What fund to add?

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Armani
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What fund to add?

Post by Armani »

I’m 45 years old. My AA is 90/10 stocks/bonds. My Roth consists of VTSAX and BND, which I might convert to VBTLX. I have a taxable account with Vanguard which holds VFIAX. I also have a Schwab account, but currently nothing is in it. I’d like to put something that account. I’m thinking SCHD for a little dividend income, but I’m open to suggestions. I see no purpose in buying their S&P 500 fund or total stock market fund. I want something to compliment what I currently have.

Thanks in advance.
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ruralavalon
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Re: What fund to add?

Post by ruralavalon »

Armani wrote: Sat Sep 11, 2021 10:19 am I’m 45 years old. My AA is 90/10 stocks/bonds. My Roth consists of VTSAX and BND, which I might convert to VBTLX. I have a taxable account with Vanguard which holds VFIAX. I also have a Schwab account, but currently nothing is in it. I’d like to put something that account. I’m thinking SCHD for a little dividend income, but I’m open to suggestions. I see no purpose in buying their S&P 500 fund or total stock market fund. I want something to compliment what I currently have.

Thanks in advance.
What type of account is that at Schwab?

What is your tax bracket, both federal and state? What is your tax filing status?

You mentioned Schwab US Dividend Equity ETF (SCHD). Why do you want dividend income, rather than a total return approach?

Do you have an employer plan (e.g. 401k, 403b, 457b, SEP IRA, SIMPLE IRA) that you can contribute to? Do you contribute, and if so how much?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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Armani
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Re: What fund to add?

Post by Armani »

ruralavalon wrote: Sat Sep 11, 2021 11:10 am
Armani wrote: Sat Sep 11, 2021 10:19 am I’m 45 years old. My AA is 90/10 stocks/bonds. My Roth consists of VTSAX and BND, which I might convert to VBTLX. I have a taxable account with Vanguard which holds VFIAX. I also have a Schwab account, but currently nothing is in it. I’d like to put something that account. I’m thinking SCHD for a little dividend income, but I’m open to suggestions. I see no purpose in buying their S&P 500 fund or total stock market fund. I want something to compliment what I currently have.

Thanks in advance.
What type of account is that at Schwab?

What is your tax bracket, both federal and state? What is your tax filing status?

You mentioned Schwab US Dividend Equity ETF (SCHD). Why do you want dividend income, rather than a total return approach?

Do you have an employer plan (e.g. 401k, 403b, 457b, SEP IRA, SIMPLE IRA) that you can contribute to? Do you contribute, and if so how much?
Start a new job this week, actually. So I will find out about 401K options. Most likely I’ll probably just put that in some sort of S&P 500 or total market account. I’ll find out what my choices are. I make $98,000 and wife makes $53,000. The Schwab account is a regular brokerage account.
I’m open to any suggestions.
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ruralavalon
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Re: What fund to add?

Post by ruralavalon »

Armani wrote: Sat Sep 11, 2021 11:17 am
ruralavalon wrote: Sat Sep 11, 2021 11:10 am
Armani wrote: Sat Sep 11, 2021 10:19 am I’m 45 years old. My AA is 90/10 stocks/bonds. My Roth consists of VTSAX and BND, which I might convert to VBTLX. I have a taxable account with Vanguard which holds VFIAX. I also have a Schwab account, but currently nothing is in it. I’d like to put something that account. I’m thinking SCHD for a little dividend income, but I’m open to suggestions. I see no purpose in buying their S&P 500 fund or total stock market fund. I want something to compliment what I currently have.

Thanks in advance.
What type of account is that at Schwab?

What is your tax bracket, both federal and state? What is your tax filing status?

You mentioned Schwab US Dividend Equity ETF (SCHD). Why do you want dividend income, rather than a total return approach?

Do you have an employer plan (e.g. 401k, 403b, 457b, SEP IRA, SIMPLE IRA) that you can contribute to? Do you contribute, and if so how much?
Start a new job this week, actually. So I will find out about 401K options. Most likely I’ll probably just put that in some sort of S&P 500 or total market account. I’ll find out what my choices are. I make $98,000 and wife makes $53,000. The Schwab account is a regular brokerage account.
I’m open to any suggestions.
What is your tax bracket, both federal and state? (A high dividend fund is a bad idea in a taxable brokerage account, unless in a very low tax bracket. At $141k, you may be in the 22% bracket. It depends on your "taxable income", link, which you can find on your tax return for 2020.)

