Can someone help me purchase my first mutual fund?

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

Post by yogesh » Wed Nov 27, 2019 6:51 pm

thelateinvestor43 wrote:
Wed Nov 27, 2019 5:00 pm
Thanks everyone I think I'm getting it!
You might want to post full picture using the link/format below and get feedback from forum members.
https://www.bogleheads.org/wiki/Asking_ ... _questions
Emergency: FDIC | Taxable: VTMFX | Retirement: TR2040

Ferdinand2014
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Re: Can someone help me purchase my first mutual fund?

Post by Ferdinand2014 » Wed Nov 27, 2019 8:14 pm

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

Thanks :)
Yes. I wouldn’t bother. No it does not.

You had mentioned in another thread that you had decided on a 3 fund. The sense I get is your fretful and unsure of your choices. If it were me I would keep enough emergency cash (3-6 months of expenses) in a money market mutual fund in your Fidelity brokerage account such as with FDLXX (treasury only money market fund) and the rest in the Roth and taxable with FSKAX with both hands on deck. Your savings rate is much more important then your actual allocation at this point by far. I get the sense keeping it very simple with less decision points will be important. Don’t worry about taxable and tax deferred or mutual funds or etf tax efficiency right now. Focus on simplicity and savings rate. A second solution is to just dump it all into a target date index fund or FFNOX (Fidelity four in one index fund) which would include the U.S., international and bonds in a 3 fund at low cost. That would reduce your decision making needs.

FFNOX Er 0.11

https://fundresearch.fidelity.com/mutua ... e=o-NavBar

FBIFX (Fidelity Freedom Index 2040 Fund) er 0.12


https://fundresearch.fidelity.com/mutua ... /315793885
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

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

Post by pkcrafter » Wed Nov 27, 2019 11:35 pm

lateinvestor,

I've read through this whole thread and by your comments, I believe you are not ready for 100% equity, and you may never be. None the less, It is very important to get your money invested ASAP in a portfolio you can be comfortable with. Count all investment accounts as one portfolio. Besides the investment portfolio, you should have a taxable account and an emergency fund.

For the retirement account, you can use the classic 3-fund or maybe a target date fund to begin. Total stock market is tax-efficient. Choose a target date fund by desired asset allocation, not date.

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

3-fund

viewtopic.php?f=10&t=88005

TR funds

https://investor.vanguard.com/mutual-fu ... etirement/#/




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.

Ferdinand2014
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Re: Can someone help me purchase my first mutual fund?

Post by Ferdinand2014 » Thu Nov 28, 2019 12:10 am

pkcrafter wrote:
Wed Nov 27, 2019 11:35 pm
lateinvestor,

I've read through this whole thread and by your comments, I believe you are not ready for 100% equity, and you may never be. None the less, It is very important to get your money invested ASAP in a portfolio you can be comfortable with. Count all investment accounts as one portfolio. Besides the investment portfolio, you should have a taxable account and an emergency fund.

For the retirement account, you can use the classic 3-fund or maybe a target date fund to begin. Total stock market is tax-efficient. Choose a target date fund by desired asset allocation, not date.

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

3-fund

viewtopic.php?f=10&t=88005

TR funds

https://investor.vanguard.com/mutual-fu ... etirement/#/





Paul

His accounts are with Fidelity. I posted Fidelity TDF based on his stated age in my post above.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

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thelateinvestor43
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Location: Westbrook, Maine

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

Post by thelateinvestor43 » Thu Nov 28, 2019 1:31 am

So if I just want to put a little of my savings money into a brokerage to try and make more than my savings 0.05%, BUT don't really want to risk much should I get an etf?

Which one?

I figure that even if I put $10k or maybe less in a brokerage and even put it into something making 1.5% I'll make more than my entire inheritance just sitting in my savings right?

If my 401k turns out ok, I might try and put up to $10k into that for the next year.

or should I just do up to the match if I have one? I guess it all depends on the funds right?

Thanks and Happy Thanksgiving everyone! Thanks for all your help helping a dummy like me start to learn about investing! This is so exciting, it's all I've been thinking about for about a month now! I'm still reading my Investing for Dummies also and might get the Mutual and Etfs for Dummies companion book that the author wrote.

vipertom1970
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Re: Can someone help me purchase my first mutual fund?

Post by vipertom1970 » Thu Nov 28, 2019 1:38 am

I got a feeling you will have a heart attack if the market drops. The worst you could do to your portfolio is to sell when the market drops.

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thelateinvestor43
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Location: Westbrook, Maine

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

Post by thelateinvestor43 » Thu Nov 28, 2019 1:51 am

Ferdinand2014 wrote:
Wed Nov 27, 2019 8:14 pm
thelateinvestor43 wrote:
Wed Nov 27, 2019 11:41 am
I have just the FSKAX funded with $1k for now and I just transferred another $5k to my Roth so I'm at my limit. Should I put it all into the FSKAX Total Market Index or should I put a little bit into a Total bond Index? Does it matter with such a low total right now?

Thanks :)
Yes. I wouldn’t bother. No it does not.

You had mentioned in another thread that you had decided on a 3 fund. The sense I get is your fretful and unsure of your choices. If it were me I would keep enough emergency cash (3-6 months of expenses) in a money market mutual fund in your Fidelity brokerage account such as with FDLXX (treasury only money market fund) and the rest in the Roth and taxable with FSKAX with both hands on deck. Your savings rate is much more important then your actual allocation at this point by far. I get the sense keeping it very simple with less decision points will be important. Don’t worry about taxable and tax deferred or mutual funds or etf tax efficiency right now. Focus on simplicity and savings rate. A second solution is to just dump it all into a target date index fund or FFNOX (Fidelity four in one index fund) which would include the U.S., international and bonds in a 3 fund at low cost. That would reduce your decision making needs.

