starting out intelligently.

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Topic Author
anaelmasri
Posts: 66
Joined: Thu Sep 10, 2020 6:24 pm

starting out intelligently.

Post by anaelmasri »

Hello All,
I am new to investing and this forum has been very instrumental for me to learn alot about trading. As I have been consuming lots of information one cant help but feel lost.

Now I am a freelance artist with no pension or retirement and I am very keen now to start investing as much as I can towards a LONG TERM investment.
with that said, Index funds and ETFs seem to be the best two entities one should consider given my situation.

Now I am very drawn to vanguard, specially index funds and s&p500 stock - but ofcourse the minimum of $3000 can be hard.
I have a couple of questions and hope you can help me.

1- if I cant afford to open an index fund, if I invest in the same alternative ETF of the index fund, would more likely my return outcome in 10 to 20 years be similar? if thats the case am I better off investing in an index fund va fidelity or schwab as opposed to focusing on vanguard etfs?

2- If I open a VSTAX at 3000$ minimum, if I want to open another index fund - do I need to have another seperate $3000 for another index fund?
3- I dont have a 401k or roth ira - would it be better for long term to invest via a Roth IRa or a regular brokerage account?

thank you so much.
livesoft
Posts: 73207
Joined: Thu Mar 01, 2007 8:00 pm

Re: starting out intelligently.

Post by livesoft »

Your income and tax bracket will dictate whether a 401(k) or traditional IRA or Roth IRA or even a Roth 401(k) would be best for you. A taxable account can be used as well. It seems you are self-employed if I interpret "free-lance" correctly, so if you have no employees, then an individual 401(k) could be good if you can save/invest more than $6000 a year. An IRA (Roth or traditional) would not be bad if you can only save/invest $6,000 or less for retirement each year.

There are mutual funds with $100 minimums and even Vanguard has $1000 initial minimum funds in the form of their Target Retirement funds. If your heart is set on Vanguard, then you can use ETFs if you don't have $1000, but then when your ETF(s) have a value of more than $1000 you can sell them and switch the money to a mutual fund if you want.

Presumably, you know how to fill out your own federal (and state) tax returns and know about the IRS publications and instructions. But just in case there is the Publication 560 Retirement Plans for Small Business: https://www.irs.gov/pub/irs-pdf/p560.pdf

And don't forget that you can change what you are doing going forward and are not making choices that you are locked into.

To answer one of your questions: Yes, the initial fund minimum is for each fund individually, so you will need to have at least the initial minimum amount for each fund that you want to buy separately.

I will add that it is unlikely that Vanguard is the best choice for you given the limited information you have presented. That because both Fidelity and Schwab and lower minimums for index mutual funds, and no commission trades for ETFs including even Vanguard ETFs. Also they offer individual 401(k)s that have better features than the Vanguard individual 401(k). But research all that first because I could be worng.
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Topic Author
anaelmasri
Posts: 66
Joined: Thu Sep 10, 2020 6:24 pm

Re: starting out intelligently.

Post by anaelmasri »

livesoft wrote: Thu Sep 10, 2020 7:06 pm Your income and tax bracket will dictate whether a 401(k) or traditional IRA or Roth IRA or even a Roth 401(k) would be best for you. A taxable account can be used as well. It seems you are self-employed if I interpret "free-lance" correctly, so if you have no employees, then an individual 401(k) could be good if you can save/invest more than $6000 a year. An IRA (Roth or traditional) would not be bad if you can only save/invest $6,000 or less for retirement each year.

There are mutual funds with $100 minimums and even Vanguard has $1000 initial minimum funds in the form of their Target Retirement funds. If your heart is set on Vanguard, then you can use ETFs if you don't have $1000, but then when your ETF(s) have a value of more than $1000 you can sell them and switch the money to a mutual fund if you want.

Presumably, you know how to fill out your own federal (and state) tax returns and know about the IRS publications and instructions. But just in case there is the Publication 560 Retirement Plans for Small Business: https://www.irs.gov/pub/irs-pdf/p560.pdf

And don't forget that you can change what you are doing going forward and are not making choices that you are locked into.

To answer one of your questions: Yes, the initial fund minimum is for each fund individually, so you will need to have at least the initial minimum amount for each fund that you want to buy separately.

I will add that it is unlikely that Vanguard is the best choice for you given the limited information you have presented. That because both Fidelity and Schwab and lower minimums for index mutual funds, and no commission trades for ETFs including even Vanguard ETFs. Also they offer individual 401(k)s that have better features than the Vanguard individual 401(k). But research all that first because I could be worng.
thank you so much for all this helpful info. Most of my income is in w2s and some 1099 but still freelancing yet most of my work isnt independent contractor.

I keep hearing its much better and safer to only invest in low cost index fund, yet the ETFs show the same outcome - so if one can't afford an index fund at minimum requirement - wouldnt their investment grow the same rate with the equivalent etf LONG TERM?

cause with the math, yes schwab or fidelity would work better in terms of index funds, yet vanguard has more invested and more options for index funds at higher market value - could that mean my return will be significantly less investing in a schwab or fidelity index vs a vanguard?

I dont have a 401k which means I can only do a ira or roth ira if I am correct since 401k is issued by employer.

thanks again!
livesoft
Posts: 73207
Joined: Thu Mar 01, 2007 8:00 pm

Re: starting out intelligently.

Post by livesoft »

Yes, index ETFs vs index mutual funds are no difference in returns and would grow the same.

If you don't have a 401(k) you can start your own especially with your 1099 income. Learn about that. But an IRA may be better or both an IRA and an individual 401(k) plan would be best. That is, you can issue your own 401(k) with your self-employed income.

You have some odd (wrong!) thinking about Vanguard vs Schwab or Fidelity. You need to sort that out.
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Ferdinand2014
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Joined: Mon Dec 17, 2018 6:49 pm

Re: starting out intelligently.

Post by Ferdinand2014 »

anaelmasri wrote: Thu Sep 10, 2020 6:29 pm Hello All,
I am new to investing and this forum has been very instrumental for me to learn alot about trading. As I have been consuming lots of information one cant help but feel lost.

Now I am a freelance artist with no pension or retirement and I am very keen now to start investing as much as I can towards a LONG TERM investment.
with that said, Index funds and ETFs seem to be the best two entities one should consider given my situation.

