Author Topic: Help requested - Which index fund(s)?  (Read 857 times)

pistolpete123

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Help requested - Which index fund(s)?
« on: January 18, 2018, 11:06:41 AM »
SELF FACEPUNCH - I have been foolishly keeping a chunk of money out of the market for some time now, while watching the market climb higher and higher. After playing a 'market timing' game, I have finally come to accept that time in the market >> timing the market.

I am ready to take the (long term) leap into the market but need help selecting the correct funds. My current portfolio is 48% VFINX, 22% VEXMX, 25% VGTSX, 5% VBMFX. My goal is to create a diversified portfolio across domestic (US) and international, as well as blend of growth/value, and cap sizes. In essence, since I know I am jumping into a relatively high market - I want to have broad equity exposure.

Some other info about me that may be useful:
- This is my taxable, also have 401ks with target date funds
- Investing for long term (5 years+ minimum), okay with taking on risk
- Mid 20's with a long time horizon
- If suggestion is to add one fund, I may be eligible for admiral with the money I am dumping in now
- New mustachian but taking it seriously (just bought used honda fit cash)
- I realize that VFINX + VEXMX is the equivalent of some other Vangaurd fund but, hey - that's why I am asking for help now

Would really appreciate your help!

GuinnessPhish

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Mother Fussbudget

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Re: Help requested - Which index fund(s)?
« Reply #2 on: January 18, 2018, 03:41:53 PM »
Read "The Simple Path to Wealth", or  JLCollinsNH's Stock Series.  You'll come away with the idea that Jim really recommends VTSAX, and for good reason.  His entry Part XI on International funds suggests two international funds: 
* VFWAX  FTSE all-World ex-US Index Fund (expense ratio .14).  This fund invests everywhere in the world except the USA, which you’ll have covered with VTSAX.
* VTWSX  Total World Stock Index Fund (expense ratio .27).  This fund invests all over the world, including 50% in the USA.  With it you no longer even need to hold VTSAX.

My suggestion would be to read his entry on International Funds specifically, then go back and read the rest.  He makes good reading of an often 'dry' subject.  http://jlcollinsnh.com/2012/09/26/stocks-part-xi-international-funds-2/

If you're relatively new at this, I always recommend people look at the 'Investing Order' post in the forums.  Always a subject for thought relative to one's own personal saving priorities.

In any case, best of luck, and Congratulations for taking charge of your FI Future!
MFB

pegleglolita

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Re: Help requested - Which index fund(s)?
« Reply #3 on: January 18, 2018, 03:59:26 PM »
Some of the Targeted Retirement funds at Vanguard give you a way to diversify to varying degrees without really increasing your expense ratio much.  For instance, the Vanguard Target Retirement 2060 (even though that has no relation to your actual retirement date) has a low expense ratio (0.16%) and has 90% stocks spread between total stock market (54%) and international total stock market (36%), plus a wee bit of diversification in total US bond market (5%) and total international bond market (3%).  Less aggressive than all stocks, balanced between US and non-US.  I'm sure others have really strong opinions and more experience than I do. 

pistolpete123

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Re: Help requested - Which index fund(s)?
« Reply #4 on: January 18, 2018, 11:07:36 PM »
Thank you both for your thoughtful feedback, I am consistently amazed with the insightfulness and willingness to help of this community.

@MFB - Appreciate the suggestion, I will definitely take a look at what JL Collins has to say about international funds. Also, I have a strong understanding/implementation of investing order - and definitely agree this is paramount.

@pegleglolita - Agree that the target accounts are a low cost, well diversified option. I use these for my 401ks! Maybe should have just done target accounts from the start in my taxable.