FFNOX Er 0.11

https://fundresearch.fidelity.com/mutua ... e=o-NavBar

FBIFX (Fidelity Freedom Index 2040 Fund) er 0.12


https://fundresearch.fidelity.com/mutua ... /315793885
I went with a 3 fund because it seems that's what Bogle recommended or at least a total market and total bond. I don't want to lose money you're correct. Who does?

I might just try and put like $7-10k in a fund that you mentioned in a taxable to see what happens. It's better than just leaving it all in that savings making 0.05%! I'm new to investing and don't make a lot of money, so I have to be careful with the inheritance that I have. I could never make that much money again in my life I think, so I'm very protective of it, but I don't see just letting it sit a 0%.

Bama12
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Re: Can someone help me purchase my first mutual fund?

Post by Bama12 » Thu Nov 28, 2019 2:21 am

Paulmerriman.com

Don't be lazy learn.

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

Post by mortfree » Thu Nov 28, 2019 3:32 am

I would stay away from the Dummies books.

Did you read If You Can online? It is very short but very informative. So many threads I feel like I may have already mentioned this read to you.

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

Post by dogagility » Thu Nov 28, 2019 5:54 am

mortfree wrote:
Thu Nov 28, 2019 3:32 am
I would stay away from the Dummies books.
Did you read If You Can online? It is very short but very informative. So many threads I feel like I may have already mentioned this read to you.
Yes, do not purchase any more Dummies books.
Here's the link to the If You Can pdf: https://www.etf.com/docs/IfYouCan.pdf
Taking "risk" since 1995.

Ferdinand2014
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Re: Can someone help me purchase my first mutual fund?

Post by Ferdinand2014 » Thu Nov 28, 2019 6:43 am

thelateinvestor43 wrote:
Thu Nov 28, 2019 1:51 am
Ferdinand2014 wrote:
Wed Nov 27, 2019 8:14 pm
thelateinvestor43 wrote:
Wed Nov 27, 2019 11:41 am
I have just the FSKAX funded with $1k for now and I just transferred another $5k to my Roth so I'm at my limit. Should I put it all into the FSKAX Total Market Index or should I put a little bit into a Total bond Index? Does it matter with such a low total right now?

Thanks :)
Yes. I wouldn’t bother. No it does not.

You had mentioned in another thread that you had decided on a 3 fund. The sense I get is your fretful and unsure of your choices. If it were me I would keep enough emergency cash (3-6 months of expenses) in a money market mutual fund in your Fidelity brokerage account such as with FDLXX (treasury only money market fund) and the rest in the Roth and taxable with FSKAX with both hands on deck. Your savings rate is much more important then your actual allocation at this point by far. I get the sense keeping it very simple with less decision points will be important. Don’t worry about taxable and tax deferred or mutual funds or etf tax efficiency right now. Focus on simplicity and savings rate. A second solution is to just dump it all into a target date index fund or FFNOX (Fidelity four in one index fund) which would include the U.S., international and bonds in a 3 fund at low cost. That would reduce your decision making needs.

FFNOX Er 0.11

https://fundresearch.fidelity.com/mutua ... e=o-NavBar

FBIFX (Fidelity Freedom Index 2040 Fund) er 0.12


https://fundresearch.fidelity.com/mutua ... /315793885
I went with a 3 fund because it seems that's what Bogle recommended or at least a total market and total bond. I don't want to lose money you're correct. Who does?

I might just try and put like $7-10k in a fund that you mentioned in a taxable to see what happens. It's better than just leaving it all in that savings making 0.05%! I'm new to investing and don't make a lot of money, so I have to be careful with the inheritance that I have. I could never make that much money again in my life I think, so I'm very protective of it, but I don't see just letting it sit a 0%.
1.) You should anticipate that over your investing lifetime, you will see your stock fund go down 10-20% once every 2-3 years and 50% or more in a lifetime if history is a guide. Over time owning stocks in the form of a mutual fund such as FSKAX will likely do very well, but over 1-3-5 even 10 years it could lose value. If you think you would sell in a market downturn or if you need the money sooner then 10 years, then you shouldn’t be in stocks or at least a small percent.
2.) I would read 1 good book on investing such as: https://www.amazon.com/gp/product/11194 ... bl_vppi_i0
3.) After you read the book, come back to this forum and post in the following format so you can get more complete accurate advice: https://www.bogleheads.org/wiki/Asking_ ... _questions
4.) For now, I would leave the FSKAX you already have purchased and do nothing for a few days until you can read a good book and come up with a rough investment policy statement (IPS).
5. I have a feeling based on your posts, that you are risk adverse and also having a hard time making a decision and might be better served with a target date index fund and call it good rather then trying to do 3 separate funds. Target date funds contain all the 3 fund components all in one and over time become more conservative automatically without you needing to do anything other then add to it.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

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

Post by yogesh » Thu Nov 28, 2019 9:25 am

OP

What would you do if you put all money in FSKAX and stock market dropped by 50%?

What’s your time horizon for this investment? 3,5,10,20yr?

What’s the amount of risk you want to take? Mild, Med, High?