In general in a taxable brokerage account use only very tax-efficient stock index funds. Wiki article Tax-efficient Fund Placement. The best funds to use are total market type stock index funds, large-cap stock index funds or a S&P 500 index fund.

If any decent funds are offered in your new employer's plan then maximum annual employee contributions ($19.5k) to the plan should be a priority ahead of contributions to a taxable brokerage account. Wiki article Prioritizing Investments.

Does your spouse also have an employer plan available at work. If so does your spouse contribute, and how much?

What is your tax filing status? If "married filing jointly" your spouse should also have an IRA, and both of you should make maximum annual contributions ($6k each) as a priority ahead of contributions to a taxable brokerage account.
Last edited by ruralavalon on Sat Sep 11, 2021 11:48 am, edited 3 times in total.
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sycamore
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Re: What fund to add?

Post by sycamore »

Armani wrote: Sat Sep 11, 2021 10:19 am I’m 45 years old. My AA is 90/10 stocks/bonds. My Roth consists of VTSAX and BND, which I might convert to VBTLX. I have a taxable account with Vanguard which holds VFIAX. I also have a Schwab account, but currently nothing is in it. I’d like to put something that account. I’m thinking SCHD for a little dividend income, but I’m open to suggestions. I see no purpose in buying their S&P 500 fund or total stock market fund. I want something to compliment what I currently have.
Why specifically do you want to complement what you have? What shortcomings do you see in VTSAX?

Total Stock Market can easily and safely be used to get all the US stock exposure you need. It provides many great benefits: very low cost, diversification, no manager risk. It also pays out dividends. It's one of the foundations of the Three-fund portfolio used by many a Boglehead. Not to say it's perfect, though.

One shortcoming I see is that it's US-only. A Total International Stock Market index (VTIAX) would be a great complement. There are a regular discussions about how much to invest in US and International. A good starting point is 20% of stocks in international.

What goal are you trying to achieve? So far it seems like the goal is to merely have something different from VTSAX or BND. But that goal can be achieved with any of thousands of funds out there. Please give some guidance on what you're trying to do.
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Armani
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Re: What fund to add?

Post by Armani »

ruralavalon wrote: Sat Sep 11, 2021 11:34 am
Armani wrote: Sat Sep 11, 2021 11:17 am
ruralavalon wrote: Sat Sep 11, 2021 11:10 am
Armani wrote: Sat Sep 11, 2021 10:19 am I’m 45 years old. My AA is 90/10 stocks/bonds. My Roth consists of VTSAX and BND, which I might convert to VBTLX. I have a taxable account with Vanguard which holds VFIAX. I also have a Schwab account, but currently nothing is in it. I’d like to put something that account. I’m thinking SCHD for a little dividend income, but I’m open to suggestions. I see no purpose in buying their S&P 500 fund or total stock market fund. I want something to compliment what I currently have.

Thanks in advance.
What type of account is that at Schwab?

What is your tax bracket, both federal and state? What is your tax filing status?

You mentioned Schwab US Dividend Equity ETF (SCHD). Why do you want dividend income, rather than a total return approach?

Do you have an employer plan (e.g. 401k, 403b, 457b, SEP IRA, SIMPLE IRA) that you can contribute to? Do you contribute, and if so how much?
Start a new job this week, actually. So I will find out about 401K options. Most likely I’ll probably just put that in some sort of S&P 500 or total market account. I’ll find out what my choices are. I make $98,000 and wife makes $53,000. The Schwab account is a regular brokerage account.
I’m open to any suggestions.
What is your tax bracket, both federal and state? (A high dividend fund is a bad idea in a taxable brokerage account, unless in a very low tax bracket. At $141k, you may be in the 22% bracket. It depends on your "taxable income", link, which you can find on your tax return for 2020.)

In general in a taxable brokerage account use only very tax-efficient stock index funds. Wiki article Tax-efficient Fund Placement. The best funds to use are total market type stock index funds, large-cap stock index funds or a S&P 500 index fund.

