Investing Thread?

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kmacht

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Kmacht
I tried the search button but didn't find much other than someone asking to create an investing sub forum a ew years back. Do we have any good threads on here for investing, particularly for beginners? I just fired my financial investor as he was taking 1.5% a year, hasn't changed or reviewed any of my investments in almost 2 years despite only growing 3% total over the past 2 years and I could never get ahold of him on the phone when needed. The more I look into it the more I think that just putting a sizeable chunk of money in a simple index or mutual fund would make more sense than finding someone else who will also charge me 1.5% to do what was essentially the same thing. My problem is that there are too many options out there. First up is finding and funding a brokerage account. I see lots of recommendations both for and against many of the major companies that offer low or no cost brokerage accounts (Robinhood, SoFi, Vanguard, Fidelity, etc). For buying one or two simple index funds they all seem to be about the same so how do you decide which is best without actually opening accounts with all of them to check out what is offered. What do you look for in a brokerage account and why? After that, it's what to invest in. I am not interested in single stocks. I just want somewhere I can park my money long term and have it earn a better interest than the savings accounts it sits in now. Mutual funds / ETF's seem like the best place to me but even then, there are hundreds of them. If going with a S&P 500 index fund for example, do you just choose the one with the lowest fees since they are all supposed to mirror the same index or is there more to it than that?

I can't imagine that we don't have a bunch of people on here that are managing their own investments and financial future so if there is a thread out there that I am missing for beginner investors please let me know. Of course, asking a bunch of pilots for financial advice when they also see airplanes as good investment may not be the wisest thing to do :)
 
Oh, there’s at least one large thread here on the subject, but it’s been a few years.

When it comes to the Vanguards or Schwabs as the custodian (who holds the fund(s) in your name, it really comes down to personal choice but if you’re going to buy Vanguard funds, it makes sense to use Vanguard as the custodian because Schwab and others will likely have a fee to purchase a competitors product.

For the funds themselves, there’s plenty of comparisoms out there, but an S&P index or Total Market Index is relatively the same across the various broker/dealers. When you get to specialized/sector funds, there’s 10-yr and lifetime perfomance charts freely available to make your decisions on.

The simplest portfolio would be US Total Market fund and Global Total Market fund and US and Global Total Bond funds, just choose your allocations and re-balance annually to keep the allocation percentages the same year over year.
 
Go where the brains of investing hang out. Plenty of amazing people there, stays polite with firm oversight by professional level volunteers.
Same as here, there are a few less than brilliant posters, but they are corrected by those that are expert.

They are biased toward Vanguard, but probably half the money there is not at Vanguard, or in Vanguard funds. Some have substantial direct stock portfolios.

 
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I keep most of mine in an Fidelity S&P 500 index fund with low load/costs. I believe my 3 yr return on that fund has been close to 32% (obviously making back up ground since Covid), but historically has averaged about 13%. FXAIX has a 0.015% expense ratio, so it's pretty low cost of management since it's just maintaining a weighted average of 80% common stocks in the S&P 500. It's been pretty well proven that over the long term, index funds almost universally outperform managed funds. Some hedge fund managers can outperform for short stints, but maintaining better-than-market averages is tough over longer periods.
 
Rewire that "Buy stock " button to zap your butt. That will train you from buying stock, instead of stock index funds.
 
I just found that boggle heads put one of their investing 101 conferences on YouTube and will start watching it tonight. Their forums look interesting but are a little too deep for someone just trying to figure out which brokerage account to go with and how to sort through all the index fund options.

I would be absolutely thrilled with a portfolio earring 10% or better each year over the next 4 years. My daughter graduates high school next year and it would be nice to make the money we have saved work for us earning interest to help pay for school rather than just drawing down on principal each time a tuition check is due. 10% long term may or may not be realistic for the next 4 or 5 years but anything has to be better than the 0.01% it’s earning for n a savings account.
 
kmacht said:
10% long term may or may not be realistic for the next 4 or 5 years but anything has to be better than the 0.01% it’s earning for n a savings account.
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There are banks now that have better interest rates, though not my own big-name bank for some reason. Vanguard has something called "cash plus account" that works like a savings account basically, is FDIC insured, and gets something like 4.5% now. It's a good place to park money you may need soon and isn't exposed to risk like stocks.
 
Baked Potato said:
There are banks now that have better interest rates, though not my own big-name bank for some reason. Vanguard has something called "cash plus account" that works like a savings account basically, is FDIC insured, and gets something like 4.5% now. It's a good place to park money you may need soon and isn't exposed to risk like stocks.
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We've got one through Synchrony with a current interest rate of 4.64% - it's called a high yield savings account. It's not 10% return, but it is still (mostly) accessible at any time as cash, and it definitely pays off better than keeping it parked in a normal savings account!
 