What’s the recommended allocation when you answer questions on Fidelity GO questionnaire?
Emergency: FDIC | Taxable: VTMFX | Retirement: TR2040

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

Post by Chrono Triggered » Thu Nov 28, 2019 9:39 am

thelateinvestor43 wrote:
Thu Nov 28, 2019 1:31 am
So if I just want to put a little of my savings money into a brokerage to try and make more than my savings 0.05%, BUT don't really want to risk much should I get an etf?

Which one?
I use Fidelity as my checking account and I use SPRXX. https://fundresearch.fidelity.com/mutua ... /31617H201

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

Post by pkcrafter » Thu Nov 28, 2019 12:35 pm

lateinvestor, for your reading pleasure :shock: - Article on market ups and DOWNS (volatility).

https://finpage.blog/2016/04/26/underst ... olatility/


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.

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

Post by ruralavalon » Thu Nov 28, 2019 1:57 pm

thelateinvestor43 wrote:
Thu Nov 28, 2019 1:31 am
So if I just want to put a little of my savings money into a brokerage to try and make more than my savings 0.05%, BUT don't really want to risk much should I get an etf?

Which one?
I don't believe that any savings should be in an account earning just 0.05% interest. You are getting a negative real return on your savings, net of inflation and taxes. You are losing money on your savings.

You can get a much better interest rate for savings. Consider:
1) a FDIC insured high yield online savings account or FDIC insured short-term CDs, for interest rates see www.bankrate.com; or
2) a good money market fund like Vanguard Prime Money Market Fund (VMMXX) current SEC Yield = 1.74% or Vanguard Federal Money Market Fund (VMFXX) current SEC Yield = 1.63%. You would need an account at Vanguard to use these funds. Or consider Fidelity® Investments Money Market - Money Market Portfolio - Class I (FMPXX) current SEC Yield = 1.89%; or
3) a very short-term bond fund like iShares Ultra Short-Term Bond ETF (ICSH) current SEC Yield = 2.09%. You could use this iShares ETF in an account at Fidelity. Also consider Vanguard Ultra Short-term Bond Fund (VUBFX) current SEC Yield = 2.04%.

What is your tax bracket, both federal and state? What state do you pay any state income tax to?
thelateinvestor43 wrote:
Thu Nov 28, 2019 1:31 am
I figure that even if I put $10k or maybe less in a brokerage and even put it into something making 1.5% I'll make more than my entire inheritance just sitting in my savings right?

If my 401k turns out ok, I might try and put up to $10k into that for the next year.

or should I just do up to the match if I have one? I guess it all depends on the funds right?
Is there an employer match in your 401k plan? If so what is it? Find out what funds are offered in your 401k plan, and post the choices. Please give fund names, tickers and expense ratios. Finding these facts about your 401k plan should be your top priority.

If any decent funds are offered in your 401k plan then use the plan, if the funds offered are good then contribute the annual maximum.

thelateinvestor43 wrote:
Thu Nov 28, 2019 1:31 am
Thanks and Happy Thanksgiving everyone! Thanks for all your help helping a dummy like me start to learn about investing! This is so exciting, it's all I've been thinking about for about a month now! I'm still reading my Investing for Dummies also and might get the Mutual and Etfs for Dummies companion book that the author wrote.
Keep reading.

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

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

Post by thelateinvestor43 » Fri Nov 29, 2019 12:29 am

Ok everyone here's my 401k info. They mailed it to me this summer.

It's through Merril Lynch;

I believe they do have a match because it shows a figure "employer contributed amount" and it's in the millions.

Anyways, here's some of the funds they offer:

Stock Equity:
----------------------------------------

AMG TimesSquare Mid cap Growth CLass Z ER 0.98%

Dodge and Cox Stock fund - Large cap ER .52%

PRIMECAP Odessy Growth 0.65%

State Street S&P 500 Index Class N1 0.02%

Vanguard Extended Market Index Inst. Class ER 0.06%

Vanguard Wellington Admiral Fund 0.17%

Fixed/Bond
----------------------
Goldman Sacks High Yield Class 1 0.75%
PIMPCO Total Return class 1 ER 0.55%

Vanguard Total Bond Index Inst. Class 0.03%

Money Market
----------------------

Putnam Stable Value ER 0.50%


Target Date funds
----------------

JP Morgan SmartRetirement 2040 Fund Class R6 ER 0.51%
etc,

Thanks

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

Post by lakpr » Fri Nov 29, 2019 1:07 am

I don't see a good international equities fund in the line up, but you have excellent 500 index fund, extended market index fund and total bond index fund with expense ratios in single digit basis points.

You can ignore all other funds. The Target Date funds are so much expensive, you are better off choosing 2 fund or 3 fund portfolio here.

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

Post by thelateinvestor43 » Fri Nov 29, 2019 1:17 am

lakpr wrote:
Fri Nov 29, 2019 1:07 am
I don't see a good international equities fund in the line up, but you have excellent 500 index fund, extended market index fund and total bond index fund with expense ratios in single digit basis points.

You can ignore all other funds. The Target Date funds are so much expensive, you are better off choosing 2 fund or 3 fund portfolio here.
Thanks lakpr! I have the FSKAX Total though in my ROTH IRA. I don't have an International in my Roth IRA, but have $5k unallocated as of yet, so maybe I could add it there?

Is that ok? Maybe should I just choose the extended and the bond?
Last edited by thelateinvestor43 on Fri Nov 29, 2019 1:23 am, edited 1 time in total.

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

Post by yogesh » Fri Nov 29, 2019 1:19 am

thelateinvestor43 wrote:
Fri Nov 29, 2019 1:17 am
lakpr wrote:
Fri Nov 29, 2019 1:07 am
I don't see a good international equities fund in the line up, but you have excellent 500 index fund, extended market index fund and total bond index fund with expense ratios in single digit basis points.