If any decent funds are offered in your new employer's plan then maximum annual employee contributions ($19.5k) to the plan should be a priority ahead of contributions to a taxable brokerage account. Wiki article Prioritizing Investments.

Does your spouse also have an employer plan available at work. If so does your spouse contribute, and how much?

What is your tax filing status? If "married filing jointly" your spouse should also have an IRA, and both of you should make maximum annual contributions ($6k each) as a priority ahead of contributions to a taxable brokerage account.
I max my IRA and add about $6-7K to taxable each year. Wife has a Roth and is in a target date fund as well as having a state employee pension.
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Armani
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Re: What fund to add?

Post by Armani »

sycamore wrote: Sat Sep 11, 2021 11:37 am
Armani wrote: Sat Sep 11, 2021 10:19 am I’m 45 years old. My AA is 90/10 stocks/bonds. My Roth consists of VTSAX and BND, which I might convert to VBTLX. I have a taxable account with Vanguard which holds VFIAX. I also have a Schwab account, but currently nothing is in it. I’d like to put something that account. I’m thinking SCHD for a little dividend income, but I’m open to suggestions. I see no purpose in buying their S&P 500 fund or total stock market fund. I want something to compliment what I currently have.
Why specifically do you want to complement what you have? What shortcomings do you see in VTSAX?

Total Stock Market can easily and safely be used to get all the US stock exposure you need. It provides many great benefits: very low cost, diversification, no manager risk. It also pays out dividends. It's one of the foundations of the Three-fund portfolio used by many a Boglehead. Not to say it's perfect, though.

One shortcoming I see is that it's US-only. A Total International Stock Market index (VTIAX) would be a great complement. There are a regular discussions about how much to invest in US and International. A good starting point is 20% of stocks in international.

What goal are you trying to achieve? So far it seems like the goal is to merely have something different from VTSAX or BND. But that goal can be achieved with any of thousands of funds out there. Please give some guidance on what you're trying to do.
You all have “fun money.” This would essentially be that. My main investment is VTSAX. I’m comfortable with that. I was just thinking for something to put a tiny fraction of money in. That’s all. In the end I usually put extra money in my main investments, LOL
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Re: What fund to add?

Post by sycamore »

Armani wrote: Sat Sep 11, 2021 11:55 am You all have “fun money.” This would essentially be that. My main investment is VTSAX. I’m comfortable with that. I was just thinking for something to put a tiny fraction of money in. That’s all. In the end I usually put extra money in my main investments, LOL
In that case, I'd pick an actively managed fund. In the past I used VPCCX Vanguard Primecap Core fund.
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Re: What fund to add?

Post by dbr »

Armani wrote: Sat Sep 11, 2021 11:55 am

You all have “fun money.” This would essentially be that. My main investment is VTSAX. I’m comfortable with that. I was just thinking for something to put a tiny fraction of money in. That’s all. In the end I usually put extra money in my main investments, LOL
Fun money means fun money. Mutual funds are no fun at all. Look around for some odd ball company that might do great things and put your money in that. You can also look around and see if someone you know needs financing for some business or another. That can be fun. People also enjoy speculating in collectibles. There is bitcoin but that just seems kind of tarnished and common. You could see of you can buy an oil well or speculate in some kind of land deal. I myself would probably look around for some small company stock or another for investing fun, if I were to do it.

Your first suggestion of putting some money in a dividend fund wouldn't seem to me to be of any use at all, either fun or adding anything meaningful to what you have.
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telemark
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Re: What fund to add?

Post by telemark »

My thinking on adding funds is that if you have to ask, you probably shouldn't. If I suggest something and it doesn't do well, you're likely to say "guess that guy on the internet was wrong" and switch to something else. If you choose for yourself, you will know exactly why you did that and what you expect from it, and you're more likely to stick with it through periods of underperformance.
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Re: What fund to add?

Post by tibbitts »

If you do something, your taxable account needs to be a total market type index, and then you need to do whatever else in your deferred or Roth accounts. Well, not necessarily true with international, which is complicated due to taxes; personally I have international in deferred but there's a case for the tax credits available in taxable. You don't say where your international is.

Anyway whatever tilt you want, small, value, whatever, usually only makes sense in deferred or Roth.
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Taylor Larimore
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Re: What fund to add?

