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943660 No.943660 [Reply] [Original]

How do I decide a mutual fund to invest in? I currently am invested in NLOAX through statefarm, but im looking to transfer to Vanguard.

How do I decide which of their funds to use? I looked at their target retirement funds and VFFVX is the one they recommend for me due to my age and what not. How do I know if this is the best choice?

>> No.943670

Vanguard's target retirement funds are the best in the industry if you're looking for a simple, one-fund approach. There are advantages and disadvantages of using an all-in-one fund, but often its the best approach for many investors.

If you want to take more control over your specific allocations, look into a "Four Fund Portfolio" which replicates the same constitute investments as the target retirement fund, but allows you to set your own allocations.

Either way, you may also wish to consider adding a REIT index fund at some point. Real estate can be a nice compliment to a starting portfolio of equities and fixed income. You can do this from the start, or add it later depending on your account balances.

>> No.943675

>>943670
thanks for the reply.

I could add the REIT to my roth ira, or would it just be a second fund? I dont fully understand what you mean by "adding" it.

>> No.943682

>>943675
Your IRA account (or 401k or any other type of account) can hold as many or as few mutual funds as you wish. You're not limited to putting one fund in the account.

>> No.943684

vanguard is going the way of enron, don't buy into the reddit/4chan shilling

>> No.943685

>>943682
holy crap i didnt know that. So when I make monthly contributions to it it'll automatically split it up?

>> No.943693
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943693

>>943685
Yes. If your contributions are made automatically, then you'll decide how to make the split when you setup the contributions (and you can change it at any time). If you make a "manual" deposit to your account, you specify your allocations at the time of the deposit (pic related)

>> No.943695

>>943693
well that's awesome. thanks so much dude

>> No.943733

>>943684
Proof?

>> No.944412

>>943670
>REIT
That's what vanguard is

>> No.944453

>>944412
> Be you
> Know nothing about Vanguard

>> No.944632

If I had to pick only 1, it would be VTSAX.

>> No.944635

>>944632
i dont have 10k minimum

>> No.944642

>>944453
Vanguard is a REIT you fucking idiot

>> No.944647

>>944635
https://personal.vanguard.com/us/funds/snapshot?FundId=0057&FundIntExt=INT

>> No.944649

>>944647
thanks i'll add that one to my list

>> No.944720

>>944647
>>944649
Dividend funds are usually a bad idea for young investors unless you're putting them inside an IRA or 401k. They're tax inefficient, much more so than a growth fund or value fund. This will eat into your compounding, and your accumulated balance at the end of the day will be significantly less.

Stick with balanced funds like the Target Retirement or the Total Market funds.

>>944642
No. Stop being stupid.

>> No.944721

>>944720
I'm putting these funds into an IRA tho.

I plan on having the target retirement fund and probably one other.

>> No.944763

>>944721
In an IRA, go with (90%) VFFVX and (10%) VGSIX (VGSLX if you're investing enough).

If you're willing to add a little more risk, later add VISVX (or VSIAX) up to 10%. Strategic over-weighting into small-cap value has been proven accretive to long-term portfolios.

There's no overwhelming reason to add more funds after that, but down the road you might consider VDADX, VGHCX, or VWELX, which are some of Vanguard's best specialized and active funds. Also, keep an eye open in case either of the PRIMECAP funds open.

>> No.944782

>>944642
Vanguard is an investment manager -- REITs may be one of their offerings, but Vanguard itself is not an REIT.

Never post on this board again

>> No.944818

Do the target retirement fund for 401K
For IRA do 100% stock (if you're young) 60% domestic stock, 30% foreign stock, 10% REIT. I use VTSMX (domestic), VTIAX (Foreign), VGSLX (REIT)

>> No.944874

>>944720
What about this one? It was the other one I was looking at on my list.
https://personal.vanguard.com/us/funds/snapshot?FundId=5102&FundIntExt=INT

>> No.944955

>>944874
You should never put a tax-managed fund inside a tax-advantaged account like an IRA or a 401k (which is what OP is asking about). Tax-managed funds sacrifice some gains in favor of tax savings. But inside a tax-advantaged account, you don't have tax consequences so all you're doing is giving up gain without getting anything in return.

