Author Topic: Inheritance Investing  (Read 3833 times)

kmall

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Inheritance Investing
« on: July 29, 2015, 11:06:29 AM »
Hello Mustachians,

My dad lived his entire life by mustachian principles and successfully saved until he passed away two years ago. Growing up in a mustachian household I learned the principles and now that I am an adult I see the wisdom of his ways. It took most of my 20's to see my mistakes and those mistakes led me to this website. Thank goodness they did!

What I need your help with is where to put the money I received from my dad. My current salary is about 100k and I already max out my 401k and have an emergency fund I keep in dividend paying stocks that I add to monthly through Scottrade and I have no debt. After my dad passed I received about 600k in liquid capital. After visiting 6 different financial advisors and even a couple insurance salesmen disguised as advisors who all tried to sell me an overly complex product or fund that has grown 33% YOY, etc, etc. It all seemed far to fishy to me and thankfully I listened to my dads voice in my head, read all the documentation (or lack thereof) and decided is was all bogus.

The last 6 months I have been learning about the DGI and buy-n-hold strategies which appeal to me. I've decided upon Vanguard funds but need some help on choosing which ones will serve my goals best. My overall goal is to set and forget the money until I am ready to retire.

What are you thoughts on the VFIAX and/or VYM funds?

Thanks,
K


innerscorecard

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Re: Inheritance Investing
« Reply #1 on: July 29, 2015, 11:08:28 AM »
Are you interested in single stock DGI or market-cap weighted indexes? They are different approaches, and you have to be disciplined about your choices. Of course, you can do both simultaneously. But that requires even more discipline to do effectively.

kmall

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Re: Inheritance Investing
« Reply #2 on: July 29, 2015, 11:18:10 AM »
Are you interested in single stock DGI or market-cap weighted indexes? They are different approaches, and you have to be disciplined about your choices. Of course, you can do both simultaneously. But that requires even more discipline to do effectively.

I guess I am not 100% sure how to answer your question. My Scottrade account has about 20 individual equities that is fun to watch although I do not plan to sell any of them any time soon. Could you explain what you mean to this beginner?

Roots&Wings

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Re: Inheritance Investing
« Reply #3 on: July 29, 2015, 11:29:43 AM »
Bogleheads inheritance windfall advice may be helpful: http://www.bogleheads.org/wiki/Managing_a_windfall
And for additional input/insight, you might consider posting on the Bogleheads forum also if you haven't already.

thedayisbrave

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Re: Inheritance Investing
« Reply #4 on: July 29, 2015, 12:08:05 PM »
Bogleheads inheritance windfall advice may be helpful: http://www.bogleheads.org/wiki/Managing_a_windfall
And for additional input/insight, you might consider posting on the Bogleheads forum also if you haven't already.

+1.  If I were you, I would post a case study on the Bogleheads forum.  They will help you tremendously and it will be free.  These are community members so they have no vested interest to sell you anything.

If your money is with Vanguard, then you can also call them and talk to a rep.  I believe the amount you have should qualify you for at least one free initial consultation.  They will help you design an investment plan and none of the reps work on a commission basis.

Between these two things, you should be good to go.  Good for you for listening the voices and your gut. 

Sorry to hear about your father.

hodedofome

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Re: Inheritance Investing
« Reply #5 on: July 29, 2015, 12:25:01 PM »
How is your 401k invested? You could keep it simple and use the same asset allocation as the 401k but use Vanguard funds instead. Then rebalance every 1-3 years and watch it grow.


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kmall

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Re: Inheritance Investing
« Reply #6 on: July 29, 2015, 12:47:49 PM »
How is your 401k invested? You could keep it simple and use the same asset allocation as the 401k but use Vanguard funds instead. Then rebalance every 1-3 years and watch it grow.


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My 401k is invested with 50% Large Cap, 35% Small Cap and 15% International. We only have 5 choices for the funds but the fee's are almost non-existent.

kmall

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Re: Inheritance Investing
« Reply #7 on: July 29, 2015, 12:49:04 PM »
Bogleheads inheritance windfall advice may be helpful: http://www.bogleheads.org/wiki/Managing_a_windfall
And for additional input/insight, you might consider posting on the Bogleheads forum also if you haven't already.

+1.  If I were you, I would post a case study on the Bogleheads forum.  They will help you tremendously and it will be free.  These are community members so they have no vested interest to sell you anything.

If your money is with Vanguard, then you can also call them and talk to a rep.  I believe the amount you have should qualify you for at least one free initial consultation.  They will help you design an investment plan and none of the reps work on a commission basis.

Between these two things, you should be good to go.  Good for you for listening the voices and your gut. 

Sorry to hear about your father.

Thank you so much for the pointers.

Aphalite

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Re: Inheritance Investing
« Reply #8 on: July 29, 2015, 12:51:22 PM »
Are you interested in single stock DGI or market-cap weighted indexes? They are different approaches, and you have to be disciplined about your choices. Of course, you can do both simultaneously. But that requires even more discipline to do effectively.

I guess I am not 100% sure how to answer your question. My Scottrade account has about 20 individual equities that is fun to watch although I do not plan to sell any of them any time soon. Could you explain what you mean to this beginner?

His point is that DGI and Vanguard are two different approaches. If you want to buy dividend growth stocks, then you will need to spend the time to research and learn about the company as well as fundamentals of investing. If you want to go with Vanguard, you're buying index funds, which select stocks based on their market capitalization. A larger company is given more weight than a smaller company. It's up to you to decide which strategy would fit best with your risk tolerance and temperament. For simplicity, dump everything into a Vanguard account and forget about it. If you want to partake in individual stocks, then you'll need to ask yourself if you would be comfortable seeing giant red indicators when equity markets are not doing as well.

milesdividendmd

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Re: Inheritance Investing
« Reply #9 on: July 31, 2015, 09:59:36 AM »
Now is a particularly terrible time to take up DGI investing as dividend payers are priced at a premium to the market which suggests lowere than historical expected returns going forward.

Stick with index investing and if you are going to invest in a taxable account I would advocate investigating Betterment with tax loss harvesting. You will more than pay for the additional 0.15 % expense ratio with your tax savings.

Your dad sounds like he was an incredible role model who left you with more than one valuable inheritance.

Financial.Velociraptor

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Re: Inheritance Investing
« Reply #10 on: July 31, 2015, 11:56:04 AM »
If DGI appeals, Vanguard has a Dividend Achievers fund.  The ticker outside Vanguard is VIG.  I think it is something like VDADX inside their platform.