Post by Taylor Larimore »

Armani:

Strive for simplicity -- not complexity:

What Experts Say About "Simplicity" .

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."
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ruralavalon
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Re: What fund to add?

Post by ruralavalon »

Armani wrote: Sat Sep 11, 2021 11:55 amYou all have “fun money.”
No, I don't.

Armani wrote: Sat Sep 11, 2021 11:55 amThis would essentially be that. My main investment is VTSAX. I’m comfortable with that. I was just thinking for something to put a tiny fraction of money in. That’s all. In the end I usually put extra money in my main investments, LOL
This isn't Monopoly.

Put extra money in the best fund offered in your new employer's 401k plan.
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Armani
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Re: What fund to add?

Post by Armani »

tibbitts wrote: Sun Sep 12, 2021 2:11 pm If you do something, your taxable account needs to be a total market type index, and then you need to do whatever else in your deferred or Roth accounts. Well, not necessarily true with international, which is complicated due to taxes; personally I have international in deferred but there's a case for the tax credits available in taxable. You don't say where your international is.

Anyway whatever tilt you want, small, value, whatever, usually only makes sense in deferred or Roth.
I don’t have international. My Roth IRA consists of VTSAX and BND(should I switch that to VBTLX?). My taxable is VFIAX.
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ruralavalon
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Re: What fund to add?

Post by ruralavalon »

Armani wrote: Tue Sep 14, 2021 11:12 am
tibbitts wrote: Sun Sep 12, 2021 2:11 pm If you do something, your taxable account needs to be a total market type index, and then you need to do whatever else in your deferred or Roth accounts. Well, not necessarily true with international, which is complicated due to taxes; personally I have international in deferred but there's a case for the tax credits available in taxable. You don't say where your international is.

Anyway whatever tilt you want, small, value, whatever, usually only makes sense in deferred or Roth.
I don’t have international. My Roth IRA consists of VTSAX and BND(should I switch that to VBTLX?). My taxable is VFIAX.
Vanguard Total Bond Market ETF (BND) is just another share class of Vanguard Total Bond Market Index Fund (VBTLX). The investments in each are identical.

Vanguard 500 Index Fund Admiral Shares (VFIAX) is an excellent fund for a taxable account. I would not switch out of that fund if any significant income tax liability would be created.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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Armani
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Re: What fund to add?

Post by Armani »

ruralavalon wrote: Tue Sep 14, 2021 11:33 am
Armani wrote: Tue Sep 14, 2021 11:12 am
tibbitts wrote: Sun Sep 12, 2021 2:11 pm If you do something, your taxable account needs to be a total market type index, and then you need to do whatever else in your deferred or Roth accounts. Well, not necessarily true with international, which is complicated due to taxes; personally I have international in deferred but there's a case for the tax credits available in taxable. You don't say where your international is.

Anyway whatever tilt you want, small, value, whatever, usually only makes sense in deferred or Roth.
I don’t have international. My Roth IRA consists of VTSAX and BND(should I switch that to VBTLX?). My taxable is VFIAX.
Vanguard Total Bond Market ETF (BND) is just another share class of Vanguard Total Bond Market Index Fund (VBTLX). The investments in each are identical.

Vanguard 500 Index Fund Admiral Shares (VFIAX) is an excellent fund for a taxable account. I would not switch out of that fund if any significant income tax liability would be created.
I don’t plan to change any of that. After I max out my Roth, I put money in the taxable. I keep all the bond money in the Roth and I maintain, as much as possible, a 90/10 ratio. I contribute about $6-8K per year into the taxable.
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Armani
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Re: What fund to add?

Post by Armani »

I had a Schwab account with nothing in it so I decided to buy a little SWLGX.
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ruralavalon
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Re: What fund to add?

Post by ruralavalon »

Armani wrote: Mon Sep 20, 2021 8:06 am I had a Schwab account with nothing in it so I encoded to buy a little SWLGX.
That is a nonsense move.

Schwab US Large-Cap Growth Index Fund (SWLGX), adds nothing you didn't already have in Vanguard Total Stock Market Index Fund (VTSAX).

