Author Topic: Help me understand what I'm doing  (Read 616 times)

FireAnt

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Help me understand what I'm doing
« on: December 17, 2018, 05:28:24 PM »
I've recently transferred my IRA's from EJ to Vanguard. I was able to confirm a few weeks ago that these funds are free from any back load fees. I've been sitting and waiting to sell them so I can buy into the 2050 fund, but the prices keep going down as I wait longer. Is it worth it to wait for the numbers to creep back up with the current high expense ratios or just bite the bullet? How does someone make these decisions?

*For some reason, the expense ratios aren't listed on Vanguard's website like usual. They are as follows:
FGFCX 2.17%
SVBCX 1.78%
JHLVX 1.79%

IsThisAGoodUsername

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Re: Help me understand what I'm doing
« Reply #1 on: December 17, 2018, 05:34:17 PM »
Unless you're a prescient genius and know when The Bottom is (hint: you're not and neither am I), it's best to invest now.  Your fund may go down tomorrow, or it may go up. You're in it for the long haul. Don't try to Time The Market. You want to spend Time In The Market.

FireAnt

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Re: Help me understand what I'm doing
« Reply #2 on: December 17, 2018, 05:55:30 PM »
Unless you're a prescient genius and know when The Bottom is (hint: you're not and neither am I), it's best to invest now.  Your fund may go down tomorrow, or it may go up. You're in it for the long haul. Don't try to Time The Market. You want to spend Time In The Market.

Oh this I know. I've read that many many times in this forum haha. I just figure if it goes down, it will go up, right? Is it worth waiting for that day when it could be tomorrow, next week, or next year due to the present expense ratios?

Heckler

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Re: Help me understand what I'm doing
« Reply #3 on: December 17, 2018, 06:57:46 PM »
Don't forget that the 2050 fund is also going down at the same time!  It'll be cheaper to buy in after your sale.

https://personal.vanguard.com/us/funds/vanguard/compare?navigatingFrom=5


I'm struggling with a similar issue (selling higher cost SP500 in exchange for VTI after transferring my funds).  My problem is I can't transfer the funds in kind, so will be out of the volatile market for a week or two, depending on two brokerages doing their job based on a fax. 


ILikeDividends

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Re: Help me understand what I'm doing
« Reply #4 on: December 17, 2018, 07:24:29 PM »
Unless you're a prescient genius and know when The Bottom is (hint: you're not and neither am I), it's best to invest now.  Your fund may go down tomorrow, or it may go up. You're in it for the long haul. Don't try to Time The Market. You want to spend Time In The Market.

Oh this I know. I've read that many many times in this forum haha. I just figure if it goes down, it will go up, right? Is it worth waiting for that day when it could be tomorrow, next week, or next year due to the present expense ratios?

Think of it as a transfer.  If you sell in one IRA and then buy back in another IRA, the only thing differentiating the transfer from a buy-and-hold strategy is the period of time between selling, transferring settled funds, and buying back in.  Volatility during that brief period could make the outcome marginally bad, or marginally good; but relatively insignificant in either case from a long term perspective.

If you artificially prolong that time-gap, then you are timing the market.  I would argue that when you do this is irrelevant, and that keeping the time gap between selling and buying back in to an absolute minimum is what is important; assuming your preference is a buy-and-hold approach.
« Last Edit: December 17, 2018, 07:37:11 PM by ILikeDividends »

Andy R

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Re: Help me understand what I'm doing
« Reply #5 on: December 17, 2018, 07:42:25 PM »
..but the prices keep going down as I wait longer. Is it worth it to wait for the numbers to creep back up..
Unless you're a prescient genius and know when The Bottom is (hint: you're not and neither am I), it's best to invest now.  Your fund may go down tomorrow, or it may go up. You're in it for the long haul. Don't try to Time The Market. You want to spend Time In The Market.

Oh this I know. I've read that many many times in this forum

Clearly you don't know. You are basically saying.
"Hey, I know nobody can predict the future, but just this one time, can someone predict my future please?".

FireAnt

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Re: Help me understand what I'm doing
« Reply #6 on: December 18, 2018, 06:44:24 AM »
Unless you're a prescient genius and know when The Bottom is (hint: you're not and neither am I), it's best to invest now.  Your fund may go down tomorrow, or it may go up. You're in it for the long haul. Don't try to Time The Market. You want to spend Time In The Market.

Oh this I know. I've read that many many times in this forum haha. I just figure if it goes down, it will go up, right? Is it worth waiting for that day when it could be tomorrow, next week, or next year due to the present expense ratios?

Think of it as a transfer.  If you sell in one IRA and then buy back in another IRA, the only thing differentiating the transfer from a buy-and-hold strategy is the period of time between selling, transferring settled funds, and buying back in.  Volatility during that brief period could make the outcome marginally bad, or marginally good; but relatively insignificant in either case from a long term perspective.

If you artificially prolong that time-gap, then you are timing the market.  I would argue that when you do this is irrelevant, and that keeping the time gap between selling and buying back in to an absolute minimum is what is important; assuming your preference is a buy-and-hold approach.

This is a great way to think about it. Thanks.