Pre-Tax:
I'm in Russell Hybrid Growth. That has 11 ticker symbols which is split among Equity, Fixed Income, Real Estate and Non-Classified. Each of those tickers have countless ticker symbols within them.
+10% since Jan 1
+14% last year
(-15% in 2022)


Post Tax:

Equity Stocks
+5% Since Jan 1
+33% last year
(-5% 2022)

Fixed Income Tax Free Stocks/Bonds
+0% since Jan 1
+6% last year
(-11% 2022)
Only expect a 3% return on this, but it's tax free when I withdraw


Thornburg Equity
+11% since Jan 1
+18% last year
(-8% in 2022)
 
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@kmacht , I don't know what time frame you're considering, but if you're looking at the long run you might consider that most of your portfolio growth over the next 30 or 40 years will come from stocks, but along with that growth will come some dramatic swings, positive and negative. You will want to be heavy in stocks, but diversify your stock funds, and also consider using other investments as ways to cushion those stock market swings while riding the long-term upward trend of stocks.

An S&P 500 fund isn't a bad choice (it's averaged a bit over 10% per year since inception), and it's certainly a simple approach, but bear in mind that the S&P500 is weighted by market cap. That means that a few large cap companies (think Amazon, Microsoft, etc.) tend to over-dominate the index and this can lead to excessive volatility. It'll average out and will probably be okay over 40 years, but if you want to smooth things out over a shorter term then look for ETF investments across a blend of large cap, mid cap, and small cap funds, both domestic and international. Also a smaller amount in a bond fund, maybe a commodity fund or real estate fund, too. Look at the mix and rebalance once or twice a year. Otherwise, let it ride and it should grow nicely in the long run.

Stick with the funds for most of your investing; you can lose your shirt trying to pick the next Amazon. If you want to do some individual stock picking, have fun and maybe you'll get lucky, but think of it as entertainment (like a weekend in Vegas) and keep the amounts small.

CDs and money market funds are paying decently right now (5-ish percent) and are good for short-term investments when you might want to access cash soon. My CDs are set up with staggered maturity dates, so that one matures each quarter but are all 12-month CDs for a bit better rate. You can, for example, split money between a 3-month, a 6-month, a 9-month, and a 12-month CD. As each matures (the first in 3 months), you buy a 12-month CD and just keep it rolling as long as CD returns stay up. Otherwise, each quarter you can consider whether there's a better investment option.

If you do this, you probably don't want to have any CDs longer than 12 months. The current uncertainty in the market is reflected in CD rates being lower for the longer term notes. Right now, CD terms of 12 months or less are over 5%, but a 5-year CD is only paying about 3.75%.

OR, you could just take it all to the track. I suggest you bet the jockey, not the horse. The top-ranked apprentice jockey is usually on a good mount and he is often given a weight allowance, but bet him to show, never to win, and you'll have a better chance of taking home a little money.
 
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Half Fast said:
When did you buy Boeing?
;)
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For me it was right after it dropped when the first 737 MAX went down. Or maybe the second, I don't remember. I figured, now knowing any better, that Boeing as a whole couldn't really be one huge steaming pile of cock-ups, so their stock was bound to rebound. Silly me.

As an ex Ameritrade employee -- back when it was just Ameritrade, pre-TD -- I still had ONE account there (my wife's IRA) when Schwab migrated to their platform. What a stunning disappointment. It's about the worst thing I've ever seen for trading, even worse than Wells Fargo Advisors was. Fortunately I have moved most of our accounts to E*Trade. Even the checking and savings. They're paying 4.5% on savings, and 3% on checking. We can use anybody's ATM we like, they cover 100% of the fees.

I subscribed to Motley Fool for a year and followed some of their recommendations. About half were pretty obvious, and half of the rest have turned out to be horrible investments. Yeah, sure, they recommended NVDA and AMZN... right there alongside PAYC an LULU and SNOW. Dropped Motley Fool and am sorting out the wheat from the chaff.

E*Trade also offers their "core portfolio" service. It's an automated managed investment account that costs you 0.30% annually. You get to pick your goal and risk tolerance, then they manage the investments. I put some into a new account to try that out. It's way too early to tell how it will do long term; it's up just a touch over 3% since I opened it a couple months ago. If this keeps up I'll probably drop some more money into it.
 
My financial advisor hates it when I show him this chart. I just keep him around to buy American Funds for my kids' 529.

I'm the purple line. No you can't hire me.