In a taxable account, it's a perfectly fine fund. I have $400K invested in it myself.

>> No.945017
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945017

I am a new investor that's just about to get my real world life going. I am 20 years old and would like to know what index fund and or strategy I should invest my 3k into. Any suggestions? I just want to provide my self with the best possible future.

>> No.945020

>>944782
listen, kid, you dont know what you're talking about. *sighs* you're out of your depth. i am not going to contnue this conversation beause i am wright, maybe you can look back at this conversation as a learning experience on how to debate something m'kay?

>> No.945023

>State Farm
>1.17% expense ratio

Fuck that expense garbage and fuck State Farm.

>> No.945041

>>944955
what does tax-managed fund mean?


>>945023
OP here yes i agree

>> No.945074

>>945041
>what does tax-managed fund mean?
A tax-managed fund is an actively managed mutual fund that seeks to minimize the taxable income and gains realized by investors. A tax-managed fund will typically trade less frequently, avoid excessive dividends, hold well-performing stocks longer, and attempt to offset capital gains whenever possible.

Taxes can be real drag on a portfolio's performance, especially when you're in the upper tax brackets. So while a tax-managed fund will usually underperform a comparable fund by 1-2%, that difference can be more than made up by the tax savings.

(And, sometimes, a tax-managed fund will even outperform a comparable fund because the tax-managed fund tends to adhere more closely to a strict buy-and-hold philosophy without second-guessing by the fund's advisor.)

>>945017
Do you have a full-time job with a steady wage or salary? Have you established a cash emergency fund of 3-6 months months normal living expenses? Will you have any need for the money in the next five years? Unless you answered "yes" "yes" "no" then you're not situated to invest quite yet.

>> No.945252

>>945074
I finish up school in a month and will get a job within the next following months.

Now I'm used to living on less than 2k per month. So let's say I live on 20k per year. I'm going to be getting a job start at anywhere from 40-60k starting including overtime.

I will have 20k loan and 6k car loan to pay off so that will be first. Once I finsh those off I will start my 6 month emergency fund. Once I'm done with that I will start investing in index funds.

So please tell me Ihaz what next must I do?

>> No.945293

>>945252
>I will have 20k loan and 6k car loan to pay off so that will be first. Once I finsh those off I will start my 6 month emergency fund. Once I'm done with that I will start investing in index funds.
Sounds like you've got a solid plan. Stick with it, and focus on maximizing your career earnings. Your portfolio will take care of itself if you set it up right, add to it whenever possible, and leave it alone.

>> No.945307
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945307

>>945293
That's the thing. How do I "set it up right"

Can you give me some symbols to look into

>> No.945317

>>945307
You're kidding right?

Dude, I'm happy to help people, but if you can't even be bothered to read the thread then you're just wasting my time.

>> No.945325

>>945252
you have that backwards. do a 3 month emergency fund, then pay off your shit, then build it up to 6 months. what happens if you come across an emergency when paying off your loans with your current plan? you're fucked

>> No.945327

>>945317
what books would you recommend for someone interested in options and futures. i fine with textbook style 1000 pagers. that's what i've been reading for learning to trade stocks.

>> No.945387

>>945327
I only give advice from the perspective of a retail investor, so don't take my response out of context.

Futures have no place in a retail investors portfolio. They're too volatile, and there's no evidence that the added risk is paid off in alpha. Therefore, on a risk-adjusted basis, futures are suboptimal.

Options pretty much fall into the same basket. Now in the interests of full disclosure I'll admit that I used to trade a significant portion of my portfolio in options. This was back in 1998-2000, and I was trading long in tech options. If you know anything about market history, you know that I made a lot of money. Not because I was smart or followed intelligent strategies, but because the tech market was insane and irrational.

