Mutual Funds for Beginners

[Candyland33]

I'm thinking of starting to invest into mutual funds with post tax money, I have saved up. See image. Right now, I want to start with $1,000 and slowly add more funds over time. 

Some of them require a $3K min. so i'll be saving up to money to slowly buy those.

Are these good options for beginners? Is the expense ratio reasonable? Am I investing too much in area too much?  What has your experience been with mutual funds? What's your advice to grow my portfolio?

[Telecaster]

Woof.  Answering your question could take a book to answer.  Portfolio construction is a really complex topic and you can dive down as deep as you want.  In short, what you have looks fine.  It is well diversified, albeit on the conservative side.  So fine to start.

One thing you may wish to consider is using ETFs.  ETFs for the most part work the same as mutual funds, but the entry price is usually lower.   For each of the funds you have listed there is an equivalent ETF.  For example, equivalent ETFs to FXIAX include VOO and SPY.  Same basic thing.

Two suggestions:  Make sure you know why you own each of those funds.

Second:  Personal opinion is that if you are just starting out, it is a good idea to simplify.  Maybe 80/20 stock bond split or even 100% stocks like VTSAX or VTI.  At least for now.   

Many people recommend JL Collins stock series:

https://jlcollinsnh.com/stock-series/

It is a good read.

[Candyland33]

Thank you for your feedback. I think you're right, I need to do more investment in stock right now and later shift to bonds.

I'll do some reading on JL Collins stock series hopefully that'll help me learn more. Thank you

[ctuser1]

My gut feel is similar to Telecaster hinted. Your current portfolio is too complex for a beginner.

At the beginning you should have 2 (or max 3) funds so the rebalancing is easier. 2 is preferred. :).

During accumulation phase, I prefer to keep an aggressive posture with the understanding that I will simply work longer for FI if some downside risks were to materialize. You lose that option once you are close to retirement age. Hence, at that time you may need to think about more complex portfolios, with more downside protection etc.***

***Note: This part is a tiny bit heretical in the Bogleheads philosophy. You should come up with your own philosophy based on your own constraints.

[wageslave23]

Too complex.  Don't worry about diversifying until you hit at least $100k.  Until then VTI is fine.

[bmjohnson35]

I also agree that you may be overthinking the process. Read a few books.  The book "A simple Path to Wealth" is a great starter book.  Look into index funds. They offer built in diversity within an investment class. Keep it simple.  As we start out investing, many of us get hung up on trying to make the perfect selection of investments and don't realize that consistent/steady investment is very important as well.  Make a monthly contribution objective and stick to it.

[Much Fishing to Do]

IF you want to learn a lot about investing I think this is a great approach, similar to what I did.  But it is work to be efficient, so if you don't want to be that involved you're at a stage that VTI or VT are fine for everything (unless you are very averse to volatility, at which point you could pick a suitable Vanguard Lifestrategy fund to put everything into with a volatility you can stomach).

What's funny is after 20 years, I learned a lot of things that I apply to a lot of financial areas in some complex ways, incl. tax, etc, but for investment allocation/re-balancing specifically I ended up simplifying greatly over time, and am not that far off from just having everything in Vanguard LifeStrategy growth.

[Arbitrage]

You have post-tax money saved up, which is great.  Do you have an IRA?  Do you have an employer-based plan available?  Those options are what you should be looking at first, before deciding which specific mutual funds to invest in.  You will invest in mutual funds...or ETFs (but I'd recommend mutual funds as they're a bit simpler for a true beginner) inside your IRA.

I agree with the comments that you're looking at way too much complexity this early on.  I understand the excitement, but that complexity doesn't net you any real benefit when you're just getting started; your savings will dwarf any returns you get for quite a while, and your biggest goals to be to save regularly (preferably in tax-advantaged vehicles like I mentioned above), keep your costs low, and avoid any big mistakes.  VTSAX is fine, but so would be appropriately dated all-in-one retirement funds. 

[Candyland33]

I already maxed out 401K, Roth IRA and HSA so now I’m looking towards index funds. I’ll try to keep it simple and let’s see in year, I might know more and I can diversify.

[Louisville]

It's generally more tax efficient to keep bond funds in your tax sheltered accounts and stock funds in taxable accounts. Bonds are throwing off dividends all the time.

[Arbitrage]

I already maxed out 401K, Roth IRA and HSA so now I’m looking towards index funds. I’ll try to keep it simple and let’s see in year, I might know more and I can diversify.

That's great!  To clarify the terminology, though - you probably already have mutual funds, and likely index funds (which are a type of mutual fund or ETF that aims to replicate the performance of an index rather than trading actively) in your 401(k), Roth IRA, and HSA.  What you're looking to do is to start investing in a taxable investment account, which is a great next step.

I would suggest that when you start looking at diversification, that you look at all of your investment accounts as one.  It's all your money, and diversifying your investments just in one account while leaving the others (which may dwarf the taxable account) doesn't make sense.  If you're looking for a lot of investment advice from a very active community, I'd recommend the Bogleheads forum and wiki.