I still suggest a rollover to combine the two Roth IRAs at either Vanguard or Schwab, and just using a total stock market index fund.
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Armani
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Re: What fund to add?

Post by Armani »

ruralavalon wrote: Mon Sep 20, 2021 9:04 am
Armani wrote: Mon Sep 20, 2021 8:06 am I had a Schwab account with nothing in it so I encoded to buy a little SWLGX.
That is a nonsense move.

Schwab US Large-Cap Growth Index Fund (SWLGX), adds nothing you didn't already have in Vanguard Total Stock Market Index Fund (VTSAX).

I still suggest a rollover to combine the two Roth IRAs at either Vanguard or Schwab, and just using a total stock market index fund.
I don’t have two Roth IRAs. I have one at Vanguard. I also have a taxable account at Vanguard that I contribute to after maxing my Roth. The Schwab account is a taxable account as well.
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ruralavalon
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Re: What fund to add?

Post by ruralavalon »

Armani wrote: Mon Sep 20, 2021 9:31 am
ruralavalon wrote: Mon Sep 20, 2021 9:04 am
Armani wrote: Mon Sep 20, 2021 8:06 am I had a Schwab account with nothing in it so I encoded to buy a little SWLGX.
That is a nonsense move.

Schwab US Large-Cap Growth Index Fund (SWLGX), adds nothing you didn't already have in Vanguard Total Stock Market Index Fund (VTSAX).

I still suggest a rollover to combine the two Roth IRAs at either Vanguard or Schwab, and just using a total stock market index fund.
I don’t have two Roth IRAs. I have one at Vanguard. I also have a taxable account at Vanguard that I contribute to after maxing my Roth. The Schwab account is a taxable account as well.
This is still a nonsense move in my opinion.

Schwab US Large-Cap Growth Index Fund (SWLGX), still adds nothing you didn't already have in Vanguard Total Stock Market Index Fund (VTSAX).

There is no reason I can see to have two taxable brokerage accounts at two different fund firms.

Better to have one taxable account and just use a total stock market index fund.
Last edited by ruralavalon on Mon Sep 20, 2021 5:31 pm, edited 1 time in total.
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etfan
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Re: What fund to add?

Post by etfan »

A few ideas if you're looking for something that's not already covered your existing investments:

1- Add tilt to small cap value (using a fund like VBR). Paul Merriman recommends this. The idea is that this could in the long term provide more return than your regular total market funds.

2- Add tilt to a specific sector you think might be "the next big thing". Renewable energy funds are one possibility, if you believe this sector will be important in the next couple of decades. Tesla seems to dominate some of those funds. This is just an example. There are others.

3- Some people use their fun money to bet on a small collection of companies that they think will beat the rest of the market in the next decade or so. I know people who made a lot of money this way, but many people who made the wrong bets and lost.

Note: ANY of the strategies above are basically an attempt to beat the market. Statistically, you are more likely to fail, which is why the Bogleheads way is to just buy the whole market and focus more on increasing your savings rate than picking winners and losers.
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Re: What fund to add?

Post by bertilak »

Please see Taylor Larimore's post above. Follow Taylor's advice whenever you can. I see no reason you can't follow it now. There have been several posts above pointing out how.
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1789
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Re: What fund to add?

Post by 1789 »

Armani wrote: Sat Sep 11, 2021 10:19 am I’m 45 years old. My AA is 90/10 stocks/bonds. My Roth consists of VTSAX and BND, which I might convert to VBTLX. I have a taxable account with Vanguard which holds VFIAX. I also have a Schwab account, but currently nothing is in it. I’d like to put something that account. I’m thinking SCHD for a little dividend income, but I’m open to suggestions. I see no purpose in buying their S&P 500 fund or total stock market fund. I want something to compliment what I currently have.

Thanks in advance.
Imo, you have one of the best portfolios available out there. When you add more funds you may spend more time and energy but get less return in the end.
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Armani
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Re: What fund to add?

Post by Armani »

1789 wrote: Mon Sep 20, 2021 12:46 pm
Armani wrote: Sat Sep 11, 2021 10:19 am I’m 45 years old. My AA is 90/10 stocks/bonds. My Roth consists of VTSAX and BND, which I might convert to VBTLX. I have a taxable account with Vanguard which holds VFIAX. I also have a Schwab account, but currently nothing is in it. I’d like to put something that account. I’m thinking SCHD for a little dividend income, but I’m open to suggestions. I see no purpose in buying their S&P 500 fund or total stock market fund. I want something to compliment what I currently have.