Now I am very drawn to vanguard, specially index funds and s&p500 stock - but ofcourse the minimum of $3000 can be hard.
I have a couple of questions and hope you can help me.

1- if I cant afford to open an index fund, if I invest in the same alternative ETF of the index fund, would more likely my return outcome in 10 to 20 years be similar? if thats the case am I better off investing in an index fund va fidelity or schwab as opposed to focusing on vanguard etfs?

2- If I open a VSTAX at 3000$ minimum, if I want to open another index fund - do I need to have another seperate $3000 for another index fund?
3- I dont have a 401k or roth ira - would it be better for long term to invest via a Roth IRa or a regular brokerage account?

thank you so much.
Fidelity offers 47 index funds that have zero minimums and lower expense ratios. If your glued to Vanguard, just buy the ETF version. I prefer index mutual funds over index ETF's in general because it allows you to set up automatic contributions which reduces behavioral errors such as market timing and skipping contributions because you would rather spend than save the money or have a hunch about the market, etc. .
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
Topic Author
anaelmasri
Posts: 66
Joined: Thu Sep 10, 2020 6:24 pm

Re: starting out intelligently.

Post by anaelmasri »

livesoft wrote: Thu Sep 10, 2020 8:21 pm You have some odd (wrong!) thinking about Vanguard vs Schwab or Fidelity. You need to sort that out.
how do you mean?
Topic Author
anaelmasri
Posts: 66
Joined: Thu Sep 10, 2020 6:24 pm

Re: starting out intelligently.

Post by anaelmasri »

Ferdinand2014 wrote: Thu Sep 10, 2020 8:28 pm
anaelmasri wrote: Thu Sep 10, 2020 6:29 pm Hello All,
I am new to investing and this forum has been very instrumental for me to learn alot about trading. As I have been consuming lots of information one cant help but feel lost.

Now I am a freelance artist with no pension or retirement and I am very keen now to start investing as much as I can towards a LONG TERM investment.
with that said, Index funds and ETFs seem to be the best two entities one should consider given my situation.

Now I am very drawn to vanguard, specially index funds and s&p500 stock - but ofcourse the minimum of $3000 can be hard.
I have a couple of questions and hope you can help me.

1- if I cant afford to open an index fund, if I invest in the same alternative ETF of the index fund, would more likely my return outcome in 10 to 20 years be similar? if thats the case am I better off investing in an index fund va fidelity or schwab as opposed to focusing on vanguard etfs?

2- If I open a VSTAX at 3000$ minimum, if I want to open another index fund - do I need to have another seperate $3000 for another index fund?
3- I dont have a 401k or roth ira - would it be better for long term to invest via a Roth IRa or a regular brokerage account?

thank you so much.
Fidelity offers 47 index funds that have zero minimums and lower expense ratios. If your glued to Vanguard, just buy the ETF version. I prefer index mutual funds over index ETF's in general because it allows you to set up automatic contributions which reduces behavioral errors such as market timing and skipping contributions because you would rather spend than save the money or have a hunch about the market, etc. .
thanks so much for your input. aren't a good chunk of ETFs eligible to setup for DRIP?
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BolderBoy
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Re: starting out intelligently.

Post by BolderBoy »

anaelmasri wrote: Thu Sep 10, 2020 8:15 pmcause with the math, yes schwab or fidelity would work better in terms of index funds, yet vanguard has more invested and more options for index funds at higher market value - could that mean my return will be significantly less investing in a schwab or fidelity index vs a vanguard?
Ummmmm, forget the above. Don't look at returns.

You have three things to learn about: controlling costs (lower is better), asset allocation and diversification.

Do you know about those three? Once you do then figuring out whether you want to use Schwab or Fidelity or Vanguard will be next (and they are roughly equivalent).
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
Ferdinand2014
Posts: 1662
Joined: Mon Dec 17, 2018 6:49 pm

Re: starting out intelligently.

Post by Ferdinand2014 »

anaelmasri wrote: Thu Sep 10, 2020 8:58 pm
Ferdinand2014 wrote: Thu Sep 10, 2020 8:28 pm
anaelmasri wrote: Thu Sep 10, 2020 6:29 pm Hello All,
I am new to investing and this forum has been very instrumental for me to learn alot about trading. As I have been consuming lots of information one cant help but feel lost.

Now I am a freelance artist with no pension or retirement and I am very keen now to start investing as much as I can towards a LONG TERM investment.
with that said, Index funds and ETFs seem to be the best two entities one should consider given my situation.

Now I am very drawn to vanguard, specially index funds and s&p500 stock - but ofcourse the minimum of $3000 can be hard.
I have a couple of questions and hope you can help me.

1- if I cant afford to open an index fund, if I invest in the same alternative ETF of the index fund, would more likely my return outcome in 10 to 20 years be similar? if thats the case am I better off investing in an index fund va fidelity or schwab as opposed to focusing on vanguard etfs?

2- If I open a VSTAX at 3000$ minimum, if I want to open another index fund - do I need to have another seperate $3000 for another index fund?
3- I dont have a 401k or roth ira - would it be better for long term to invest via a Roth IRa or a regular brokerage account?

thank you so much.
Fidelity offers 47 index funds that have zero minimums and lower expense ratios. If your glued to Vanguard, just buy the ETF version. I prefer index mutual funds over index ETF's in general because it allows you to set up automatic contributions which reduces behavioral errors such as market timing and skipping contributions because you would rather spend than save the money or have a hunch about the market, etc. .
thanks so much for your input. aren't a good chunk of ETFs eligible to setup for DRIP?
I can confirm with Fidelity (I suspect the others as well) ETF's can be set up for automatic reinvestment of distributions. It is the default for Fidelity. I was referring to monthly/weekly contributions that you make to fund and purchase the mutual fund. That can be done automatically with a mutual fund. With an ETF it must be manually purchased each time. Not a big deal, it just tends to cause behavioral errors to creep in. It did for me anyway.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
Topic Author
anaelmasri
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Joined: Thu Sep 10, 2020 6:24 pm

Re: starting out intelligently.

Post by anaelmasri »

when looking at etfs or index funds YTD or 1 to 5 to 10 yr investment. it seems like the return is higher in an ETF as opposed to Index Fund. so why would one invest in Index vs etf long term?
Topic Author
anaelmasri
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Re: starting out intelligently.

