The Money Mustache Community

Learning, Sharing, and Teaching => Investor Alley => Topic started by: Credaholic on April 23, 2014, 04:26:32 PM

Title: Commission Free iShares
Post by: Credaholic on April 23, 2014, 04:26:32 PM
I have about $15K in our Roth IRAs that is just cash right now and needs to be invested in something, but I've been paralyzed by indecision, so I figured it was time to post here and get some decent advice. I'm not going to pretend to be a seasoned investor - I know very little, and have been pouring over the posts in these forums trying to find a direction. I know most Mustachians like the Vanguard total market funds. Our account is with Fidelity, so if we went that direction I'd buy VTI. However, I haven't pulled the trigger on that yet because it doesn't seem to be a deal to me right now at $97+. Thoughts?

With Fidelity I have access to iShare ETFs commission free, so I've been thinking that might be the way to go anyway. I think that DVY (Dow Jones Select Dividend Index) looks like a decent buy right now, but wanted to hear your opinions.

Besides that we're invested in PHK for the dividends, and then RNGBX, RGABX, RICBX and RFNBX through husband's American Funds 401K. We are 30 and okay with risk at this point in our lives. Thanks in advance for any help!
Title: Re: Commission Free iShares
Post by: skyrefuge on April 23, 2014, 05:07:39 PM
The total stock market hit a record high 14 months ago. You almost certainly would have thought it didn't "seem like a deal" then too, yet it sure looks like one in retrospect, now that it's 25% higher. You don't know what it's going to do in the future (if you did, you wouldn't be asking us), but it's likely to go up over the long term, and since your investing horizon is for the long term, don't worry too much about the current price (unless you're about to become an active trader). Even if you invest $15k at the absolute market peak, and it doesn't return to that level for 30 years, that particular $15k isn't going to have a significant effect on your future.

Fidelity's Spartan total stock market fund is just as good as Vanguard's, so no need to do Vanguard-through-Fidelity if you don't want to.

"paralyzed with indecision" and "not going to pretend to be a seasoned investor" seem a bit at odds with "invested in PHK for the dividends", which seems like a rather intentional move by someone who knows what they want.  It's probably good to hold some bonds in your overall portfolio, to make you feel better when the stock market goes down, but I don't think holding them "for the dividends" (really, "interest") is the right reason. And if they're held outside of a retirement account, it would be better (for tax reasons) to hold them in your Roth and hold stock funds in your taxable account.
Title: Re: Commission Free iShares
Post by: Credaholic on April 23, 2014, 05:31:34 PM
Thanks for the response, Skyrefuge. All I really know about PHK is it's seen as a high risk investment, but in the time I've owned it it's pretty much hung out around the same amount and I've gotten to collect the generous dividend which adds about $400 to our account every month, so I've stuck with it. This is all in our Roth IRA. I purchased it years ago based on advice from my brother who was a research analyst with Fidelity. However, he unfortunately had a mental crisis a couple of years ago and I can't turn to him for advice anymore.

I did also consider Fidelity's Spartan fund. I know you're right that these don't necessarily look like deals right now but easily still could be. We've been lucky in that we started investing in the midst of the financial crisis and went on a great ride back up to the top, so our returns in our total investing career have been excellent. I should have funded our Roths for 2013 earlier, but I waited until April of this year, and am kicking myself for it (thought we might need the cash because we were buying a house, but turns out it just sat there all year waiting to be transferred). Since I transferred it I've been trying to decide what to invest it in, but haven't been able to make myself pull the trigger since everything is so much more expensive than if I'd invested 6 months ago and that makes me a little nervous.

Still hoping to hear thoughts on DVY if anyone has any!

Title: Re: Commission Free iShares
Post by: wtjbatman on April 23, 2014, 06:30:46 PM
If you're a fan of dividend investing, DVY is one of the more popular dividend ETFs. I'm a dividend growth investor, and I focus primarily on individual stocks. I do own a couple small positions in dividend ETFs. In general, if you want to do very simple dividend investing and don't want to take the time to research individual companies (and don't mind the small fee as part of that convenience), there's nothing wrong with a dividend ETF like DVY, VYM, or VIG.
Title: Re: Commission Free iShares
Post by: Credaholic on April 24, 2014, 04:47:09 PM
Okay, thanks for the push wtjbatman! I do love the fact that DVY is commission free, and on top of the dividends it seems to be getting a decent return. I also like that it's pretty much sitting at the price it was before the crash, instead of having already zoomed past that number, so hopefully that means there's room for plenty more growth.

As much as I like receiving dividends, I'm also looking for bigger growth like I might get from a total market fund, so I'm getting off the fence and I'm going to put the half in my Roth into FSTMX and the half in my husband's Roth into DVY. Here goes!