Screenshot_20240723_215628_ETRADE.jpg
 
I'm a big fan of low expense index funds. Just the other day I told my kids how when I left my first job in '97 I dumped some money into an Vanguard S&P 500 fund. Without ever thinking about it, it's up 894%. I've used Fidelity since the mid 80s and only had one bad experience w/ them (was a somewhat unique situation). IMO, you can't go wrong w/ Fidelity, Schwab or Vanguard and index funds and making sure you're not investing (stocks & bonds) money you actually need w/in ~5 years.
 
Mahneuvers said:
I'm a big fan of low expense index funds. Just the other day I told my kids how when I left my first job in '97 I dumped some money into an Vanguard S&P 500 fund. Without ever thinking about it, it's up 894%. I've used Fidelity since the mid 80s and only had one bad experience w/ them (was a somewhat unique situation). IMO, you can't go wrong w/ Fidelity, Schwab or Vanguard and index funds and making sure you're not investing (stocks & bonds) money you actually need w/in ~5 years.
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Same. I'm pretty well split between an index fund and a managed fund. I've read something like less than 10% of managed funds beat market average. Apparently @NealRomeoGolf is in that percentile.
 
Mahneuvers said:
I'm a big fan of low expense index funds. Just the other day I told my kids how when I left my first job in '97 I dumped some money into an Vanguard S&P 500 fund. Without ever thinking about it, it's up 894%. I've used Fidelity since the mid 80s and only had one bad experience w/ them (was a somewhat unique situation). IMO, you can't go wrong w/ Fidelity, Schwab or Vanguard and index funds and making sure you're not investing (stocks & bonds) money you actually need w/in ~5 years.
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Agreed. For the <5 year money, CDs and MMs are decent options at the moment.

I’d suggest doing the long-term stuff inside a Roth as much as possible. The tax advantages will matter more and more as time goes on.
 
Half Fast said:
...I’d suggest doing the long-term stuff inside a Roth as much as possible...
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Yep. I've been pushing Roth on my kids as a no-brainier. Younglings are reluctant as retirement is so far away and their cash needs are immediate, but, being able to withdrawal principal tax free makes it more palatable. If you're getting on in years and/or making some $ then Roth is a harder decision (worthy of a financial advisor/planner guidance).
 
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Mahneuvers said:
Yep. I've been pushing Roth on my kids as a no-brainier. Younglings are reluctant as retirement is so far away and their cash needs are immediate, but, being able to withdrawal principal tax free makes it more palatable. If you're getting on in years and/or making some $ then Roth is a harder decision (worthy of a financial advisor/planner guidance).
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I’m retired but I moved a chunk from my conventional IRA into a Roth last year and I’ll move more this year. It’ll only take 2 or 3 years to earn back the tax hit, and from then on the earnings and withdrawals are free. Plus, dropping the conventional IRA down helps with the RMDs I’ll see in about 10 years.
 
StraightnLevel said:
...I have roughly zero likelihood of being in a higher tax bracket after I retire than I'm in today....
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With 35T in debt, the future is even more uncertain. What I've read is to hedge with investments in both Roth and traditional.
 
StraightnLevel said:
The challenge is your current tax rate vs. your tax rate in retirement. I don't know about you, but I have roughly zero likelihood of being in a higher tax bracket after I retire than I'm in today.
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StraightnLevel said:
All that being said, someone who is early in their career and in a lower marginal tax bracket should strongly consider it.
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Exactly. I’m at a higher rate now than I was for the first third or so of my career.

And don’t forget to consider RMDs. You may end up pulling more from your conventional IRA than you need to when you’re in your 70s and getting pushed up into a higher bracket. I’m 63 and that will be my situation unless I take action now. Each year I’m moving just enough into a Roth to max out my current lower bracket and I’ll never pay another dime of tax on it.

If I wait until RMDs start, I’ll get bumped into a higher bracket and that money and it’s earnings will be taxed at a higher rate.
 
Mahneuvers said:
With 35T in debt, the future is even more uncertain. What I've read is to hedge with investments in both Roth and traditional.
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Yes, I (and Mrs Potato) put money into both. We are told to diversify our investments - certainly diversifying in tax strategy is part of that?

We don't know what our income levels will look like in a couple decades any more than we will know what tax law will look like.
 
Half Fast said:
Exactly. I’m at a higher rate now than I was for the first third or so of my career.

And don’t forget to consider RMDs. You may end up pulling more from your conventional IRA than you need to when you’re in your 70s and getting pushed up into a higher bracket. I’m 63 and that will be my situation unless I take action now. Each year I’m moving just enough into a Roth to max out my current lower bracket and I’ll never pay another dime of tax on it.