Post by anaelmasri »

BolderBoy wrote: Thu Sep 10, 2020 9:06 pm
anaelmasri wrote: Thu Sep 10, 2020 8:15 pmcause with the math, yes schwab or fidelity would work better in terms of index funds, yet vanguard has more invested and more options for index funds at higher market value - could that mean my return will be significantly less investing in a schwab or fidelity index vs a vanguard?
Ummmmm, forget the above. Don't look at returns.

You have three things to learn about: controlling costs (lower is better), asset allocation and diversification.

Do you know about those three? Once you do then figuring out whether you want to use Schwab or Fidelity or Vanguard will be next (and they are roughly equivalent).
I dont maybe hope you can enlighten me
Doctor Rhythm
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Joined: Mon Jan 22, 2018 3:55 am

Re: starting out intelligently.

Post by Doctor Rhythm »

anaelmasri wrote: Thu Sep 10, 2020 10:05 pm when looking at etfs or index funds YTD or 1 to 5 to 10 yr investment. it seems like the return is higher in an ETF as opposed to Index Fund. so why would one invest in Index vs etf long term?
Maybe there’s some confusion about terminology. “Index fund” means that the fund seeks to passively follow (“track”) an index (such as the S&P 500). An index fund can be a mutual fund or it can be an Exchange Traded Fund (ETF). Sticking with Vanguard and the S&P as examples, their mutual fund VFIAX and their ETF VOO are both index funds that track the the S&P 500. They should produce nearly identical returns.

Don’t look at returns to choose your index funds - instead, understand what index is being tracked and how high the expenses are.
yet vanguard has more invested and more options for index funds at higher market value
Don’t look at the share price of a fund (really - just don’t), and if you do, never compare it to the share price of any other fund. It’s a meaningless comparison.
Topic Author
anaelmasri
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Re: starting out intelligently.

Post by anaelmasri »

Doctor Rhythm wrote: Sat Sep 12, 2020 1:55 am
anaelmasri wrote: Thu Sep 10, 2020 10:05 pm when looking at etfs or index funds YTD or 1 to 5 to 10 yr investment. it seems like the return is higher in an ETF as opposed to Index Fund. so why would one invest in Index vs etf long term?
Maybe there’s some confusion about terminology. “Index fund” means that the fund seeks to passively follow (“track”) an index (such as the S&P 500). An index fund can be a mutual fund or it can be an Exchange Traded Fund (ETF). Sticking with Vanguard and the S&P as examples, their mutual fund VFIAX and their ETF VOO are both index funds that track the the S&P 500. They should produce nearly identical returns.

Don’t look at returns to choose your index funds - instead, understand what index is being tracked and how high the expenses are.
yet vanguard has more invested and more options for index funds at higher market value
Don’t look at the share price of a fund (really - just don’t), and if you do, never compare it to the share price of any other fund. It’s a meaningless comparison.

would it be crazy for example to invest in a QQQ and VOO even though they are similar yet slightly different? more vested in different baskets vs one part in one basket?
Doctor Rhythm
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Re: starting out intelligently.

Post by Doctor Rhythm »

anaelmasri wrote: Sun Sep 13, 2020 7:50 pm
would it be crazy for example to invest in a QQQ and VOO even though they are similar yet slightly different? more vested in different baskets vs one part in one basket?
Not crazy like betting your life savings on Tesla - more like you aren’t doing what you think you’re doing. “Different baskets” is usually an idiom for diversifying to reduce risk. Someone can correct me with the minutiae, but QQQ companies (NASDAQ 100 index) are almost entirely represented in the S&P 500. So, you’re not adding any diversification by adding it to VOO. If anything, you are reducing diversification by “tilting” or buying a concentrated position on big tech companies that dominate QQQ. Is that what you believe to be the right move? It might be, but are you sure? Why?

You’re a self-admitted newbie, and you’ve received lots of very good, simple, mainstream advice here. Don’t complicate things.
Topic Author
anaelmasri
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Re: starting out intelligently.

Post by anaelmasri »

Doctor Rhythm wrote: Mon Sep 14, 2020 10:47 am
anaelmasri wrote: Sun Sep 13, 2020 7:50 pm
would it be crazy for example to invest in a QQQ and VOO even though they are similar yet slightly different? more vested in different baskets vs one part in one basket?
Not crazy like betting your life savings on Tesla - more like you aren’t doing what you think you’re doing. “Different baskets” is usually an idiom for diversifying to reduce risk. Someone can correct me with the minutiae, but QQQ companies (NASDAQ 100 index) are almost entirely represented in the S&P 500. So, you’re not adding any diversification by adding it to VOO. If anything, you are reducing diversification by “tilting” or buying a concentrated position on big tech companies that dominate QQQ. Is that what you believe to be the right move? It might be, but are you sure? Why?

You’re a self-admitted newbie, and you’ve received lots of very good, simple, mainstream advice here. Don’t complicate things.
its more to analyze and speak out loud. I am a newbie yet I am also trying to lose logic. from also a logical standpoint this is not diversifying if I were to do that, however many investors like Buffet and Cuban admit that diversification doesnt make sense as one cant be knowledgable in all different industries , etc and they counter the diversification argument.
Doctor Rhythm
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Re: starting out intelligently.

Post by Doctor Rhythm »

When I have Cuban or Buffett’s net worth, I’ll consider investing it like they do. Buffett, BTW, has famously said to just buy the S&P 500 (or something like that), meaning that you should own a diverse market weight collection of US companies. As for absence of knowledge about all industries, that’s the precise reason to diversify. If one believes they know something, they can choose to concentrate their investments based on that knowledge at their peril. If, like me, they’re completely agnostic, then they should own the market.

Again, don’t take this the wrong way, but you don’t need to get this deep into the weeds to be a successful investor.
Topic Author
anaelmasri
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Re: starting out intelligently.

Post by anaelmasri »

Doctor Rhythm wrote: Mon Sep 14, 2020 3:23 pm When I have Cuban or Buffett’s net worth, I’ll consider investing it like they do. Buffett, BTW, has famously said to just buy the S&P 500 (or something like that), meaning that you should own a diverse market weight collection of US companies. As for absence of knowledge about all industries, that’s the precise reason to diversify. If one believes they know something, they can choose to concentrate their investments based on that knowledge at their peril. If, like me, they’re completely agnostic, then they should own the market.