You can ignore all other funds. The Target Date funds are so much expensive, you are better off choosing 2 fund or 3 fund portfolio here.
Thanks lakpr! I have the FSKAX Total though in my ROTH IRA. Is that ok? Maybe should I just choose the extended and the bond?
You might want to post full picture using the link/format below and get feedback from forum members.
https://www.bogleheads.org/wiki/Asking_ ... _questions
Emergency: FDIC | Taxable: VTMFX | Retirement: TR2040

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

Post by lakpr » Fri Nov 29, 2019 1:44 am

thelateinvestor43 wrote:
Fri Nov 29, 2019 1:17 am
lakpr wrote:
Fri Nov 29, 2019 1:07 am
I don't see a good international equities fund in the line up, but you have excellent 500 index fund, extended market index fund and total bond index fund with expense ratios in single digit basis points.

You can ignore all other funds. The Target Date funds are so much expensive, you are better off choosing 2 fund or 3 fund portfolio here.
Thanks lakpr! I have the FSKAX Total though in my ROTH IRA. I don't have an International in my Roth IRA, but have $5k unallocated as of yet, so maybe I could add it there?

Is that ok? Maybe should I just choose the extended and the bond?
Yes that is ok. But really you should be maximizing the 401k contributions and Roth IRA contributions together. If you are doing that, sum total = $19500 + $6000 = $25500 for 2020.

If you are going with a 50:20:30 split between domestic, international and bond funds respectively, I would do it this way:

30% of portfolio in bonds = $25500 * 0.3 = $7650 in Vanguard Total Bond Market Index fund in 401k
20% of portfolio in international equities = $25500 * 0.2 = $5100 in Roth IRA into FSGGX or FTIHX at Fidelity
40% of portfolio to State Street S&P 500 index fund in 401k = $25500 *0.40 = $10200
10% of portfolio to Vanguard extended market Index fund in 401k = $2550 ( remainder of the portfolio )

An approximate split of 4:1 between 500 index fund and extended market index fund replicates the returns of total stock market. Which is what I have done with last two allocations above.

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thelateinvestor43
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Location: Westbrook, Maine

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

Post by thelateinvestor43 » Fri Nov 29, 2019 2:49 am

lakpr wrote:
Fri Nov 29, 2019 1:44 am
thelateinvestor43 wrote:
Fri Nov 29, 2019 1:17 am
lakpr wrote:
Fri Nov 29, 2019 1:07 am
I don't see a good international equities fund in the line up, but you have excellent 500 index fund, extended market index fund and total bond index fund with expense ratios in single digit basis points.

You can ignore all other funds. The Target Date funds are so much expensive, you are better off choosing 2 fund or 3 fund portfolio here.
Thanks lakpr! I have the FSKAX Total though in my ROTH IRA. I don't have an International in my Roth IRA, but have $5k unallocated as of yet, so maybe I could add it there?

Is that ok? Maybe should I just choose the extended and the bond?
Yes that is ok. But really you should be maximizing the 401k contributions and Roth IRA contributions together. If you are doing that, sum total = $19500 + $6000 = $25500 for 2020.

If you are going with a 50:20:30 split between domestic, international and bond funds respectively, I would do it this way:

30% of portfolio in bonds = $25500 * 0.3 = $7650 in Vanguard Total Bond Market Index fund in 401k
20% of portfolio in international equities = $25500 * 0.2 = $5100 in Roth IRA into FSGGX or FTIHX at Fidelity
40% of portfolio to State Street S&P 500 index fund in 401k = $25500 *0.40 = $10200
10% of portfolio to Vanguard extended market Index fund in 401k = $2550 ( remainder of the portfolio )

An approximate split of 4:1 between 500 index fund and extended market index fund replicates the returns of total stock market. Which is what I have done with last two allocations above.
Thanks, but I think for now I can only put about $10k a year between the 2. I'm still not fully comfortable putting everything into investments yet. I do have my inheritance, but I don't know what the next few years may bring. I realize at my age (46) that's kind of a slower pace, but I gotta take it slow at least over the next year until I get a little more confident and learn more.

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

Post by Mr. Rumples » Fri Nov 29, 2019 5:41 am

One tool that has helped me over the years to determine my investments is the portfolio manager on morningstar.com. You can join for free and then set up various test portfolios and look at their performance and other things. Also, on yahoo.com finance you can look at the performance of funds year by year so that you can see how they did during various market scenarios such as 2008.

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

Post by dogagility » Fri Nov 29, 2019 11:55 am

yogesh wrote:
Fri Nov 29, 2019 1:19 am
You might want to post full picture using the link/format below and get feedback from forum members.
https://www.bogleheads.org/wiki/Asking_ ... _questions
+1
Taking "risk" since 1995.

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

Post by ruralavalon » Fri Nov 29, 2019 1:42 pm

Starting late at age 46 the most important investing decision you can make is to establish a high contribution rate, with contributions to tax-avantaged accounts. It's very important to make use of available tax-advantaged accounts.

The maximum annual contribution to a 401k is $19.5k for next year. You can specify a high contribution rate from your paycheck, and draw from "almost 6 figures in the savings" to pay living expenses you would otherwise have covered from your paycheck. This has the effect of moving money from your savings into your 401k account.
thelateinvestor43 wrote:
Fri Nov 29, 2019 2:49 am
. . . I realize at my age (46) that's kind of a slower pace, but I gotta take it slow at least over the next year until I get a little more confident and learn more
This will be taking it slow, with a bit contributed to the 401k account each pay period; if paid every month that shifts just $1,625 from your "almost 6 figures in the savings" to the 401k each pay period.

