vanguard LifeStrategy Growth Fund (VASGX) ER 0.15%? Since the number 1 stock fund in VASGX is (VTSMX), when would it be apropriate to put money in VASGX instead of VTSMX?
It depends on whether you want a portfolio which manages itself, or to manage your portfolio on your own. If you have several accounts, you can either put them all in all-in-one funds, or manage them separately so that you can choose the best options in each.

A further advantage of holding the individual funds in a taxable account is that you can change your allocation freely. If you buy LifeStrategy Growth, and then decide that you want to hold fewer bonds, or a different type of bonds, or bonds in a different account, you cannot sell just the bonds; you have to sell the whole fund and pay capital-gains tax on the stock gain.
I compared them on the vanguard website and VTSMX just has a higher NAV which i looked up but i am a little confused on what it is and it just has a bit higher numbers from what I see.
The NAV is not relevant for comparing funds. Each fund is sliced into pieces, and the NAV identifies the size of each piece. If the market rises by 10%, a fund with an NAV of $20 will rise to $22, and a fund with an NAV of $40 will rise to $44, so you get the same gain whether you have shares worth $20 or half as many worth $44.
Or even what about VTSAX? (Vanguard Total Stock Mkt Idx Adm) I looked on morning star and it looked pretty strong.
The Admiral share class is better than the Investor share class of the same fund; it has the same holdings, and thus participates in the same market movements, but with lower expenses. If you start with $10K in the fund, you will immediately get Admiral shares; if you have less than $10K, but the balance grows over $10K later, Vanguard will upgrade you, so that you get the benefit of the lower expenses.
This is a tough decision because I would like to have it done for me so I dont mess up, but I could potentially make more money in a fund like VTSAX. Also I looked up admiral shares and was a bit confused on what that is. I do have 10k to use, but thats about it so i could never have a true diverified portfolio until I got more money to get international stuff and that would only give me 2 stocks and isnt that super risky?

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Re: Is an investment account the best choice for me (new guy)

Post by ruralavalon » Sun Nov 12, 2017 7:07 am

randydimera wrote:
Sat Nov 11, 2017 11:39 pm
Would there ever be a reason to invest in Vanguard Total Stock Mkt Idx Inv instead of the Vanguard LifeStrategy Growth Fund (VASGX) ER 0.15%? Since the number 1 stock fund in VASGX is (VTSMX), when would it be apropriate to put money in VASGX instead of VTSMX? I compared them on the vanguard website and VTSMX just has a higher NAV which i looked up but i am a little confused on what it is and it just has a bit higher numbers from what I see. Anyways is there ever a time that is better? Or even what about VTSAX? (Vanguard Total Stock Mkt Idx Adm) I looked on morning star and it looked pretty strong. Im just researching btw not doing anything without asking first
Right now and for the next few years a single very diversified balanced fund like Vanguard LifeStrategy Growth (VASGX) ER 0.15% makes sense. You are just starting, have a relatively small amount invested in just one account, and no employment income. Keep it simple, with a single very diversified balanced fund asset allocation decisions are done for you, keep your mind on your studies.

In a couple of years (2019 or so) when you also have an IRA or a work-based account (401k, 403b, 457, TSP, etc.), or both, have more invested, and are contributing on a regular basis, you will probably want to switch from a single balanced fund to investing in a group of 3 or more individual index funds like Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04% and others. That will let you choose the specific asset allocation that you wish, achieve an average expense ratio that's a little lower, and most important work around what is offered in your work-based plan.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: Is an investment account the best choice for me (new guy)

Post by BL » Sun Nov 12, 2017 8:59 am

Well, there you have advice from 2 different experts here!
The advice is basically the same:
Simplicity: get a LS fund and forget about it while you complete your studies, then look more closely at the 3-fund portfolio when you have a 401k, Roth IRA, and perhaps a taxable account.
or
More complicated, less diversified: Get started immediately with the main component of the LS fund, which together with your CDs or other fixed income, cover the 2 main parts of LS, but lacks international for now (also international bond, which many of us don't bother with unless they are within a balanced fund such as LS.) OK, you could even do 3k total international and 5k total stock market, but now you are throwing out simplicity for balance. None of these are bad, but as a student, you need to concentrate on your studies as any gains or losses on this investment are minor compared to the important job you need to concentrate on now.