Again, don’t take this the wrong way, but you don’t need to get this deep into the weeds to be a successful investor.
very true!! great points!!
thank you
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ruralavalon
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Re: starting out intelligently.

Post by ruralavalon »

anaelmasri wrote: Thu Sep 10, 2020 6:29 pm Hello All,
I am new to investing and this forum has been very instrumental for me to learn alot about trading. As I have been consuming lots of information one cant help but feel lost.

Now I am a freelance artist with no pension or retirement and I am very keen now to start investing as much as I can towards a LONG TERM investment.
with that said, Index funds and ETFs seem to be the best two entities one should consider given my situation.

Now I am very drawn to vanguard, specially index funds and s&p500 stock - but ofcourse the minimum of $3000 can be hard.
I have a couple of questions and hope you can help me.

1- if I cant afford to open an index fund, if I invest in the same alternative ETF of the index fund, would more likely my return outcome in 10 to 20 years be similar? if thats the case am I better off investing in an index fund va fidelity or schwab as opposed to focusing on vanguard etfs?
An exchange traded fund (ETF) is a mutual find. Most ETFs are index ETFs.

Vanguard Total Stock Market ETF (VTI) is just a different share class of Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX), they invest in exactly the same stocks. So at Vanguard there will be no difference in outcome.

Schwab and Fidelity also offer some low expense ratio index funds of their own, and ETFs of other companies. Different indexes are used, and the outcomes will be a little different.


anaelmasri wrote: Thu Sep 10, 2020 6:29 pm2- If I open a VSTAX at 3000$ minimum, if I want to open another index fund - do I need to have another seperate $3000 for another index fund?
Yes, the $3k initial minimum investment is for each fund in an account.

Instead of multiple index funds you could simply use a single very diversified, balanced index fund like Vanguard LifeStrategy Growth Fund (VASGX).

anaelmasri wrote: Thu Sep 10, 2020 6:29 pm3- I dont have a 401k or roth ira - would it be better for long term to invest via a Roth IRa or a regular brokerage account?
A Roth IRA. In general its better to make maximum use the of all available tax-advantaged accounts as a priority ahead of investment in a regular taxable brokerage account.

If you are self-employed there are other types of tax-advantaged accounts you can also consider specifically a SEP IRA, SIMPLE IRA, and individual (solo) 401k. Vanguard, "Compare . . . . ".

anaelmasri wrote: Sun Sep 13, 2020 7:50 pmwould it be crazy for example to invest in a QQQ and VOO even though they are similar yet slightly different? more vested in different baskets vs one part in one basket?
That wouldn't make much sense because there is a lot of duplication, and that wouldn't add much in the way of diversification.

Instead use either Vanguard Total Stock Market ETF (VTI) or Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) for better diversification with a lower expense ratio.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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BolderBoy
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Re: starting out intelligently.

Post by BolderBoy »

anaelmasri wrote: Fri Sep 11, 2020 11:22 pm
BolderBoy wrote: Thu Sep 10, 2020 9:06 pm
anaelmasri wrote: Thu Sep 10, 2020 8:15 pmcause with the math, yes schwab or fidelity would work better in terms of index funds, yet vanguard has more invested and more options for index funds at higher market value - could that mean my return will be significantly less investing in a schwab or fidelity index vs a vanguard?
Ummmmm, forget the above. Don't look at returns.

You have three things to learn about: controlling costs (lower is better), asset allocation and diversification.

Do you know about those three? Once you do then figuring out whether you want to use Schwab or Fidelity or Vanguard will be next (and they are roughly equivalent).
I dont maybe hope you can enlighten me
The wiki will explain it better than I can.

Very briefly: costs are the expense ratios of the funds or ETFs (lower is better), for example 0.04%, asset allocation is your stock:fixed income split in percentages, for example 30/70 is mine (30% stocks / 70% fixed income (bonds, CDs, cash, etc) and diversification is how wide a net you are casting, for example VG's VTSAX mutual fund contains stocks of all publicly traded US companies - that is as wide a US stock diversification as you can get and is the most desirable.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
whereskyle
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Re: starting out intelligently.

Post by whereskyle »

anaelmasri wrote: Thu Sep 10, 2020 6:29 pm Hello All,
I am new to investing and this forum has been very instrumental for me to learn alot about trading. As I have been consuming lots of information one cant help but feel lost.

Now I am a freelance artist with no pension or retirement and I am very keen now to start investing as much as I can towards a LONG TERM investment.
with that said, Index funds and ETFs seem to be the best two entities one should consider given my situation.

Now I am very drawn to vanguard, specially index funds and s&p500 stock - but ofcourse the minimum of $3000 can be hard.
I have a couple of questions and hope you can help me.

1- if I cant afford to open an index fund, if I invest in the same alternative ETF of the index fund, would more likely my return outcome in 10 to 20 years be similar? if thats the case am I better off investing in an index fund va fidelity or schwab as opposed to focusing on vanguard etfs?

2- If I open a VSTAX at 3000$ minimum, if I want to open another index fund - do I need to have another seperate $3000 for another index fund?
3- I dont have a 401k or roth ira - would it be better for long term to invest via a Roth IRa or a regular brokerage account?

thank you so much.
Open a Roth* at Fidelity and you can buy Vanguard ETFs with no minimums, and you can buy fractional shares of the ETFs by the dollar via fractional trading on the mobile app. This is what I do (in addition to automatic purchases in my Vanguard accounts where I met the mínimums, and you one day will as well).

*You should learn about the different retirement accounts available before you start investing because if you want the money to be for the long term, you should put it in an account where it will avoid taxation on any of the growth of the investment, which is what Roth IRAs, Traditional IRAs, and 401ks give investors. I default to the Roth, which provides tax-free growth and tax-free withdrawals after age 59 1/2. The traditional IRA and most 401ks provide a tax deduction at the year of contribution and tax-free growth but withdrawals in retirement are taxed as income. The contribution limit to either account is currently $6,000. You also can't contribute to a Roth if you earn over a certain amount, I'm not sure what the number is this year but it's over $130k IIRC.

Two Vanguard ETFs for the long term that I hold and recommend are:

VTI: Vanguard Total US Stock Market ETF, ER .03
VT: Vanguard Total World Stock ETF, ER .08
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
Topic Author
anaelmasri
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My four plan vanguard portfolio !