The maximum annual contribution to a 401k is $19.5k for next year. I suggest that you contribute the maximum. The maximum annual contribution to a Roth IRA is $6k. I suggest that you contribute the maximum.

In selecting funds to use strive for a combination of both broad diversification (to decrease risk) and low expense ratios (to increase net return).

There are some excellent funds, with broad diversification and low expense ratios, offered a your employer's 401k plan. I suggest that you contribute to your 401k plan, and use these funds:
1) State Street S&P 500 Index Class N1 0.02%; and
2) Vanguard Total Bond Index Inst. Class 0.03%.

You did not list an international stock fund in your employer's 401k plan. You said "here's some of the funds they offer: . . .". Do they also offer an international stock index fund?

If not then for additional diversification I suggest that in your Roth IRA at Fidelity that you use Fidelity® Total International Index (FTIHX) ER 0.06%.

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

Topic Author
thelateinvestor43
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Location: Westbrook, Maine

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

Post by thelateinvestor43 » Sat Nov 30, 2019 12:14 am

ruralavalon wrote:
Fri Nov 29, 2019 1:42 pm
Starting late at age 46 the most important investing decision you can make is to establish a high contribution rate, with contributions to tax-avantaged accounts. It's very important to make use of available tax-advantaged accounts.

The maximum annual contribution to a 401k is $19.5k for next year. You can specify a high contribution rate from your paycheck, and draw from "almost 6 figures in the savings" to pay living expenses you would otherwise have covered from your paycheck. This has the effect of moving money from your savings into your 401k account.
thelateinvestor43 wrote:
Fri Nov 29, 2019 2:49 am
. . . I realize at my age (46) that's kind of a slower pace, but I gotta take it slow at least over the next year until I get a little more confident and learn more
This will be taking it slow, with a bit contributed to the 401k account each pay period; if paid every month that shifts just $1,625 from your "almost 6 figures in the savings" to the 401k each pay period.

The maximum annual contribution to a 401k is $19.5k for next year. I suggest that you contribute the maximum. The maximum annual contribution to a Roth IRA is $6k. I suggest that you contribute the maximum.

In selecting funds to use strive for a combination of both broad diversification (to decrease risk) and low expense ratios (to increase net return).

There are some excellent funds, with broad diversification and low expense ratios, offered a your employer's 401k plan. I suggest that you contribute to your 401k plan, and use these funds:
1) State Street S&P 500 Index Class N1 0.02%; and
2) Vanguard Total Bond Index Inst. Class 0.03%.

You did not list an international stock fund in your employer's 401k plan. You said "here's some of the funds they offer: . . .". Do they also offer an international stock index fund?

If not then for additional diversification I suggest that in your Roth IRA at Fidelity that you use Fidelity® Total International Index (FTIHX) ER 0.06%.

I suggest that you read one or two books on investing. Wiki article, "Books: recommendations and reviews". Also take a look at the Boglehead’s wiki, the "getting started" link I give below. A quick education for a beginning investor is Dr. Bernstein's free short on-line book, "If You Can".
Thanks for all your help. I'll most likely put into the 401k, but I don't know if I can throw the max at it. I might have to preserve quite a bit of my inheritance for a couple years. Once it's in the 401, I won't have access to it, if I need a bit of it. I think between the 401 and Roth I can maybe put $10k in a year, I'll have to see.

I would also like to shift a good deal of the money in the savings, but not everything into a brokerage with Fidelity. This would be emerg/money waiting to invest, but I'm not sure of what are good funds for the brokerage yet.

Someone mentioned a money market fund may be good instead of the savings.

I think though that if I contribute enough to my 401k, I'll be able to write off quite a bit and most likely get a larger tax return which I could use to help fund the max to the ROTH. I've also got a part time job where I make about $5000 a year extra.

I'm only in the 15% bracket though and that's why I have a hard time parting with a lot of the inheritance right now, but I also don't want to leave the majority in the savings making 0%! It's already been sitting there for 4 years.

The good thing about the 401k is that I think it said somewhere that you can "change contribution amounts daily" or something. Not that I'd want to change every day!

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

Post by ruralavalon » Sat Nov 30, 2019 9:51 am

thelateinvestor43 wrote:
Sat Nov 30, 2019 12:14 am
I would also like to shift a good deal of the money in the savings, but not everything into a brokerage with Fidelity. This would be emerg/money waiting to invest, but I'm not sure of what are good funds for the brokerage yet.

Someone mentioned a money market fund may be good instead of the savings.

. . . . .

I'm only in the 15% bracket though and that's why I have a hard time parting with a lot of the inheritance right now, but I also don't want to leave the majority in the savings making 0%! It's already been sitting there for 4 years.
I still encourage you to contribute the annual maximums to your employer's 401k plan and to your Roth IRA at Fidelity.

But for any money you don't contribute to tax-advantaged accounts make sure you get a reasonable interest rate.

In a taxable brokerage account at Fidelity your best options for better yield on savings are probably either:
1) iShares Ultra Short-Term Bond ETF (ICSH) current SEC Yield = 2.09%; or
2) Fidelity® Investments Money Market - Money Market Portfolio - Class I (FMPXX) current SEC Yield = 1.89%.

