Author Topic: need some advice on investments  (Read 3220 times)

muskie28

  • 5 O'Clock Shadow
  • *
  • Posts: 7
need some advice on investments
« on: September 25, 2016, 05:43:02 PM »
Hello there could use some advice on the direction I'm taking with my investments.

Some things to know:
-Just turned 31 and I have just paid off all my school loans and car loans. Only have the mortgage every month.
-Just started this year to max out roth ira contributions every month.
-For my 401k my company matches 50% up to 6%. I do 6%.
-After all this I will have around $1500 each month I can invest.

Current investments:
Roth IRA $27,500 all blackrock (1/3 of each)
baicx multi asset income
mdlox global allocaton
mddvx equity dividend

Traditional IRA $30,000(from a 401k rollover) all franklin templeton (1/3 of each)
fkgrx growth
tedix global discovery
fkutx utilities

Have $20,000 cash I need to Invest.

I started my blackrock funds with my first job along time ago on the recommendation of a branch financial advisor as I didn't know anything about investing. Had I known about ETF and index funds I would have gone that route to save on expenses.

Should I swap out my mutual funds for lower expense funds or keep them and just use my 20k for new index funds?
I'm looking at vtsmx Vanguard Total Stock Market Index Fund Investor and vhdyx Vanguard High Dividend Yield and
ishares select dividend etf dvy.

Also looking at a few stocks for reliable dividend growth like AT&T and Pfizer.

For my $1500 a month I was thinking of putting this all toward index funds and maybe a little toward stocks.

Thanks for the help!

Financial.Velociraptor

  • Handlebar Stache
  • *****
  • Posts: 1490
  • Age: 47
  • Location: Houston TX
  • Devour your prey raptors!
    • Financial Velociraptor
Re: need some advice on investments
« Reply #1 on: September 25, 2016, 07:13:19 PM »
Do you know what fees templeton and blackrock are charging?  If you are going to go with passive diversification, you are probably better moving it all to Vanguard or Fidelty and indexing the broad market for cheap.

Financial.Velociraptor

  • Handlebar Stache
  • *****
  • Posts: 1490
  • Age: 47
  • Location: Houston TX
  • Devour your prey raptors!
    • Financial Velociraptor
Re: need some advice on investments
« Reply #2 on: September 25, 2016, 07:25:20 PM »
I want to add: you should think long and hard about what the appropriate bond allocation is for your personal situation.  Personally, I think an investor should on the side of having "too much fixed income".  Defense matters more than offense in the long game.

muskie28

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Re: need some advice on investments
« Reply #3 on: September 25, 2016, 07:27:01 PM »
blackrock the fees are in order .98, 1.14, .97

templeton the fee are in order .88, 1.24, .73

muskie28

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Re: need some advice on investments
« Reply #4 on: September 25, 2016, 07:47:22 PM »
You are right in that my current funds lack bonds. Only the blackrock multi asset is a fund that has the majority in bonds.
When I had this setup years ago my main objective was growth and really still is. Probably need to add in 1 bond fund as all the other are stocks.

Financial.Velociraptor

  • Handlebar Stache
  • *****
  • Posts: 1490
  • Age: 47
  • Location: Houston TX
  • Devour your prey raptors!
    • Financial Velociraptor
Re: need some advice on investments
« Reply #5 on: September 25, 2016, 07:52:09 PM »
blackrock the fees are in order .98, 1.14, .97

templeton the fee are in order .88, 1.24, .73

Your fees are high for funds that are intended to track an index.  Are you able to move to Vanguard or Fidelity?

Give more thought to your bond allocation.  It is important.

muskie28

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Re: need some advice on investments
« Reply #6 on: September 25, 2016, 08:00:37 PM »
Yes I can move to either one. I was leaning towards fidelity.

Financial.Velociraptor

  • Handlebar Stache
  • *****
  • Posts: 1490
  • Age: 47
  • Location: Houston TX
  • Devour your prey raptors!
    • Financial Velociraptor
Re: need some advice on investments
« Reply #7 on: September 25, 2016, 08:31:48 PM »
Yes I can move to either one. I was leaning towards fidelity.

I narrowly prefer Vanguard for indexing but I have friends who have chosen Fidelity.  Both are good choices if you mind expense ratios.

Mother Fussbudget

  • Pencil Stache
  • ****
  • Posts: 831
  • Age: 58
  • Location: Indianapolis, IN
Re: need some advice on investments
« Reply #8 on: September 25, 2016, 10:09:00 PM »
Should I swap out my mutual funds for lower expense funds or keep them and just use my 20k for new index funds?

Yes.  Swap out right away, and buy low-cost ETF's.  Only you can speak to your own risk level - I suggest reading JHCollin's Stock Series for a good read on investing.

I have brokerage accounts (taxable and IRA) at both Fidelity & Vanguard.  Both are good choices.  The Fidelity equivalent of VTSAX is FSTVX. 