As for differences in ER, you can calculate the % of 10k for any choice, and you will find just a few dollars difference between them, which is probably less than the NAV changes most days. When we start paying 1% (instead of 0.1%), then we are a bit more concerned, but only if more dollars and/or more years are involved.

Differences in NAV make no difference in the choices, unless perhaps you are buying ETFs where you buy a full share at a time and leftover money stays in a money market fund. Even there it is not really worth considering. Also, past performance doesn't necessarily predict future performance. And you can't really compare unlike funds, such as those with bonds or international with a single US stock fund.

The "total" funds, which includes LS, are pretty complete, and have a good variety of all types of companies, so you don't need to go looking for any more funds to "complete" your investment.

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Re: Is an investment account the best choice for me (new guy)

Post by grabiner » Sun Nov 12, 2017 9:42 am

randydimera wrote:
Sun Nov 12, 2017 12:30 am
grabiner wrote:
Sun Nov 12, 2017 12:19 am
The Admiral share class is better than the Investor share class of the same fund; it has the same holdings, and thus participates in the same market movements, but with lower expenses. If you start with $10K in the fund, you will immediately get Admiral shares; if you have less than $10K, but the balance grows over $10K later, Vanguard will upgrade you, so that you get the benefit of the lower expenses.
This is a tough decision because I would like to have it done for me so I dont mess up, but I could potentially make more money in a fund like VTSAX. Also I looked up admiral shares and was a bit confused on what that is. I do have 10k to use, but thats about it so i could never have a true diverified portfolio until I got more money to get international stuff and that would only give me 2 stocks and isnt that super risky?
If you are going to hold individual funds, then you can start with the Investor shares; Vanguard has a $3K minimum per fund. Your accounts will probably keep growing, and when your balance reaches $10K (in the index funds), the Investor shares convert to Admiral, at no cost to you. It isn't worth distorting your portfolio to have $10K in a fund, as the cost difference between Investor and Admiral shares on a $5K investment is usually about $5.
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Re: Is an investment account the best choice for me (new guy)

Post by PhysicsTeacher » Sun Nov 12, 2017 1:21 pm

randydimera wrote:
Sun Nov 12, 2017 12:30 am
grabiner wrote:
Sun Nov 12, 2017 12:19 am
randydimera wrote:
Sat Nov 11, 2017 11:39 pm
Would there ever be a reason to invest in Vanguard Total Stock Mkt Idx Inv instead of the Vanguard LifeStrategy Growth Fund (VASGX) ER 0.15%? Since the number 1 stock fund in VASGX is (VTSMX), when would it be apropriate to put money in VASGX instead of VTSMX?
It depends on whether you want a portfolio which manages itself, or to manage your portfolio on your own. If you have several accounts, you can either put them all in all-in-one funds, or manage them separately so that you can choose the best options in each.

A further advantage of holding the individual funds in a taxable account is that you can change your allocation freely. If you buy LifeStrategy Growth, and then decide that you want to hold fewer bonds, or a different type of bonds, or bonds in a different account, you cannot sell just the bonds; you have to sell the whole fund and pay capital-gains tax on the stock gain.
I compared them on the vanguard website and VTSMX just has a higher NAV which i looked up but i am a little confused on what it is and it just has a bit higher numbers from what I see.
The NAV is not relevant for comparing funds. Each fund is sliced into pieces, and the NAV identifies the size of each piece. If the market rises by 10%, a fund with an NAV of $20 will rise to $22, and a fund with an NAV of $40 will rise to $44, so you get the same gain whether you have shares worth $20 or half as many worth $44.
Or even what about VTSAX? (Vanguard Total Stock Mkt Idx Adm) I looked on morning star and it looked pretty strong.
The Admiral share class is better than the Investor share class of the same fund; it has the same holdings, and thus participates in the same market movements, but with lower expenses. If you start with $10K in the fund, you will immediately get Admiral shares; if you have less than $10K, but the balance grows over $10K later, Vanguard will upgrade you, so that you get the benefit of the lower expenses.
This is a tough decision because I would like to have it done for me so I dont mess up, but I could potentially make more money in a fund like VTSAX. Also I looked up admiral shares and was a bit confused on what that is. I do have 10k to use, but thats about it so i could never have a true diverified portfolio until I got more money to get international stuff and that would only give me 2 stocks and isnt that super risky?
If you own the Vanguard Total Stock Market Index Fund (with either investor or admiral shares), you actually own stock in 3626 different U.S. companies. That's pretty diversified! There's a case to be made for the additional diversification benefits of owning international as well as domestic stocks, but you'll discover that there's vigorous debate on this forum over the optimal amount of international exposure in your portfolio. There's nothing wrong with starting out with VTSMX or VTSAX now and then adding international later on.