Post by anaelmasri »

[Thread merged into here, see below. --admin LadyGeek]

I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
teddytimtam
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Re: My four plan vanguard portfolio !

Post by teddytimtam »

100% VTI is all the diversity I need for US market exposure.

Is there a reason why you're 35% S&P and 40% total market?
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dogagility
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Re: My four plan vanguard portfolio !

Post by dogagility »

No fourth needed. No third either. Just go with 80% VTI and 20% VXUS. Done.
All children spill milk. Learn to smile and wipe it up. -- A Farmer's Wife
whereskyle
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Re: My four plan vanguard portfolio !

Post by whereskyle »

anaelmasri wrote: Tue Sep 15, 2020 3:49 am I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
VOO and VTI are redundant. Just go 85% VTI and 15% VXUS. Your life will be easier and your plan easier to stick to.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
Topic Author
anaelmasri
Posts: 66
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Re: My four plan vanguard portfolio !

Post by anaelmasri »

I read alot of VTI and VXUS . for some reason as how the SPY in a way is the pulse of the market, adding a percentage to the VOO even if lower is a smart idea to double on the same horse while also diversifiying with the VTI and VXUS , maybe get in 2 percent or so BND to help diversify more. I feel adding VTI and VOO together isnt a disadvantage per say given the historical numbers. I get VTI represents the whole market and diversified, but owning a portfolio focusing on blue chips as well as tech adds more to the pile.

is there a negative obvious reason why one should invest a little in both for the long run?
Chris K Jones
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Re: My four plan vanguard portfolio !

Post by Chris K Jones »

dogagility wrote: Tue Sep 15, 2020 5:04 am No fourth needed. No third either. Just go with 80% VTI and 20% VXUS. Done.
+1. I agree. Add bonds when you get older. Best wishes.
dcabler
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Re: My four plan vanguard portfolio !

Post by dcabler »

You might want to start here, then follow the links:
https://www.bogleheads.org/wiki/Main_Page

cheers
whereskyle
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Re: My four plan vanguard portfolio !

Post by whereskyle »

anaelmasri wrote: Tue Sep 15, 2020 6:22 am I read alot of VTI and VXUS . for some reason as how the SPY in a way is the pulse of the market, adding a percentage to the VOO even if lower is a smart idea to double on the same horse while also diversifiying with the VTI and VXUS , maybe get in 2 percent or so BND to help diversify more. I feel adding VTI and VOO together isnt a disadvantage per say given the historical numbers. I get VTI represents the whole market and diversified, but owning a portfolio focusing on blue chips as well as tech adds more to the pile.

is there a negative obvious reason why one should invest a little in both for the long run?
It might seem fun when you're just getting started to play with a variety of ETFs but there is absolutely no reason for you to create unnecessary work for yourself down the line. Why in the world would you want to make yourself rebalance between VTI and VOO? If you want to focus on blue chips, VTI does exactly that. It just also includes small stocks and some huge stocks that haven't been added to the SP 500. VTI is pure total market investing that will prevent you from having to buy certain stocks high, as SP 500 funds often must do when a big name finally gets added. VTI will enable you to accomplish every goal that VOO will enable you to accomplish. And you will not miss having two funds doing pretty much the same thing when you could just have one.

"Simplicity is the master key to financial success." - Jack Bogle
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
Lou354
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Re: My four plan vanguard portfolio !

Post by Lou354 »

There’s not much difference in performance between S&P 500 and Total US market. So I wouldn’t bother with both, except perhaps as a partner if you want to do tax-loss harvesting at some point in the future.

Most people haven’t memorized ticker symbols and won’t go to the effort to look them up. So you’ll get more and better answers if you identify the funds you’re considering by name and not just by ticker symbol.

The high dividend yield fund and the real estate fund aren’t tax efficient, so they don’t belong in a taxable account. If you decide you want them, hold them in a tax-advantaged account or not at all. https://www.bogleheads.org/wiki/Tax-eff ... _placement

If you buy an extended market fund together with an S&P 500 fund, you’d just be recreating the Total US market fund, which would undermine your whole reason for buying the S&P 500 fund in addition to a Total US market fund.

When I was at a similar stage of learning as you I also bought a number of funds: high dividend yield, dividend growth, REIT, some actively managed funds etc. As I learned and experienced more I came to value simplicity and consolidated my holdings, though still holding a couple of funds I wouldn’t buy now but haven’t sold because the tax cost would be too high. Whatever your path, I wish you good luck on your investing journey.

(Edits shown by underlining.)
Last edited by Lou354 on Tue Sep 15, 2020 9:20 am, edited 1 time in total.
sycamore
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Re: My four plan vanguard portfolio !

Post by sycamore »

Agree with Lou354 that there's not much difference between total stock market and S&P 500.

OP, to show this, there's a website portfoliovisualizer.com that lets you compare different portfolios over time. Here's one comparing Vanguard S&P 500 against Vanguard Total Stock Market and a 50/50 split.

From 1993 to the present, there was a difference of 0.03% CAGR between the two funds. The 50/50 portfolio was right in-between.

If you look at the chart, you can see that sometimes S&P500 was ahead by a small amount, sometimes TSM was ahead by a bit. To me, there's no outperformance to be gained by using both funds. You might feel better/sleep better by splitting them up but using just one fund will do the job just as well.

Note: I used the mutual funds to compare rather than the ETFs because there's longer history with the mutual funds.
livesoft
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Re: My four plan vanguard portfolio !

Post by livesoft »

I have a question for the OP: Now that you are using ETFs, what are doing (or are going to do) with the leftover cash bit that is not enough to buy a full share of the ETF?

Example: You have $200 in your account and buy one share VTI for $172 leaving $28. What are you going to do with the $28?
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rkhusky
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Re: My four plan vanguard portfolio !

Post by rkhusky »

It’s good to hold different funds in taxable and tax-advantaged for TLH’ing and avoiding wash sales. You could use VOO in taxable and VTI in the IRA or vice-versa. Use Large Cap Index for a TLH partner.
snailderby
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Re: My four plan vanguard portfolio !