The investment order I recommend:
1) Max out your 401K contribution to get the dual benefit of saving pre-tax dollars, and reducing taxable income.  At a minimum, contribute to your 401K plan to get your employer match - that's FREE money.
2) Max out your HSA account (must have a HDHP to have an HSA account).  http://www.madfientist.com/ultimate-retirement-account/
3) Max out a T-IRA or ROTH IRA contribution.  A tax-advantaged $5,500/year saving bucket above and beyond the 401K/Roth401K.
4) Invest in a taxable account.  You can always invest in a taxable account. Purchase low fee ETF's >> Total Stock Market Fund / Total Bond Market Fund, and/or REIT's if you want a real-estate component to your investment portfolio but don't want to be a landlord (http://www.mrmoneymustache.com/2011/08/15/become-a-lazy-landlord-with-reits/
No one tells you that commissions can be waived when buying ETF's in a brokerage account at that company. 
Example:  in a Vanguard brokerage account, you can buy Vanguard mutual funds with no commission (true of all account types:  taxable, IRA, Roth, custodial, etc).  Same for Fidelity Funds in a Fidelity brokerage account.  The only requirement to wave commissions is you have to hold the ETF in your account for 90+ days. (and you may have to *ASK* about turning this feature on for your account - it's been so long since I did it, I can't remember if that's still true)

muskie28

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Re: need some advice on investments
« Reply #9 on: September 26, 2016, 11:38:57 AM »
After doing more research and reading the JHCollin's stock series I'm starting to look toward vanguard as I like how it is investor owned.

Quick questtion what is the main difference between VTSAX and VTSMX?

I'm looking at that and possibly a bond fund.

PhysicianOnFIRE

  • Bristles
  • ***
  • Posts: 458
  • Age: 44
  • Location: Up North
    • Physician On FIRE
Re: need some advice on investments
« Reply #10 on: September 26, 2016, 11:48:15 AM »
After doing more research and reading the JHCollin's stock series I'm starting to look toward vanguard as I like how it is investor owned.

Quick questtion what is the main difference between VTSAX and VTSMX?

I'm looking at that and possibly a bond fund.

The 2 funds track the same index and contain the same stocks in the same ratios. VTSAX is the "admiral fund" with a higher minimum investment ($10,000) and lower expense ratio (0.05 vs. 0.16).

I'm pretty much all in Vanguard. Consider writing a simple IPS to guide future decisions.

Mother Fussbudget

  • Pencil Stache
  • ****
  • Posts: 831
  • Age: 58
  • Location: Indianapolis, IN
Re: need some advice on investments
« Reply #11 on: September 26, 2016, 11:52:33 AM »

The 2 funds track the same index and contain the same stocks in the same ratios. VTSAX is the "admiral fund" with a higher minimum investment ($10,000) and lower expense ratio (0.05 vs. 0.16).

I'm pretty much all in Vanguard. Consider writing a simple IPS to guide future decisions.

Exactly what POF said.  VTI, VTSMX and VTSAX are different symbols in the same "total stock market" fund with different minimum investment requirements. 
VTI has no investment limit - you can invest any amount. VTSMX has a $3,000 minimum investment limit.  VTSAX has a $10,000 investment limit.  The more money invested, the lower the costs. (i.e. the "Admiral" shares are lower cost than VTSMX & VTI). 
AND... if you invest in one member of this fund, and you reach the next threshold, Vanguard automatically converts shares - (examples:  If you have $3,000 in VTI, those shares are converted to VTSMX.  If you have $10,000 in VTSMX, those shares are automatically converted to VTSAX.)

dandarc

  • Magnum Stache
  • ******
  • Posts: 3678
  • Age: 37
Re: need some advice on investments
« Reply #12 on: September 26, 2016, 12:04:17 PM »

The 2 funds track the same index and contain the same stocks in the same ratios. VTSAX is the "admiral fund" with a higher minimum investment ($10,000) and lower expense ratio (0.05 vs. 0.16).

I'm pretty much all in Vanguard. Consider writing a simple IPS to guide future decisions.

Exactly what POF said.  VTI, VTSMX and VTSAX are different symbols in the same "total stock market" fund with different minimum investment requirements. 
VTI has no investment limit - you can invest any amount. VTSMX has a $3,000 minimum investment limit.  VTSAX has a $10,000 investment limit.  The more money invested, the lower the costs. (i.e. the "Admiral" shares are lower cost than VTSMX & VTI). 
AND... if you invest in one member of this fund, and you reach the next threshold, Vanguard automatically converts shares - (examples:  If you have $3,000 in VTI, those shares are converted to VTSMX.  If you have $10,000 in VTSMX, those shares are automatically converted to VTSAX.)
VTSMX will convert to VTSAX.  VTI is an ETF.  You can convert any Vanguard Total Stock Market fund shares to ETF shares, but not the other way around.  Also - VTI is usually the 2nd cheapest way to own Total Stock Market for the long-term investor - same expense ratio as Admiral, but you also have to consider premium / discount and the bid-ask spread.  VTI is very liquid, so these are narrow, and the premium / discount can work for you or against you.

I personally just buy VTSAX for my domestic-equity.

muskie28

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Re: need some advice on investments
« Reply #13 on: September 27, 2016, 11:11:33 AM »
Vanguard VTSAX vs Fidelity FSTVX. These two are essentially the same fund. I did notice however the vanguard does quarterly dividends which were pretty even. The Fidelity fund did semi annual but 10% of it was paid out in April and the other 90% in December which I though was odd. Both roughly the same amount in dividends. In the long term does this difference matter or is it a wash in the end?

Mother Fussbudget

  • Pencil Stache
  • ****
  • Posts: 831
  • Age: 58
  • Location: Indianapolis, IN
Re: need some advice on investments
« Reply #14 on: September 27, 2016, 03:44:07 PM »
I have the same question, and will let you know in December (I'm running an experiment on this in my two accounts).

[which is a long-winded way of saying:  "It should be a wash, but I have no idea."  I'm thinking it is probably worse because with quarterly dividends paid in-stock, those shares are compounding throughout the year to your benefit, whereas the 90% in Dec model doesn't have those extra shares working for you until AFTER the big-dividend.]