That said, VASGX seems like a good choice for this phase of your life. You'll get the benefits of a well-diversified portfolio suitable for your age at a very reasonable expense ratio. It doesn't sound as though you are likely to be in a high tax bracket in the next few years so there should not be a major impediment to making changes if desired as you learn more about investing, get a job with a 401(k), etc. Have you looked at Vanguard's investor questionnaire (https://personal.vanguard.com/us/FundsInvQuestionnaire)? While there is no substitute for actually experiencing a bear market, this can help you get some idea of your risk tolerance.

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Re: Is an investment account the best choice for me (new guy)

Post by randydimera » Sun Nov 12, 2017 1:38 pm

ruralavalon wrote:
Sun Nov 12, 2017 7:07 am
randydimera wrote:
Sat Nov 11, 2017 11:39 pm
Would there ever be a reason to invest in Vanguard Total Stock Mkt Idx Inv instead of the Vanguard LifeStrategy Growth Fund (VASGX) ER 0.15%? Since the number 1 stock fund in VASGX is (VTSMX), when would it be apropriate to put money in VASGX instead of VTSMX? I compared them on the vanguard website and VTSMX just has a higher NAV which i looked up but i am a little confused on what it is and it just has a bit higher numbers from what I see. Anyways is there ever a time that is better? Or even what about VTSAX? (Vanguard Total Stock Mkt Idx Adm) I looked on morning star and it looked pretty strong. Im just researching btw not doing anything without asking first
Right now and for the next few years a single very diversified balanced fund like Vanguard LifeStrategy Growth (VASGX) ER 0.15% makes sense. You are just starting, have a relatively small amount invested in just one account, and no employment income. Keep it simple, with a single very diversified balanced fund asset allocation decisions are done for you, keep your mind on your studies.

In a couple of years (2019 or so) when you also have an IRA or a work-based account (401k, 403b, 457, TSP, etc.), or both, have more invested, and are contributing on a regular basis, you will probably want to switch from a single balanced fund to investing in a group of 3 or more individual index funds like Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04% and others. That will let you choose the specific asset allocation that you wish, achieve an average expense ratio that's a little lower, and most important work around what is offered in your work-based plan.
So you recommend to keep investing revenue into VASGX for the next few years, then sell and put it in a individual index bunds like 3 or 4 for a diversified portfolio and just let it go?

randydimera
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Joined: Mon Nov 06, 2017 9:28 pm

Re: Is an investment account the best choice for me (new guy)

Post by randydimera » Sun Nov 12, 2017 1:40 pm

PhysicsTeacher wrote:
Sun Nov 12, 2017 1:21 pm
randydimera wrote:
Sun Nov 12, 2017 12:30 am
grabiner wrote:
Sun Nov 12, 2017 12:19 am
randydimera wrote:
Sat Nov 11, 2017 11:39 pm
Would there ever be a reason to invest in Vanguard Total Stock Mkt Idx Inv instead of the Vanguard LifeStrategy Growth Fund (VASGX) ER 0.15%? Since the number 1 stock fund in VASGX is (VTSMX), when would it be apropriate to put money in VASGX instead of VTSMX?
It depends on whether you want a portfolio which manages itself, or to manage your portfolio on your own. If you have several accounts, you can either put them all in all-in-one funds, or manage them separately so that you can choose the best options in each.