I also lost a decent chuck on the downside of the bubble. Indeed, it was these losses, coupled with the market timing scandal in 2002-2003, that turned me off of individual equities and active trading altogether. I've followed Boglehead investing principles ever since.

I'm not risk adverse, and my dislike of futures and options has nothing to do with risk. It has to do with risk-reward. I'm happy to take risk when the risk premium makes it a prudent bet. Futures and options just don't meet that criteria.

I'm aware that futures and options can be used in complex hedging strategies, and I acknowledge that these structures can, sometimes, provide appropriate risk-reward metrics. However, I've yet to meet the retail investor who couldn't achieve similar granularity in the risk profile by simply making changes in their core asset allocations (and at lower transaction costs).

Consequently, although I'm hesitant to make an unconditional dismissal of futures and options, the current academic research on investing does not convince me that they should play a role in a retail investor's portfolio.

>> No.945401

>>945387
i'm young and willing to take the risk. i can afford it.

more accurately, i'm trying to learn more about futures/options to seek market discrepancies. for example, the stock price is up and up and up but the other instruments show a different picture.

if you're trying to dissuade me from it, i can respect that. i'll just go read some 10-15 books on it. the high degree of leveraging in futures turns me off and i don't know enough about options to have an opinion. i'm trying to get a broader view. only after digesting the information can i say some strategy X is viable for my risk tolerance.

>> No.945417

>>945401
>i'm young and willing to take the risk. i can afford it.
Sigh. That's not the way risk works.

Having a large risk tolerance doesn't make it optimal to jump into every risky strategy. Take the time to learn about risk premiums.

Besides which, options and futures aren't even inherently risky vehicles. They can actually be substantially less risky than equities alone, depending on how you deploy them. It's just that they way most people use them -- and the way you're thinking about them -- is by definition suboptimal.

I guess my bottom line is that I don't really give financial advice to people who think that "losing it all" is a sound or acceptable strategy. If you care so little for your wealth, then you're not likely to have much of it anyway, desu.

>> No.945452

>>945417
>"losing it all"

never said that. there is an amount i'm willing to lose to learn. if i lose more than that amount, i'll probably never be a successful trader. i'll call it quits and just index invest at that point. you must think i'm one of those guys in the robinhood threads with a $100 "investment" account. additionally, my strategy precludes losing it all.

nothing ventured, nothing gained.

you're assuming a lot about me. i have a trading system. i don't even look at a trade until i have all 3 go signals. even then i have to subjectively analyze the chart. it's been back tested and i'm doing real time papertrading through TOS at the moment.

if you're going to be this cryptic and deflective, i was better off checking amazon's best seller list. i'm going to bed. i have no idea why you're being so dismissive. giving someone a few book recommendations is far from encouraging risky behavior.

>> No.945466

>>945452
>if you're going to be this cryptic and deflective
I've been neither cryptic nor deflective. I've put more time into answering your questions than most people on 4chan put into 50 posts.

>i have no idea why you're being so dismissive
Because you think investing is the same as gambling. Because you claim to have a "system." Because you think is acceptable to endure losses as the cost of playing in the markets. Because you believe in something called "go signals." Because you make stock picks with charts. Because you think paper trading is how you learn to invest. And because you think you need book recommendations to make wealth in the markets.

You seem to have forgotten that you specifically asked me for advice. Don't get pissy just because you don't like the answers I give.

>> No.945497

>>945466
so it shall be. i will learn by myself. bruises and all.

what i asked specifically was books about futures and options. advice outside of that was extraneous.

more knowledge never hurt anyone. good night.

>> No.945643

>>944763
This really cool to read, I literally just set my 401k on this earlier this week based on my research. Essentially the bogle head lazy portfolio page has been my starting point.

>> No.945655

>>945325
Family

>> No.945662

>>945643
Yup. Guess I'll have to refer back to boggle and MMM, since ihaz doesn't have anything to offer me.

>> No.945722

>>945662
I would say he is just giving good advice, the fact that it is so widely found does not make it less valid.