Post by snailderby »

whereskyle wrote: Tue Sep 15, 2020 6:53 am
anaelmasri wrote: Tue Sep 15, 2020 6:22 am I read alot of VTI and VXUS . for some reason as how the SPY in a way is the pulse of the market, adding a percentage to the VOO even if lower is a smart idea to double on the same horse while also diversifiying with the VTI and VXUS , maybe get in 2 percent or so BND to help diversify more. I feel adding VTI and VOO together isnt a disadvantage per say given the historical numbers. I get VTI represents the whole market and diversified, but owning a portfolio focusing on blue chips as well as tech adds more to the pile.

is there a negative obvious reason why one should invest a little in both for the long run?
It might seem fun when you're just getting started to play with a variety of ETFs but there is absolutely no reason for you to create unnecessary work for yourself down the line. Why in the world would you want to make yourself rebalance between VTI and VOO? If you want to focus on blue chips, VTI does exactly that. It just also includes small stocks and some huge stocks that haven't been added to the SP 500. VTI is pure total market investing that will prevent you from having to buy certain stocks high, as SP 500 funds often must do when a big name finally gets added. VTI will enable you to accomplish every goal that VOO will enable you to accomplish. And you will not miss having two funds doing pretty much the same thing when you could just have one.

"Simplicity is the master key to financial success." - Jack Bogle
whereskyle is right. There is no need to hold both VOO and VTI. VOO is fine on its own, as is VTI. 32.2% of VTI's holdings are tech stocks. 33.9% of VOO's holdings are tech stocks. Do you think a 1.7% difference in allocation to the tech sector will make a big difference in the long run? It didn't, historically. Plus, we don't know which fund will outperform going forward. If VTI outperforms going forward, will you regret investing in VOO, or vice versa? Keep it simple. Just use VTI. Or VOO. There are more important things to worry about in life.
whereskyle
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Re: My four plan vanguard portfolio !

Post by whereskyle »

livesoft wrote: Tue Sep 15, 2020 8:11 am I have a question for the OP: Now that you are using ETFs, what are doing (or are going to do) with the leftover cash bit that is not enough to buy a full share of the ETF?

Example: You have $200 in your account and buy one share VTI for $172 leaving $28. What are you going to do with the $28?
Fractional trading in the Fidelity mobile app makes this a non-issue. I buy VTI by the dollar this way.

My advice is to hold mutual funds at Vanguard and to hold Vanguard ETFs at Fidelity.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
Topic Author
anaelmasri
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Re: My four plan vanguard portfolio !

Post by anaelmasri »

livesoft wrote: Tue Sep 15, 2020 8:11 am I have a question for the OP: Now that you are using ETFs, what are doing (or are going to do) with the leftover cash bit that is not enough to buy a full share of the ETF?

Example: You have $200 in your account and buy one share VTI for $172 leaving $28. What are you going to do with the $28?
I havent thought of the question, good question. I figured id do the math of what to expect per ETF and buy based on the total amount. if you mean any profit generated then DRIP. but when I buy the etf from my bank account via vanguard for example, why would I send 200 and not just the amount of the share itself/.?
livesoft
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Re: My four plan vanguard portfolio !

Post by livesoft »

anaelmasri wrote: Tue Sep 15, 2020 7:51 pm... when I buy the etf from my bank account via vanguard for example, why would I send 200 and not just the amount of the share itself/.?
With your Roth IRA, I would think that you would want to contribute the maximum allowed legal contribution of $6,000 by the deadline and that would rarely let one buy an integral number of shares. I think once you get going, then you will have a better understanding of my question.
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Robert20
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Re: My four plan vanguard portfolio !

Post by Robert20 »

whereskyle wrote: Tue Sep 15, 2020 5:58 am
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
VOO and VTI are redundant. Just go 85% VTI and 15% VXUS. Your life will be easier and your plan easier to stick to.
Buy 10-25% of VUG in taxable also.. It gives some extra PUSH.. :)

60% VTI, 20% VUG and 20% VXUS...... Thats all we need..
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arcticpineapplecorp.
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Re: My four plan vanguard portfolio !

Post by arcticpineapplecorp. »

anaelmasri wrote: Tue Sep 15, 2020 6:22 am I read alot of VTI and VXUS . for some reason as how the SPY in a way is the pulse of the market, adding a percentage to the VOO even if lower is a smart idea to double on the same horse while also diversifiying with the VTI and VXUS , maybe get in 2 percent or so BND to help diversify more. I feel adding VTI and VOO together isnt a disadvantage per say given the historical numbers. I get VTI represents the whole market and diversified, but owning a portfolio focusing on blue chips as well as tech adds more to the pile.

is there a negative obvious reason why one should invest a little in both for the long run?
below is a chart back to inception of total stock market index fund 4/27/1992. I'm using the funds instead of the ETFs because the funds started earlier than ETFs. The funds are comparable, however to the ETFs. VTSAX (total stock market, comparable to VTI, in blue below) goes back to 4/27/1992. VFIAX (S&P500 index fund, comparable to VOO, in orange below) goes back further (8/31/1976) but we can't compare them before 4/27/1992.

What do you notice between the two below? Which did better? Is there a significant difference between the two? Is there any advantage to hold both VTI and VOO? Which is more representative of the total market?

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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arcticpineapplecorp.
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Re: My four plan vanguard portfolio !

Post by arcticpineapplecorp. »

Robert20 wrote: Tue Sep 15, 2020 8:48 pm
whereskyle wrote: Tue Sep 15, 2020 5:58 am
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
VOO and VTI are redundant. Just go 85% VTI and 15% VXUS. Your life will be easier and your plan easier to stick to.
Buy 10-25% of VUG in taxable also.. It gives some extra PUSH.. :)

60% VTI, 20% VUG and 20% VXUS...... Thats all we need..
PUSH?

or DRAG?

Depends on the time period, doesn't it?

morningstar has VUG going back to 11/2/92, which shows the following (same other two funds previously discussed, and now VUG in green):

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

VUG ended higher than total stock market index fund and S&P500 index fund, but there were periods where it underperfomed both from 6/3/2003 until 6/30/2018 (and only briefly beating the market for a few months) before underperforming again, until 6/30/2019 where it outperformed again.

would you have held on to something that underperformed the market for 15 years, knowing all the while you could have gotten a guaranteed return of the market?

isn't the outperformance mostly attributable since 6/30/19?

will it outperform the market or underperform over the long term?

nobody knows.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. get a plan: www.bogleheads.org/wiki/Investment_policy_statement
Robert20
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Re: My four plan vanguard portfolio !