A further advantage of holding the individual funds in a taxable account is that you can change your allocation freely. If you buy LifeStrategy Growth, and then decide that you want to hold fewer bonds, or a different type of bonds, or bonds in a different account, you cannot sell just the bonds; you have to sell the whole fund and pay capital-gains tax on the stock gain.
I compared them on the vanguard website and VTSMX just has a higher NAV which i looked up but i am a little confused on what it is and it just has a bit higher numbers from what I see.
The NAV is not relevant for comparing funds. Each fund is sliced into pieces, and the NAV identifies the size of each piece. If the market rises by 10%, a fund with an NAV of $20 will rise to $22, and a fund with an NAV of $40 will rise to $44, so you get the same gain whether you have shares worth $20 or half as many worth $44.
Or even what about VTSAX? (Vanguard Total Stock Mkt Idx Adm) I looked on morning star and it looked pretty strong.
The Admiral share class is better than the Investor share class of the same fund; it has the same holdings, and thus participates in the same market movements, but with lower expenses. If you start with $10K in the fund, you will immediately get Admiral shares; if you have less than $10K, but the balance grows over $10K later, Vanguard will upgrade you, so that you get the benefit of the lower expenses.
This is a tough decision because I would like to have it done for me so I dont mess up, but I could potentially make more money in a fund like VTSAX. Also I looked up admiral shares and was a bit confused on what that is. I do have 10k to use, but thats about it so i could never have a true diverified portfolio until I got more money to get international stuff and that would only give me 2 stocks and isnt that super risky?
If you own the Vanguard Total Stock Market Index Fund (with either investor or admiral shares), you actually own stock in 3626 different U.S. companies. That's pretty diversified! There's a case to be made for the additional diversification benefits of owning international as well as domestic stocks, but you'll discover that there's vigorous debate on this forum over the optimal amount of international exposure in your portfolio. There's nothing wrong with starting out with VTSMX or VTSAX now and then adding international later on.

That said, VASGX seems like a good choice for this phase of your life. You'll get the benefits of a well-diversified portfolio suitable for your age at a very reasonable expense ratio. It doesn't sound as though you are likely to be in a high tax bracket in the next few years so there should not be a major impediment to making changes if desired as you learn more about investing, get a job with a 401(k), etc. Have you looked at Vanguard's investor questionnaire (https://personal.vanguard.com/us/FundsInvQuestionnaire)? While there is no substitute for actually experiencing a bear market, this can help you get some idea of your risk tolerance.
I appreciate the input. I hope I am not coming off as greedy but i trying to build some cash, thats why the VASGX looked good to me because of the 80% stocks and it doesnt look like ill get screwed over super hard if the market goes kerplunk. And always hold too right?

PhysicsTeacher
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Re: Is an investment account the best choice for me (new guy)

Post by PhysicsTeacher » Sun Nov 12, 2017 6:36 pm

Are you prepared to watch the value of your fund drop by 40% in the next recession? That's a possibility you need to be aware of if you want to invest in a fund with an 80:20 stock to bond ratio. In the long run, you are likely to end up with more money than if you opted for a more conservative allocation with a greater percentage of bonds, but you have to be prepared to hold on through volatility.

randydimera
Posts: 59
Joined: Mon Nov 06, 2017 9:28 pm

Re: Is an investment account the best choice for me (new guy)

Post by randydimera » Sun Nov 12, 2017 7:51 pm

PhysicsTeacher wrote:
Sun Nov 12, 2017 6:36 pm
Are you prepared to watch the value of your fund drop by 40% in the next recession? That's a possibility you need to be aware of if you want to invest in a fund with an 80:20 stock to bond ratio. In the long run, you are likely to end up with more money than if you opted for a more conservative allocation with a greater percentage of bonds, but you have to be prepared to hold on through volatility.
Yep, i learned from you guys to just hold it and everything will balance itself out in the end. But I dont think ill be keeping my money in it all that long, only a few years then I was told to look at something else like a 3 fund portfolio

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ruralavalon
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Re: Is an investment account the best choice for me (new guy)

Post by ruralavalon » Mon Nov 13, 2017 9:47 am

randydimera wrote:
Sun Nov 12, 2017 1:38 pm
ruralavalon wrote:
Sun Nov 12, 2017 7:07 am
randydimera wrote:
Sat Nov 11, 2017 11:39 pm
Would there ever be a reason to invest in Vanguard Total Stock Mkt Idx Inv instead of the Vanguard LifeStrategy Growth Fund (VASGX) ER 0.15%? Since the number 1 stock fund in VASGX is (VTSMX), when would it be apropriate to put money in VASGX instead of VTSMX? I compared them on the vanguard website and VTSMX just has a higher NAV which i looked up but i am a little confused on what it is and it just has a bit higher numbers from what I see. Anyways is there ever a time that is better? Or even what about VTSAX? (Vanguard Total Stock Mkt Idx Adm) I looked on morning star and it looked pretty strong. Im just researching btw not doing anything without asking first
Right now and for the next few years a single very diversified balanced fund like Vanguard LifeStrategy Growth (VASGX) ER 0.15% makes sense. You are just starting, have a relatively small amount invested in just one account, and no employment income. Keep it simple, with a single very diversified balanced fund asset allocation decisions are done for you, keep your mind on your studies.