I don't believe that any savings should be in an account earning just 0.05% interest. You are getting a negative real return on your savings, net of inflation and taxes. You are losing money on your savings.

There is no 15% federal tax bracket.

Here are methods you can use to estimate your federal tax bracket. First estimate your "taxable income". Moneychimp, "Tax Calculator". Or if your income etc. is fairly consistent from year to year, then look at line 43 on your 1040 tax return for last year for your "taxable income". Then use your "taxable income" to estimate 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

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

Post by thelateinvestor43 » Sun Dec 01, 2019 12:34 am

How would the FFNOX Fidelity FOUR in one index be for a taxable to hold some money that I don't want to "tie-up" yet in tax-deferred 401k instead of leaving it in the savings at 0.05%?

I don't want to put everything in there of course, but maybe $5-10k. It looks on the lower side of risk and the ER is low. To me the money-market funds don't outdo inflation or make much and I realize that's what you "pay" for the security of them, but ....

Are there any ETF's that are similar to the FFNOX?

I don't know much about purchasing ETFs either. Can you "add" money to them here and there or do you get charged to do that?

I heard that they're not like mutual funds where you can auto add money and stuff.

Thanks.

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

Post by ruralavalon » Sun Dec 01, 2019 12:46 pm

thelateinvestor43 wrote:
Sun Dec 01, 2019 12:34 am
How would the FFNOX Fidelity FOUR in one index be for a taxable to hold some money that I don't want to "tie-up" yet in tax-deferred 401k instead of leaving it in the savings at 0.05%?

I don't want to put everything in there of course, but maybe $5-10k. It looks on the lower side of risk and the ER is low. To me the money-market funds don't outdo inflation or make much and I realize that's what you "pay" for the security of them, but ....

Are there any ETF's that are similar to the FFNOX?

I don't know much about purchasing ETFs either. Can you "add" money to them here and there or do you get charged to do that?

I heard that they're not like mutual funds where you can auto add money and stuff.

Thanks.
What what is your tax bracket, both federal and state? That will affect the suitability of Fidelity® Four-in-One Index (FFNOX) in a taxable brokerage account.

FFNOX holds about 15% bonds, is not very tax-efficient, and so is not usually suggested for a taxable account.

Tax-efficiency is the reason that more use of tax-advantaged accounts is suggested.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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

Post by thelateinvestor43 » Sun Dec 01, 2019 10:36 pm

ruralavalon wrote:
Sun Dec 01, 2019 12:46 pm
thelateinvestor43 wrote:
Sun Dec 01, 2019 12:34 am
How would the FFNOX Fidelity FOUR in one index be for a taxable to hold some money that I don't want to "tie-up" yet in tax-deferred 401k instead of leaving it in the savings at 0.05%?

I don't want to put everything in there of course, but maybe $5-10k. It looks on the lower side of risk and the ER is low. To me the money-market funds don't outdo inflation or make much and I realize that's what you "pay" for the security of them, but ....

Are there any ETF's that are similar to the FFNOX?

I don't know much about purchasing ETFs either. Can you "add" money to them here and there or do you get charged to do that?

I heard that they're not like mutual funds where you can auto add money and stuff.

Thanks.
What what is your tax bracket, both federal and state? That will affect the suitability of Fidelity® Four-in-One Index (FFNOX) in a taxable brokerage account.

FFNOX holds about 15% bonds, is not very tax-efficient, and so is not usually suggested for a taxable account.

Tax-efficiency is the reason that more use of tax-advantaged accounts is suggested.
I'm in the 12% bracket and State is from 5-7%.

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

Post by thelateinvestor43 » Sun Dec 01, 2019 11:00 pm

SPAXX Fidelity Money Market Government - thinking of putting some of my savings here. Does anyone know the cost of each share? If I say put $10 in it, what would I receive about for dividends?

Does a money market fund just pay dividends? Why does the return rate always seem to drop below a percentage after 5 years with money markets?

Ferdinand2014
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Re: Can someone help me purchase my first mutual fund?

Post by Ferdinand2014 » Mon Dec 02, 2019 12:14 am

thelateinvestor43 wrote:
Sun Dec 01, 2019 11:00 pm
SPAXX Fidelity Money Market Government - thinking of putting some of my savings here. Does anyone know the cost of each share? If I say put $10 in it, what would I receive about for dividends?

Does a money market fund just pay dividends? Why does the return rate always seem to drop below a percentage after 5 years with money markets?
Money market funds are always $1 a share. They can be used like cash. They pay dividends (interest) monthly. Current rate is about 1.3%. Every share ($1) paid $0.001317577 last month. That is $10.17 per $10,000 per month or $122 per year. Interest rates we’re very low from 2008-2017, a result of fed policy after the financial crisis.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

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

Post by thelateinvestor43 » Mon Dec 02, 2019 5:22 am

Ferdinand2014 wrote:
Mon Dec 02, 2019 12:14 am
thelateinvestor43 wrote:
Sun Dec 01, 2019 11:00 pm
SPAXX Fidelity Money Market Government - thinking of putting some of my savings here. Does anyone know the cost of each share? If I say put $10 in it, what would I receive about for dividends?

Does a money market fund just pay dividends? Why does the return rate always seem to drop below a percentage after 5 years with money markets?
Money market funds are always $1 a share. They can be used like cash. They pay dividends (interest) monthly. Current rate is about 1.3%. Every share ($1) paid $0.001317577 last month. That is $10.17 per $10,000 per month or $122 per year. Interest rates we’re very low from 2008-2017, a result of fed policy after the financial crisis.
Thanks. that's ok, but nothing to "write home about", but of course better than my savings at 0.05%! I guess the idea is to keep the money safe and not make a lot off it. Would there be anything just a little more risky that I could make a little more off? What about t-bills or short term bonds? I really don't get them yet, but I'm trying to learn.