Post by Robert20 »

arcticpineapplecorp. wrote: Tue Sep 15, 2020 9:02 pm
Robert20 wrote: Tue Sep 15, 2020 8:48 pm
whereskyle wrote: Tue Sep 15, 2020 5:58 am
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
VOO and VTI are redundant. Just go 85% VTI and 15% VXUS. Your life will be easier and your plan easier to stick to.
Buy 10-25% of VUG in taxable also.. It gives some extra PUSH.. :)

60% VTI, 20% VUG and 20% VXUS...... Thats all we need..
PUSH?

or DRAG?

Depends on the time period, doesn't it?

morningstar has VUG going back to 11/2/92, which shows the following (same other two funds previously discussed, and now VUG in green):

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

VUG ended higher than total stock market index fund and S&P500 index fund, but there were periods where it underperfomed both from 6/3/2003 until 6/30/2018 (and only briefly beating the market for a few months) before underperforming again, until 6/30/2019 where it outperformed again.

would you have held on to something that underperformed the market for 15 years, knowing all the while you could have gotten a guaranteed return of the market?

isn't the outperformance mostly attributable since 6/30/19?

will it outperform the market or underperform over the long term?

nobody knows.
NObody knows how the future 20years will be ... I am OK to bet 20% with VUG, atleast it gives better/same as VTI.
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dogagility
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Re: My four plan vanguard portfolio !

Post by dogagility »

Robert20 wrote: Tue Sep 15, 2020 9:41 pm
arcticpineapplecorp. wrote: Tue Sep 15, 2020 9:02 pm
Robert20 wrote: Tue Sep 15, 2020 8:48 pm
whereskyle wrote: Tue Sep 15, 2020 5:58 am
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
VOO and VTI are redundant. Just go 85% VTI and 15% VXUS. Your life will be easier and your plan easier to stick to.
Buy 10-25% of VUG in taxable also.. It gives some extra PUSH.. :)

60% VTI, 20% VUG and 20% VXUS...... Thats all we need..
PUSH?

or DRAG?

Depends on the time period, doesn't it?

morningstar has VUG going back to 11/2/92, which shows the following (same other two funds previously discussed, and now VUG in green):

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

VUG ended higher than total stock market index fund and S&P500 index fund, but there were periods where it underperfomed both from 6/3/2003 until 6/30/2018 (and only briefly beating the market for a few months) before underperforming again, until 6/30/2019 where it outperformed again.

would you have held on to something that underperformed the market for 15 years, knowing all the while you could have gotten a guaranteed return of the market?

isn't the outperformance mostly attributable since 6/30/19?

will it outperform the market or underperform over the long term?

nobody knows.
NObody knows how the future 20years will be ... I am OK to bet 20% with VUG, atleast it gives better/same as VTI.
It gives better/same as VTI/VTSAX... until is doesn't. See the beginning of the graph and 2004-7.

Holding VUG over the long-term is likely OK, but if you are one to compare VUG to the total market periodically, you may find yourself switching positions at inopportune times.
All children spill milk. Learn to smile and wipe it up. -- A Farmer's Wife
000
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Re: My four plan vanguard portfolio !

Post by 000 »

What is VNG?
User avatar
arcticpineapplecorp.
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Re: My four plan vanguard portfolio !

Post by arcticpineapplecorp. »

Robert20 wrote: Tue Sep 15, 2020 9:41 pm
arcticpineapplecorp. wrote: Tue Sep 15, 2020 9:02 pm
Robert20 wrote: Tue Sep 15, 2020 8:48 pm
whereskyle wrote: Tue Sep 15, 2020 5:58 am
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
VOO and VTI are redundant. Just go 85% VTI and 15% VXUS. Your life will be easier and your plan easier to stick to.
Buy 10-25% of VUG in taxable also.. It gives some extra PUSH.. :)

60% VTI, 20% VUG and 20% VXUS...... Thats all we need..
PUSH?

or DRAG?

Depends on the time period, doesn't it?

morningstar has VUG going back to 11/2/92, which shows the following (same other two funds previously discussed, and now VUG in green):

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

VUG ended higher than total stock market index fund and S&P500 index fund, but there were periods where it underperfomed both from 6/3/2003 until 6/30/2018 (and only briefly beating the market for a few months) before underperforming again, until 6/30/2019 where it outperformed again.

would you have held on to something that underperformed the market for 15 years, knowing all the while you could have gotten a guaranteed return of the market?

isn't the outperformance mostly attributable since 6/30/19?

will it outperform the market or underperform over the long term?

nobody knows.
NObody knows how the future 20years will be ... I am OK to bet 20% with VUG, atleast it gives better/same as VTI.
better/same...or worse as the chart showed at times. you should not just assume better/same, but also be prepared for "or worse".

And to the OP, what is VNG?
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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CyclingDuo
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Re: My four plan vanguard portfolio !

Post by CyclingDuo »

livesoft wrote: Tue Sep 15, 2020 8:11 am I have a question for the OP: Now that you are using ETFs, what are doing (or are going to do) with the leftover cash bit that is not enough to buy a full share of the ETF?

Example: You have $200 in your account and buy one share VTI for $172 leaving $28. What are you going to do with the $28?
Same as individual stocks, the brokerages allow fractional share DRIP investing to reinvest the quarterly dividends into your ETF's.

CyclingDuo
"Everywhere is within walking distance if you have the time." ~ Steven Wright
Topic Author
anaelmasri
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Re: My four plan vanguard portfolio !

Post by anaelmasri »

Robert20 wrote: Tue Sep 15, 2020 8:48 pm
whereskyle wrote: Tue Sep 15, 2020 5:58 am
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
VOO and VTI are redundant. Just go 85% VTI and 15% VXUS. Your life will be easier and your plan easier to stick to.
Buy 10-25% of VUG in taxable also.. It gives some extra PUSH.. :)

60% VTI, 20% VUG and 20% VXUS...... Thats all we need..
Why not VGT? it has a low overlapp with VTI and that way I can focus on growth with long term dividend yeild in the long run? I feel its a stronger market long run that VUG? thoughts?
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anaelmasri
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Re: My four plan vanguard portfolio !

