newbie bond index fund question

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Topic Author
edward
Posts: 2
Joined: Wed Sep 21, 2022 2:59 pm

newbie bond index fund question

Post by edward »

Hello all,

I am a total greenhorn to this, and have read a few Buffet books, then the bogle books that finally made sense... I have my ira in Charles schwab for a while and just came to realize that i actually have to put it to work... :?

I used the 3 fund strategy and have invested in:

US total stocks - SWPPX
International - SWISX
Bonds - SWAGX

The reason I selected these over the vanguard funds from the book is that Charles Schwab charges a 75 dollar fee. I am wondering if it is a good choice to go with Charles Schwab instead of Vanguard (and pay the fee) or, does it matter ?


After reading the first Buffet books, i went ahead and bought a few Individual stocks to try it out.. Now that I've discovered the Index Funds, is it a good move to sell those individual stocks and buy into the Funds or just leave as is ?

Any information and help is greatly appreciated !

Cheers.

Ed
cbs2002
Posts: 389
Joined: Thu Feb 27, 2020 2:10 pm

Re: newbie bond index fund question

Post by cbs2002 »

Those funds are fine. Schwab charges to buy Vanguard funds because they want you to buy Schwab-brand funds. They are functionally identical.

Yes sell all individual stocks and allocate the money according to your desired three-fund allocation. If they are in a retirement fund, you won't have to worry about gain/loss. If in a taxable account, you'll have to report the gains or losses on your taxes. Best to get out of that individual stock game ASAP and leave it in the rearview.

Read the wiki and post your portfolio according to the instructions and you'll get better responses to your questions. You are on the right track by being here, good luck!
dbr
Posts: 42508
Joined: Sun Mar 04, 2007 9:50 am

Re: newbie bond index fund question

Post by dbr »

They are fine. The expense ratio might even be a tad less than the equivalent Vanguard fund. If you are at Schwab it makes sense. I have a Schwab account as the directed brokerage in my 401k and hold the TIPS fund SWRSX there.
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squirrel1963
Posts: 810
Joined: Wed Jun 21, 2017 10:12 am
Location: Portland OR area

Re: newbie bond index fund question

Post by squirrel1963 »

edward wrote: Wed Sep 21, 2022 4:08 pm Hello all,

I am a total greenhorn to this, and have read a few Buffet books, then the bogle books that finally made sense... I have my ira in Charles schwab for a while and just came to realize that i actually have to put it to work... :?

I used the 3 fund strategy and have invested in:

US total stocks - SWPPX
International - SWISX
Bonds - SWAGX

The reason I selected these over the vanguard funds from the book is that Charles Schwab charges a 75 dollar fee. I am wondering if it is a good choice to go with Charles Schwab instead of Vanguard (and pay the fee) or, does it matter ?


After reading the first Buffet books, i went ahead and bought a few Individual stocks to try it out.. Now that I've discovered the Index Funds, is it a good move to sell those individual stocks and buy into the Funds or just leave as is ?

Any information and help is greatly appreciated !

Cheers.

Ed
I think they are great choices. If you want an ETF you can get an ETF from Vanguard (or even Schwab). The biggest advantage of an ETF Imho is its portability to other brokers, it can be moved in-kind (without selling) if you change broker.
| LMP | safe portfolio: TIPS ladder + I-bonds + Treasuries | risky portfolio: US stocks / US REIT / International stocks |
mongstradamus
Posts: 316
Joined: Mon Nov 04, 2013 11:46 pm

Re: newbie bond index fund question

Post by mongstradamus »

edward wrote: Wed Sep 21, 2022 4:08 pm Hello all,

I am a total greenhorn to this, and have read a few Buffet books, then the bogle books that finally made sense... I have my ira in Charles schwab for a while and just came to realize that i actually have to put it to work... :?

I used the 3 fund strategy and have invested in:

US total stocks - SWPPX
International - SWISX
Bonds - SWAGX

The reason I selected these over the vanguard funds from the book is that Charles Schwab charges a 75 dollar fee. I am wondering if it is a good choice to go with Charles Schwab instead of Vanguard (and pay the fee) or, does it matter ?


After reading the first Buffet books, i went ahead and bought a few Individual stocks to try it out.. Now that I've discovered the Index Funds, is it a good move to sell those individual stocks and buy into the Funds or just leave as is ?

Any information and help is greatly appreciated !

Cheers.

Ed
The only thing I will add it may not matter to you but schwab international fund doesn't include emerging markets , so you may want to to add SCHE or VWO to your SWISX allocation. Typically if you want to follow vxus/vtiax lead its 75/25 between developed, SWISX, and Emerging , VWO/SCHE. Also your probably know this but will throw it in there swtsx is equivalent to vtsax and vti, it could be something I would consider over swppx for tad more diversification , as swppx is only sp500 .
Last edited by mongstradamus on Wed Sep 21, 2022 6:04 pm, edited 1 time in total.
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Duckie
Posts: 8937
Joined: Thu Mar 08, 2007 2:55 pm

Re: newbie bond index fund question

Post by Duckie »

edward, welcome to the forum.
edward wrote: Wed Sep 21, 2022 4:08 pm I used the 3 fund strategy and have invested in:

US total stocks - SWPPX
International - SWISX
Bonds - SWAGX
Just so you know, SWPPX is 500 Index which covers around 80% of the US market. If you want a total US stock fund the ticker is SWTSX. And SWISX is only developed markets, about 75% of the international market. It's missing emerging markets and Canada.
The reason I selected these over the vanguard funds from the book is that Charles Schwab charges a 75 dollar fee. I am wondering if it is a good choice to go with Charles Schwab instead of Vanguard (and pay the fee) or, does it matter ?
If you want to stay at Schwab and buy Vanguard funds you can buy the ETFs with no transaction fees:
  • VOO -- 500 Index
    VTI -- Total US stock
    VXUS -- Total International stock
    BND -- US bonds
After reading the first Buffet books, i went ahead and bought a few Individual stocks to try it out.. Now that I've discovered the Index Funds, is it a good move to sell those individual stocks and buy into the Funds or just leave as is ?
I would sell the individual stocks and just go with index funds/ETFs.
the_wiki
Posts: 381
Joined: Thu Jul 28, 2022 11:14 am

Re: newbie bond index fund question

Post by the_wiki »

edward wrote: Wed Sep 21, 2022 4:08 pm Hello all,

I am a total greenhorn to this, and have read a few Buffet books, then the bogle books that finally made sense... I have my ira in Charles schwab for a while and just came to realize that i actually have to put it to work... :?

I used the 3 fund strategy and have invested in:

US total stocks - SWPPX
International - SWISX
Bonds - SWAGX

The reason I selected these over the vanguard funds from the book is that Charles Schwab charges a 75 dollar fee. I am wondering if it is a good choice to go with Charles Schwab instead of Vanguard (and pay the fee) or, does it matter ?
Great choices. Schwab is a huge money manager just like vanguard, and those are low cost funds tracking the same indexes that Vanguard funds would. There is no reason to change and your returns will be (close enough to) the same.

Some have mentioned SWTSX as a total market fund. That is fine, but SWPPX and SWTSX end up performing so close over time, that it won't really matter. Won't hurt to swap or stay where you are. Same story with those saying to add an emerging markets fund. You can if you want, but what you have will perform very similarly whether you add it or not.

What you have right now is a good simple portfolio and there's no reason to mess with it, if you ask me. That's kind of a good recipe for bad behavior. once you start making tweaks, it is hard to stop.

After reading the first Buffet books, i went ahead and bought a few Individual stocks to try it out.. Now that I've discovered the Index Funds, is it a good move to sell those individual stocks and buy into the Funds or just leave as is ?
A good exercise is to ask yourself if you would buy the stocks you are holding today if you did not already own them. If the answer is no, which it sounds like it is, then sell them. Especially in a tax-deferred account like an IRA because you will not have to worry about paying taxes if you've have any gains. Chances are you already also own those stocks via your index funds anyway.
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ruralavalon
Posts: 23794
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: newbie bond index fund question

Post by ruralavalon »

Welcome to the forum :D .

edward wrote: Wed Sep 21, 2022 4:08 pm Hello all,

I am a total greenhorn to this, and have read a few Buffet books, then the bogle books that finally made sense... I have my ira in Charles schwab for a while and just came to realize that i actually have to put it to work... :?

I used the 3 fund strategy and have invested in:

US total stocks - SWPPX
International - SWISX
Bonds - SWAGX

The reason I selected these over the vanguard funds from the book is that Charles Schwab charges a 75 dollar fee. I am wondering if it is a good choice to go with Charles Schwab instead of Vanguard (and pay the fee) or, does it matter ?
Since your IRA is with Schwab I suggest using those three Schwab index funds.

But SWTSX, not SWPPX, is the Schwab Total Stock Market Index Fund.

edward wrote: Wed Sep 21, 2022 4:08 pmAfter reading the first Buffet books, i went ahead and bought a few Individual stocks to try it out.. Now that I've discovered the Index Funds, is it a good move to sell those individual stocks and buy into the Funds or just leave as is ?
Are the "few Individual stocks to try it out" in your IRA or in a taxable brokerage account?

If in an IRA then sell now and replace with your desired low cost index funds.

If in a taxable brokerage account, then beware of tax consequences:
1) How "few" is that? What is the capital gains/loss status and amount for each?;
2) What is your tax bracket, both federal and state?; and
3) What is your rate for capital gains?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
Topic Author
edward
Posts: 2
Joined: Wed Sep 21, 2022 2:59 pm

Re: newbie bond index fund question

Post by edward »

Thank you so much to everyone who have chimed in !! :-D All the information have definitely helped a lot and i feel less worried now... phew...

One thing I am still have a question on, if I sell the individual stocks for less money than I purchased it for, would that be a loss (it is in an IRA account)..

Thanks again and cheers ! :sharebeer

Ed
dbr
Posts: 42508
Joined: Sun Mar 04, 2007 9:50 am

Re: newbie bond index fund question

Post by dbr »

edward wrote: Mon Sep 26, 2022 10:02 am Thank you so much to everyone who have chimed in !! :-D All the information have definitely helped a lot and i feel less worried now... phew...

One thing I am still have a question on, if I sell the individual stocks for less money than I purchased it for, would that be a loss (it is in an IRA account)..

Thanks again and cheers ! :sharebeer

Ed
As a tax question, no, that is not a loss you report on your tax return.

As an investing question it is a realized loss in the sense that you went from having more money to having less money via an investment in those stocks.

Also as an investing question you have lost value in your portfolio already whether or not you sell. The difference between keeping the stocks or selling them and buying something else is what happens next so far as what either investment might gain or lose over time.
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ruralavalon
Posts: 23794
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: newbie bond index fund question

Post by ruralavalon »

edward wrote: Mon Sep 26, 2022 10:02 am Thank you so much to everyone who have chimed in !! :-D All the information have definitely helped a lot and i feel less worried now... phew...

One thing I am still have a question on, if I sell the individual stocks for less money than I purchased it for, would that be a loss (it is in an IRA account)..

Thanks again and cheers ! :sharebeer

Ed
I'm an IRA it is not a tax-deductible loss.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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