What would a fund like FBALX or FPURX Fidelity Balanced and Puritan do in a taxable? They seem to have a high turnover rate. Would that generate a lot of taxes in a taxable? I'm only in the 12% Federal but Maine State tax runs from 5-7%.

Ferdinand2014
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Re: Can someone help me purchase my first mutual fund?

Post by Ferdinand2014 » Mon Dec 02, 2019 6:34 am

thelateinvestor43 wrote:
Mon Dec 02, 2019 5:22 am
Ferdinand2014 wrote:
Mon Dec 02, 2019 12:14 am
thelateinvestor43 wrote:
Sun Dec 01, 2019 11:00 pm
SPAXX Fidelity Money Market Government - thinking of putting some of my savings here. Does anyone know the cost of each share? If I say put $10 in it, what would I receive about for dividends?

Does a money market fund just pay dividends? Why does the return rate always seem to drop below a percentage after 5 years with money markets?
Money market funds are always $1 a share. They can be used like cash. They pay dividends (interest) monthly. Current rate is about 1.3%. Every share ($1) paid $0.001317577 last month. That is $10.17 per $10,000 per month or $122 per year. Interest rates we’re very low from 2008-2017, a result of fed policy after the financial crisis.
Thanks. that's ok, but nothing to "write home about", but of course better than my savings at 0.05%! I guess the idea is to keep the money safe and not make a lot off it. Would there be anything just a little more risky that I could make a little more off? What about t-bills or short term bonds? I really don't get them yet, but I'm trying to learn.

What would a fund like FBALX or FPURX Fidelity Balanced and Puritan do in a taxable? They seem to have a high turnover rate. Would that generate a lot of taxes in a taxable? I'm only in the 12% Federal but Maine State tax runs from 5-7%.
FUMBX (Fidelity Short Term Treasury Bond Index) current yield 1.62%
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

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

Post by thelateinvestor43 » Mon Dec 02, 2019 7:44 am

Thanks! What does YTD yield mean?

Ferdinand2014
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Re: Can someone help me purchase my first mutual fund?

Post by Ferdinand2014 » Mon Dec 02, 2019 10:30 am

thelateinvestor43 wrote:
Mon Dec 02, 2019 7:44 am
Thanks! What does YTD yield mean?
Bond funds are a collection of individual bonds meeting the criteria of the index - in the case of FUMBX - short term U.S. treasuries with an average duration of about 3 years or less. When interest rates decline for new issue bonds, old bonds with higher yields become more valuable, so the bond fund that still holds some of the old bonds goes up. The converse is true as well. The YTD is a combination of capital gains (losses) from the bonds going up or down in value that are held in the fund as described and the dividend (interest) that the fund provides monthly as well from the held bonds.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

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

Post by Shallowpockets » Mon Dec 02, 2019 1:31 pm

OP, what is your health insurance? Sounds like you could very well fit into the ACA brackets and save some money if you are on a private plan. NOW is open enrollment.
Could be possible to drop your income even further by using that 401.
I was surprised you discarded any thought of the 401 and then in a subsequent post stated you had no knowledge of how the 401 it worked at your company and what was available. That’s is a big lack of information.
You seem skittish about locking up your money and not having access to it before 59 1/2 and also about taxes you might pay in the future when you took it out. You should know that if you take that tax deferred money before 59 1/2 that you will be liable for the taxes on it PLUS 10% penalty.

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

Post by thelateinvestor43 » Mon Dec 02, 2019 4:38 pm

Shallowpockets wrote:
Mon Dec 02, 2019 1:31 pm
OP, what is your health insurance? Sounds like you could very well fit into the ACA brackets and save some money if you are on a private plan. NOW is open enrollment.
Could be possible to drop your income even further by using that 401.
I was surprised you discarded any thought of the 401 and then in a subsequent post stated you had no knowledge of how the 401 it worked at your company and what was available. That’s is a big lack of information.
You seem skittish about locking up your money and not having access to it before 59 1/2 and also about taxes you might pay in the future when you took it out. You should know that if you take that tax deferred money before 59 1/2 that you will be liable for the taxes on it PLUS 10% penalty.
I get my health insurance through work. Anthem Blue Cross.

retire2022
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Re: Can someone help me purchase my first mutual fund?

Post by retire2022 » Mon Dec 02, 2019 5:50 pm

Op you need to learn Dollar Cost Average: https://www.investopedia.com/investing/ ... ging-pays/

compound interest

https://www.investopedia.com/terms/c/co ... terest.asp

46-67=21 years into the future

6,000x21=$126,000.00, at 7% =$288,034.43

http://www.moneychimp.com/calculator/co ... ulator.htm

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

Post by thelateinvestor43 » Thu Dec 05, 2019 6:20 am

Is the Fidelity Bond Index Fund FXNAX ok for money that I think I'll need in the next 3 years or so, but don't want to keep in low interest like savings or mutual funds?

Can you cash part or all of it out if you did need some money? Is it fairly liquid?

Sorry, don't really get bonds yet.

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

Post by UpperNwGuy » Thu Dec 05, 2019 6:49 am

FXNAX is a good fund for those who are investing longer term. It has a duration of 5.7 years, so you wouldn't want to put your three-year savings in this fund. Look for a short term bond fund instead.

