Investing

Discussion in 'Fan Forum - Random Thoughts' started by RubADub, Dec 2, 2018.

  1. RubADub

    RubADub Well-Known Member

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    I'm looking to invest in mutual funds and/or ETFs. Do any of you have any experience in doing so? What are the pros and cons of each? Which would you recommend most?
     
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  2. larrydavid

    larrydavid Well-Known Member

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    here's simple/beginner info: https://www.bogleheads.org/wiki/Three-fund_portfolio

    I like getting funds with very small fees, so I like vanguard.
     
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  3. Juan Gris

    Juan Gris Well-Known Member

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  4. larrydavid

    larrydavid Well-Known Member

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    WU TANG
     
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  5. Shoupaloop

    Shoupaloop Well-Known Member

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    The ETF's are going to be super low fees.TD Ameritrade has no commission fee ETFs. I have some Class A mutual funds (you pay almost all the fees up front, with minimal annual fees.) They pay dividends every December, I'm anxious to see how they pay out this year. Other classes of mutual funds take less up front, but hit you with more annual fees.

    I like to spread it around to different categories. Currently doing Natural Resources, SPDR DOW JONES Real Estate, Large Growth Fund, Vanguard S&P 500 ETF, Technical Opportunities, Financial Opportunities, Emerging Markets, and Small Cap Value Fund. Everything has taken a beating this year, with the exception of the Real Estate and the Technical Opportunities funds... It's almost all higher risk funds, so I'm not super worried until closer to retirement time, plus some of the funds I'm in are leveraged to do better when our economy is down. (Market was down 799 today, and all 3 were down over 3%, so the recession may be inching in on us.)
     
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  6. skiing311

    skiing311 Well-Known Member

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    Asset allocation (stocks vs. bonds, etc.) is the most important factor in determining risk/return. Stay away from buying individual stocks or bonds and, instead, use low-cost index funds and ETFs to construct a portfolio with an ideal asset mix for your time horizon.

    For actively managed funds that don’t just follow an index, I generally avoid funds with expense ratios >1% (or >0.50% for bond funds). For passively managed index funds, I generally avoid funds with expense ratios >0.15% for simple indexes and >0.50% for more complicated indexes/asset classes.

    (ETFs trade on the open market exchanges, which provides flexibility but you pay trade commissions. Most ETFs are very liquid, but some aren’t, and that can cause some issues if you want to trade frequently. Mutual funds don’t trade on the market, but most will gladly take your money. They can be less flexible than ETFs and some may be less accessible, depending on the broker you use. I use a mix of both ETFs and open-ended mutual funds.)

    An old adage is, “invest your age in bonds.” (i.e, if you’re 35, then 35% of your portfolio should be in bonds/fixed-income and 65% in stocks/equity.) I still think that is true enough (although perhaps a little conservative).

    Don’t forget to allocate some of your portfolio internationally. I shoot for 40% international within the equity portion of my portfolio. Some international bonds are a good idea, too.

    I also like to overweight inflation-protected securities (TIPS) in the bond portion of my portfolio.

    One of my favorite ETFs is RSP (Guggenheim S&P 500 Equal Weight ETF). This fund buys all the 500 stocks in the S&P 500 index but weights them equally instead of by market cap (as most index funds do). The purported advantage to this approach is that they rebalance the portfolio each quarter, so they always have to sell the stocks that went up and buy the stocks that went down—buy low; sell high.

    Qualifications: M.S. in finance, 2 years at an investment management firm, 12 years in bank treasury management. I do have some relevant qualifications/experience, but, seriously, don’t take my advice or anyone else’s as gospel. Use good/honest advice as input, but do the research, build a consensus of opinions, avoid advice you have to pay for and advice that promises more than sounds reasonable, and trust your instincts.
     
    #6 skiing311, Dec 5, 2018
    Last edited: Dec 7, 2018
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  7. Terp

    Terp Well-Known Member

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    Good post.

    Pretty heavy allocation to international.
     
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  8. Running123

    Running123 Well-Known Member

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    I worked for Vanguard for three years and I agree with you. Everyone listen to this guy.

    Funny story: right when I was leaving, they were rolling out an advisory service. I'd make the exchanges for the customer once the recommendations had been made. Nine times out of ten the advisor would say something like "yeah we had a great discussion and we're going to go 100% into the target retirement fund". (This is a single fund with a stock/bond mix that shifts based on when you plan to retire.) I wasn't/am not a licensed planner but it always made me scratch my head. Like... we're charging people for this advice? It seemed really lazy. They are otherwise a company who does right by their investors so I'm sure it's probably a lot better now.
     
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  9. Running123

    Running123 Well-Known Member

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  10. skiing311

    skiing311 Well-Known Member

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    Thanks.

    Yeah, that international allocation is probably higher than what most suggest. Equity returns (domestic and international) are already so highly correlated, the international exposure really just provides some protection against short-term regional economic disturbances. It won't necessarily protect against the contagion from systemic economic shocks (e.g., the Great Recession), but I like the allocation as a backstop against, for example, some of the regional economic tinkering that's going on (Eurozone and NAFTA). If something falls apart with the NAFTA stuff, for example, you could have a short-term reaction with North American stocks without any impact to the EAFE (Europe, Australasia, and Far East) index.
     
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  11. Running123

    Running123 Well-Known Member

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    What if I told you I could offer a zero-risk, 120% return investment product. One that Wall Street DOESN’T want you to know about. PM me for details....
     
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  12. skiing311

    skiing311 Well-Known Member

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    Sign me up! Ha
     
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  13. robb

    robb Well-Known Member

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    Everything I know about investing, I know from playing Gazillionaire.
     
  14. TrickyRainbow

    TrickyRainbow Well-Known Member

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    Since inflation rates have made 401k irrelevant, and my job does jackshit for 401k, I have a few. I'm at a pace to make 8 times 401K.

    Thats ~ 3.2 Mill for all you math junkies. Sorry Nick.
     
  15. Ate16AM

    Ate16AM Well-Known Member

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    This post is too adult for me.
     

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