Post by anaelmasri »

arcticpineapplecorp. wrote: Tue Sep 15, 2020 8:52 pm
anaelmasri wrote: Tue Sep 15, 2020 6:22 am I read alot of VTI and VXUS . for some reason as how the SPY in a way is the pulse of the market, adding a percentage to the VOO even if lower is a smart idea to double on the same horse while also diversifiying with the VTI and VXUS , maybe get in 2 percent or so BND to help diversify more. I feel adding VTI and VOO together isnt a disadvantage per say given the historical numbers. I get VTI represents the whole market and diversified, but owning a portfolio focusing on blue chips as well as tech adds more to the pile.

is there a negative obvious reason why one should invest a little in both for the long run?
below is a chart back to inception of total stock market index fund 4/27/1992. I'm using the funds instead of the ETFs because the funds started earlier than ETFs. The funds are comparable, however to the ETFs. VTSAX (total stock market, comparable to VTI, in blue below) goes back to 4/27/1992. VFIAX (S&P500 index fund, comparable to VOO, in orange below) goes back further (8/31/1976) but we can't compare them before 4/27/1992.

What do you notice between the two below? Which did better? Is there a significant difference between the two? Is there any advantage to hold both VTI and VOO? Which is more representative of the total market?

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
I see the overlap and have researched it, I felt more its compounding more of the same company in two different etfs which long run brings more shares. but I see the huge disadvatnage of diversification, thats why I feel VGT can be a good tech alternative that doesnt overlap as much, for addition to VTI and VXUS as opposed to VNQ or VHT. long term that is
Last edited by anaelmasri on Wed Sep 16, 2020 6:30 pm, edited 1 time in total.
Topic Author
anaelmasri
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Re: My four plan vanguard portfolio !

Post by anaelmasri »

arcticpineapplecorp. wrote: Tue Sep 15, 2020 9:02 pm
Robert20 wrote: Tue Sep 15, 2020 8:48 pm
whereskyle wrote: Tue Sep 15, 2020 5:58 am
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I opened my Roth IRA and brokerage account and I am getting close to the end of my research to invest

Currently 36, paid off my credit card and student loan , file single, most my work is w2 with various employers and some 1099 , currently live in California

I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM - set up, forget them, contribute Dollar cost average and reinvest dividends - let it ride for 25 to 30 years .and not touch them.

Now three of my etfs I feel solid on: 35% VOO, 40% VTI, 10% or 15% VXUS and given that i am 36 years old investing in bonds feel too premature for me to invest so the remaining 10 to 15 percent I am torn with which ETF to Invest besides bonds to help diversify as much as possible - the ones that I am interested in, and I gotta pick one to fit the batch - but can’t decide :
VYM, VNQ , VHT, VGT, VXF, VIG, VNG

Which one is these do you recommend to close the circle for the fourth etf? Or a whole other one?

Thanks
VOO and VTI are redundant. Just go 85% VTI and 15% VXUS. Your life will be easier and your plan easier to stick to.
Buy 10-25% of VUG in taxable also.. It gives some extra PUSH.. :)

60% VTI, 20% VUG and 20% VXUS...... Thats all we need..
PUSH?

or DRAG?

Depends on the time period, doesn't it?

morningstar has VUG going back to 11/2/92, which shows the following (same other two funds previously discussed, and now VUG in green):

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

VUG ended higher than total stock market index fund and S&P500 index fund, but there were periods where it underperfomed both from 6/3/2003 until 6/30/2018 (and only briefly beating the market for a few months) before underperforming again, until 6/30/2019 where it outperformed again.

would you have held on to something that underperformed the market for 15 years, knowing all the while you could have gotten a guaranteed return of the market?

isn't the outperformance mostly attributable since 6/30/19?

will it outperform the market or underperform over the long term?

nobody knows.
great point, given the track record of the 15 years it just doesnt make sense to bet on VUG
Doctor Rhythm
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Re: My four plan vanguard portfolio !

Post by Doctor Rhythm »

anaelmasri wrote: Tue Sep 15, 2020 3:49 am I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM ...
Picking individual stocks as a part of your investment strategy is generally discouraged here. If you’re wealthy enough to have “play money” that can be lost without financial consequences and enjoy the excitement of volatility, you could dabble in it. It’s not a part of a strategy in that case; it’s just an often expensive, though occasionally profitable, hobby. Stick with broad index funds for strategy.
Topic Author
anaelmasri
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Re: My four plan vanguard portfolio !

Post by anaelmasri »

Doctor Rhythm wrote: Wed Sep 16, 2020 6:56 pm
anaelmasri wrote: Tue Sep 15, 2020 3:49 am I think a four divide portfolio of etfs makes sense to start then add individual stocks to my ira or brokerage account for LONG TERM ...
Picking individual stocks as a part of your investment strategy is generally discouraged here. If you’re wealthy enough to have “play money” that can be lost without financial consequences and enjoy the excitement of volatility, you could dabble in it. It’s not a part of a strategy in that case; it’s just an often expensive, though occasionally profitable, hobby. Stick with broad index funds for strategy.
I read about bogle recommending at most 5% in stocks if feasible so I am thinking why not?
also it is amazing to me how many people oppose before voo and vti , which I get the overlap, but I have seen alot of portfolios that have both. and if i had a vfiax in one retirement account and vtsax in another then wouldnt that overlap either way/? but still generate profits seperately?
Image
snailderby
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Re: My four plan vanguard portfolio !

Post by snailderby »

anaelmasri wrote: Fri Sep 18, 2020 12:40 amI read about bogle recommending at most 5% in stocks if feasible so I am thinking why not?
As far as I know, Bogle didn't encourage investors to buy individual stocks, as much as he discouraged them from holding more than 5% in individual stocks, if they wanted to gamble a portion of their money.

Why do you want to hold individual stocks? For the education? Because you enjoy gambling? Or for some other reason?
anaelmasri wrote: Fri Sep 18, 2020 12:40 amalso it is amazing to me how many people oppose before voo and vti , which I get the overlap, but I have seen alot of portfolios that have both. and if i had a vfiax in one retirement account and vtsax in another then wouldnt that overlap either way/? but still generate profits seperately?
Image
There's nothing wrong with holding both VOO and VTI. It's just completely unnecessary, unless you only have access to one fund in one of your accounts. But hey, if you want to increase the complexity of your portfolio for the fun of it, it's your time, not mine.

The portfolio image you posted doesn't hold both VOO and VTI. It holds U.S. large cap stocks, U.S. small cap stocks, international stocks, and U.S. bonds.
Last edited by snailderby on Fri Sep 18, 2020 12:39 pm, edited 1 time in total.
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