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

Post by thelateinvestor43 » Thu Dec 05, 2019 7:39 am

UpperNwGuy wrote:
Thu Dec 05, 2019 6:49 am
FXNAX is a good fund for those who are investing longer term. It has a duration of 5.7 years, so you wouldn't want to put your three-year savings in this fund. Look for a short term bond fund instead.
What happens if you take money out of it early? Thanks though for the short term recommend!

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

Post by lakpr » Thu Dec 05, 2019 7:44 am

thelateinvestor43 wrote:
Thu Dec 05, 2019 6:20 am
Is the Fidelity Bond Index Fund FXNAX ok for money that I think I'll need in the next 3 years or so, but don't want to keep in low interest like savings or mutual funds?

Can you cash part or all of it out if you did need some money? Is it fairly liquid?

Sorry, don't really get bonds yet.
I would suggest a split into 20% stocks and 80% intermediate term treasuries. In the past 2 decades, this particular combination returned 3.5% average, with a max loss of 0.16% (in 2018). So no guarantees, but about as safe as can be. The additional advantage is that the dividends from the treasuries portion of this portfolio are exempt from state tax

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

Post by thelateinvestor43 » Thu Dec 05, 2019 7:46 am

lakpr wrote:
Thu Dec 05, 2019 7:44 am
thelateinvestor43 wrote:
Thu Dec 05, 2019 6:20 am
Is the Fidelity Bond Index Fund FXNAX ok for money that I think I'll need in the next 3 years or so, but don't want to keep in low interest like savings or mutual funds?

Can you cash part or all of it out if you did need some money? Is it fairly liquid?

Sorry, don't really get bonds yet.
I would suggest a split into 20% stocks and 80% intermediate term treasuries. In the past 2 decades, this particular combination returned 3.5% average, with a max loss of 0.16% (in 2018). So no guarantees, but about as safe as can be. The additional advantage is that the dividends from the treasuries portion of this portfolio are exempt from state tax
Thanks Lakpr! Do you know what Fidelity funds those would be? The intermediate term treasuries?

Is FUAMX what you're talking about? Intermediate Treasury Bond Index Fund
Last edited by thelateinvestor43 on Thu Dec 05, 2019 7:48 am, edited 1 time in total.

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

Post by lakpr » Thu Dec 05, 2019 7:47 am

FUAMX

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

Post by thelateinvestor43 » Thu Dec 05, 2019 7:50 am

lakpr wrote:
Thu Dec 05, 2019 7:47 am
FUAMX
I mean no State tax right? My Federal tax is 12% and State I think is from 5-7%.
Last edited by thelateinvestor43 on Thu Dec 05, 2019 7:52 am, edited 1 time in total.

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

Post by lakpr » Thu Dec 05, 2019 7:51 am

thelateinvestor43 wrote:
Thu Dec 05, 2019 7:50 am
lakpr wrote:
Thu Dec 05, 2019 7:47 am
FUAMX
You don't pay Federal tax correct?
No, you still pay Federal tax. You don’t pay the state tax though.

Edit: saw your second post a bit late. That is correct, you don’t pay state tax.

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

Post by thelateinvestor43 » Thu Dec 05, 2019 7:53 am

lakpr wrote:
Thu Dec 05, 2019 7:51 am
thelateinvestor43 wrote:
Thu Dec 05, 2019 7:50 am
lakpr wrote:
Thu Dec 05, 2019 7:47 am
FUAMX
You don't pay Federal tax correct?
No, you still pay Federal tax. You don’t pay the state tax though.
Thanks! Not that I need the money, but if I needed it for something could I just cash out part or all of the fund?

What would be the tax consequences? Just pay income tax?

I was thinking this could be for the money that I MAY need in the near future, but am not sure, but not my emergency fund. Money market funds interest in not good.

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

Post by lakpr » Thu Dec 05, 2019 7:56 am

thelateinvestor43 wrote:
Thu Dec 05, 2019 7:53 am
Thanks! Not that I need the money, but if I needed it for something could I just cash out part or all of the fund?

What would be the tax consequences? Just pay income tax?
Yep. Highly liquid. You pay the capital gains tax on the stock portion (the 20%), and the 12% tax (your ordinary income tax bracket) on the sale of treasuries portion (the rest 80%).

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

Post by thelateinvestor43 » Thu Dec 05, 2019 8:03 am

lakpr wrote:
Thu Dec 05, 2019 7:56 am
thelateinvestor43 wrote:
Thu Dec 05, 2019 7:53 am
Thanks! Not that I need the money, but if I needed it for something could I just cash out part or all of the fund?

What would be the tax consequences? Just pay income tax?
Yep. Highly liquid. You pay the capital gains tax on the stock portion (the 20%), and the 12% tax (your ordinary income tax bracket) on the sale of treasuries portion (the rest 80%).
That would be two separate funds right? I already have the S&P Index fund in my Individual.

Does the liquidity and tax implications change with regard to short, intermediate and long government Treasury Bond funds? They have 3 index funds.
Last edited by thelateinvestor43 on Thu Dec 05, 2019 8:09 am, edited 1 time in total.

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

Post by lakpr » Thu Dec 05, 2019 8:09 am

thelateinvestor43 wrote:
Thu Dec 05, 2019 8:03 am
That would be two separate funds right? I already have the S&P Index fund in my Individual.
Yes. There is no fund that I know of that combines stocks and intermediate term treasuries in this ratio.

You can buy a separate stock fund, perhaps one of the zero funds, for the 20% stocks portion and associate it with FUAMX for your accounting.

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