Thanks in advance.
Imo, you have one of the best portfolios available out there. When you add more funds you may spend more time and energy but get less return in the end.
So should I just forget about the Schwab account and not use it for anything?
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Re: What fund to add?

Post by sycamore »

Armani wrote: Tue Sep 21, 2021 12:11 pm
1789 wrote: Mon Sep 20, 2021 12:46 pm
Armani wrote: Sat Sep 11, 2021 10:19 am I’m 45 years old. My AA is 90/10 stocks/bonds. My Roth consists of VTSAX and BND, which I might convert to VBTLX. I have a taxable account with Vanguard which holds VFIAX. I also have a Schwab account, but currently nothing is in it. I’d like to put something that account. I’m thinking SCHD for a little dividend income, but I’m open to suggestions. I see no purpose in buying their S&P 500 fund or total stock market fund. I want something to compliment what I currently have.

Thanks in advance.
Imo, you have one of the best portfolios available out there. When you add more funds you may spend more time and energy but get less return in the end.
So should I just forget about the Schwab account and not use it for anything?
Sure, that's entirely reasonable.

Following your own Investment policy statemen, and making sure your portfolio reflects your target Asset Allocation are among the more important investment steps to follow. No need to buy a different fund at that other brokerage just because you have another account.

That said, some people do open an account at multiple brokerages in case one of the brokerages happens to suffer a system outage on the day they need to make a transaction.

Why did you open the Schwab account?
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ruralavalon
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Re: What fund to add?

Post by ruralavalon »

Armani wrote: Tue Sep 21, 2021 12:11 pm
1789 wrote: Mon Sep 20, 2021 12:46 pm
Armani wrote: Sat Sep 11, 2021 10:19 am I’m 45 years old. My AA is 90/10 stocks/bonds. My Roth consists of VTSAX and BND, which I might convert to VBTLX. I have a taxable account with Vanguard which holds VFIAX. I also have a Schwab account, but currently nothing is in it. I’d like to put something that account. I’m thinking SCHD for a little dividend income, but I’m open to suggestions. I see no purpose in buying their S&P 500 fund or total stock market fund. I want something to compliment what I currently have.

Thanks in advance.
Imo, you have one of the best portfolios available out there. When you add more funds you may spend more time and energy but get less return in the end.
So should I just forget about the Schwab account and not use it for anything?
That's entirely reasonable.

I prefer simplicity so just one taxable brokerage account unless there is some good reason to have two, which I don't see here.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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Re: What fund to add?

Post by Oak&Elm »

At 45 yo if you want to keep 2 brokerage accounts go ahead. I have one at Fidelity and a second at Vanguard, it’s not really much work to have multiple accounts. (Yes, it’s more than zero effort) If you were 65 yo I would say simplify everything and make life easier for your spouse or heirs. Just for fun I take all my dividends from my Vanguard account and purchase different funds outside my normal 3-fund basic portfolio in Fidelity. One of my favorites is NTSX Wisdom Tree Efficient Core fund. Just do a search on Bogleheads and you can find a couple threads about it.
Good luck
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ruralavalon
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Re: What fund to add?

Post by ruralavalon »

When thinking about adding anything a question I always ask myself is "what's the point?" or "why bother?"

Using the example of WisdomTree U.S. Efficient Core Fund (NTSX) ER 0.20%, Trailing Twelve Months (TTM) Yield = 0.87%. If you wanted that fund then it could be held at Vanguard, Fidelity or Schwab. There is no reason I can see to have another taxable brokerage account at another fund firm.
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bertilak
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Re: What fund to add?

Post by bertilak »

ruralavalon wrote: Tue Sep 21, 2021 3:27 pm When thinking about adding anything a question I always ask myself is "what's the point?" or "why bother?"
In the same vein, a quote from a link in Taylor's post above that resonated with me:
  • Antoine de Saint-Exupéry: "A designer knows he has achieved perfection not when there is nothing left to add, but when there is nothing left to take away."
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
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