If I wait until RMDs start, I’ll get bumped into a higher bracket and that money and it’s earnings will be taxed at a higher rate.
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I will probably be moving my pre-tax through a SoSEPP as soon as I hang it up (maybe 6 years, I'll be 56) to the post tax investments to make sure I don't get bit by RMDs later on down the road. Then I will only be paying the taxes on the dividends, not what I withdraw and can take out less than the RMD and let it build up if I want to.
 
Investing???

My son signed up for an e trade account for an economics class he has.. I asked what his straggly was going to be for investing.... his remark borders on political heresy which is verboten here, but let just say he is keeping a close eye on those who have offices off of Constitution and Independence Ave's

Works for me
 
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You need to ask yourself a lot of questions. What's your timeline, what is your risk tolerance, (could you accept a 20% drop? 40%? or panic and sell? The S&P has not always been a straight rise.) how much do you understand about investing?

Do you believe inflation is over? The US$ is stable? Understand that diversification is not a broad ETF in US Stocks or lots of stocks? Or even US Stocks and bonds.

Good luck!
 
kmacht said:
I just found that boggle heads put one of their investing 101 conferences on YouTube and will start watching it tonight. Their forums look interesting but are a little too deep for someone just trying to figure out which brokerage account to go with and how to sort through all the index fund options.

I would be absolutely thrilled with a portfolio earring 10% or better each year over the next 4 years. My daughter graduates high school next year and it would be nice to make the money we have saved work for us earning interest to help pay for school rather than just drawing down on principal each time a tuition check is due. 10% long term may or may not be realistic for the next 4 or 5 years but anything has to be better than the 0.01% it’s earning for n a savings account.
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Super too-short answer for a Boglehead approach...

Use these funds at Fidelity, Vanguard, or your favorite brokerage company:

VTI - Whole US market
VXUS - Whole (sorta) International markets
BND - US-based Bonds

As for the % allocation between those three, that's a personal decision. More BND is less risky (mostly), no BND is aggressive. Market weight between VTI to VXUS is roughly 60/40, but lots of folks use a skew for more of a US allocation (e.g 80/20).

If you're planning on using the funds over the next 4-5 years, probably want to keep a 12-18 month chunk in cash at all times in case the market goes poof right before the next tuition payment is due. If you do that, no need for BND probably (depends on risk tolerance).

For cash, use a HYSA or one of USFR or SGOV funds that aren't taxed at the state level since they're US Treasury funds.
 
mark.staggs said:
Super too-short answer for a Boglehead approach...

Use these funds at Fidelity, Vanguard, or your favorite brokerage company:

VTI - Whole US market
VXUS - Whole (sorta) International markets
BND - US-based Bonds

As for the % allocation between those three, that's a personal decision. More BND is less risky (mostly), no BND is aggressive. Market weight between VTI to VXUS is roughly 60/40, but lots of folks use a skew for more of a US allocation (e.g 80/20).

If you're planning on using the funds over the next 4-5 years, probably want to keep a 12-18 month chunk in cash at all times in case the market goes poof right before the next tuition payment is due. If you do that, no need for BND probably (depends on risk tolerance).

For cash, use a HYSA or one of USFR or SGOV funds that aren't taxed at the state level since they're US Treasury funds.
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Finally getting back to this thread. Thanks everyone for all the advice so-far. I'm leaning towards a 60/20/20 split across three ETF's to cover US markets, International Markets, and Bonds while trying to limit any overlap. I looked into the three above and VTI looks like a solid investment but VXUS has only earned an average of 4% a year over the past 5 years and BND started dropping in 2022, never recovered and has been mostly flat since. I think I would be better off parking the 20% chunk of money in CD"s rather than the BND fund. What am I missing on VXUS and BND that makes them recommended?
 
kmacht said:
Finally getting back to this thread. Thanks everyone for all the advice so-far. I'm leaning towards a 60/20/20 split across three ETF's to cover US markets, International Markets, and Bonds while trying to limit any overlap. I looked into the three above and VTI looks like a solid investment but VXUS has only earned an average of 4% a year over the past 5 years and BND started dropping in 2022, never recovered and has been mostly flat since. I think I would be better off parking the 20% chunk of money in CD"s rather than the BND fund. What am I missing on VXUS and BND that makes them recommended?
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Yeah, bonds were negative a couple years ago in 2022 like @Mahneuvers said. For BND, you have to look at the yield (some charts are misleading). BND's 1-year return is currently 5.09%. VXUS hasn't performed as well as the US market recently, but it's a hedge against a possible correction of the US market vs international. You could be fine just going with VTI or VOO and using a HYSA for your chunk of cash. Currently Fidelity and others have money market funds and HYSA's that are getting > 5%.
 
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