In a couple of years (2019 or so) [emphasis added] when you also have an IRA or a work-based account (401k, 403b, 457, TSP, etc.), or both, have more invested, and are contributing on a regular basis, you will probably want to switch from a single balanced fund to investing in a group of 3 or more individual index funds [emphasis added] like Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04% and others. That will let you choose the specific asset allocation that you wish, achieve an average expense ratio that's a little lower, and most important work around what is offered in your work-based plan. [emphasis added].
So you recommend to keep investing revenue into VASGX for the next few years, then sell and put it in a individual index bunds like 3 or 4 for a diversified portfolio and just let it go?
I suggest continuing to contribute to Vanguard LifeStrategy Growth (VASGX) ER 0.15% for the next couple of years, and then considering a switch to perhaps three index funds.

In 2019 when your finish your Masters and get a full time job in your field, your employer will probably offer a work-based plan like a 401k. Sometimes the funds offered in a 401k plan are very good, sometimes very poor. What you do starting in 2019 will depend a lot on what investments are offered in the work-based plan.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

randydimera
Posts: 59
Joined: Mon Nov 06, 2017 9:28 pm

Re: Is an investment account the best choice for me (new guy)

Post by randydimera » Tue Nov 14, 2017 9:11 am

ruralavalon wrote:
Mon Nov 13, 2017 9:47 am
randydimera wrote:
Sun Nov 12, 2017 1:38 pm
ruralavalon wrote:
Sun Nov 12, 2017 7:07 am
randydimera wrote:
Sat Nov 11, 2017 11:39 pm
Would there ever be a reason to invest in Vanguard Total Stock Mkt Idx Inv instead of the Vanguard LifeStrategy Growth Fund (VASGX) ER 0.15%? Since the number 1 stock fund in VASGX is (VTSMX), when would it be apropriate to put money in VASGX instead of VTSMX? I compared them on the vanguard website and VTSMX just has a higher NAV which i looked up but i am a little confused on what it is and it just has a bit higher numbers from what I see. Anyways is there ever a time that is better? Or even what about VTSAX? (Vanguard Total Stock Mkt Idx Adm) I looked on morning star and it looked pretty strong. Im just researching btw not doing anything without asking first
Right now and for the next few years a single very diversified balanced fund like Vanguard LifeStrategy Growth (VASGX) ER 0.15% makes sense. You are just starting, have a relatively small amount invested in just one account, and no employment income. Keep it simple, with a single very diversified balanced fund asset allocation decisions are done for you, keep your mind on your studies.

In a couple of years (2019 or so) [emphasis added] when you also have an IRA or a work-based account (401k, 403b, 457, TSP, etc.), or both, have more invested, and are contributing on a regular basis, you will probably want to switch from a single balanced fund to investing in a group of 3 or more individual index funds [emphasis added] like Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04% and others. That will let you choose the specific asset allocation that you wish, achieve an average expense ratio that's a little lower, and most important work around what is offered in your work-based plan. [emphasis added].
So you recommend to keep investing revenue into VASGX for the next few years, then sell and put it in a individual index bunds like 3 or 4 for a diversified portfolio and just let it go?
I suggest continuing to contribute to Vanguard LifeStrategy Growth (VASGX) ER 0.15% for the next couple of years, and then considering a switch to perhaps three index funds.

In 2019 when your finish your Masters and get a full time job in your field, your employer will probably offer a work-based plan like a 401k. Sometimes the funds offered in a 401k plan are very good, sometimes very poor. What you do starting in 2019 will depend a lot on what investments are offered in the work-based plan.
I have to wait a week for Vanguard to verify my purchase, but I have 10k going into it. If I get any extra money outside of an emergency fund, should I just toss it into (VASGX) too? Like theres no fee for continuing to throw money into it, right?

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ruralavalon
Posts: 11679
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Location: Illinois

Re: Is an investment account the best choice for me (new guy)

Post by ruralavalon » Tue Nov 14, 2017 9:20 am

There is no fee for making more contributions.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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