Author Topic: New index fund investor and need help! What platform to invest in!?  (Read 959 times)

cheflife27

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Hello everyone,

Itís been a long time since I have logged into here but Iíam here for the long road now! Itís time to catch the FIRE!. So Iíam stuck and a little confused and need a better explanation on where I should begin investing in and what platform should I use?I want to know what it is better for me in the long run. I have thoughts on either using the M1 finance and buying vanguard S&P 500 ETF or should I open a brokerage account through either vanguard, fidelity, etc and then purchasing the index fund through there? Is there a difference? Any pros and cons between M1 and a brokerage account! S.O.S I need a beginner breakdown please! Have a great day!

Rob_bob

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Re: New index fund investor and need help! What platform to invest in!?
« Reply #1 on: October 02, 2021, 05:30:04 PM »
If you are going to use ETFs then most any brokerage should be fine as long as you can trade commission free.  If you were going to use index mutual funds then you should be with the fund family since most brokerages charge a commission to trade mutual funds.

Instead of an S&P 500 fund I would go with a total market fund like VTI and VEU if you want to keep it simple with broad market diversification.  Personally I'm less into simple and use a mix of VV, VO, VB (Vanguard large, mid, small cap) and other ETF and a handful of individual stocks.

cheflife27

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Re: New index fund investor and need help! What platform to invest in!?
« Reply #2 on: October 02, 2021, 05:48:09 PM »
Thanks for that. Since Iíam very new to this can you please explain the difference between the index fund mutual fund and the index fund etf? Also my investing strategy that I would like to implement is a set it and forget type of investing.

Abe

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Re: New index fund investor and need help! What platform to invest in!?
« Reply #3 on: October 02, 2021, 07:28:21 PM »
Index mutual funds are valued on a daily basis and usually have minimums of $1-5k. ETFs are traded similarly to stocks and the minimum is the cost of one share. For a long-term horizon the most important thing is the expense ratio, which for vanguard funds and etfs are similar. Compare vtsax and vti for example.

If you are investing through a 401k, there may be only certain funds available. The trade-off is that the fee may be very slightly lower than if you bought it yourself. In that case go with the lowest-fee index fund that meets your objective. For an IRA you can do whatever you want since itís your account, not managed by your employer.

Radagast

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Re: New index fund investor and need help! What platform to invest in!?
« Reply #4 on: October 02, 2021, 09:37:17 PM »
I would recommend Vanguard and their Total World Stock Mutual Fund VTWAX as the most set it and forget it option.

M1 Finance also looks good, just be sure to set up low cost funds. Actually it looks like M1 lets you set up a custom allocation and it automatically directs new purchases toward keeping your allocation in balance, which is nice. Plus you might get a small bonus for transferring enough money in.

Is this a taxable account?

First Read:
https://forum.mrmoneymustache.com/investor-alley/investment-order/
https://www.etf.com/docs/IfYouCan.pdf
https://jlcollinsnh.com/stock-series/

MustacheAndaHalf

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Re: New index fund investor and need help! What platform to invest in!?
« Reply #5 on: October 03, 2021, 03:26:31 AM »
I have thoughts on either using the M1 finance and buying vanguard S&P 500 ETF or should I open a brokerage account through either vanguard, fidelity, etc and then purchasing the index fund through there? Is there a difference?
Your account says "Nomad" - does that mean you often move from country to country?  I've heard Schwab supports that the best, with their international ATM withdrawals.

Vanguard is the champion of low "expense ratios", which is how much of your money the ETF or mutual fund uses up every year (silently).  If you get a Vanguard account, it will be hard to make mistakes.

A mutual fund is only bought/sold with the company that created it.  So if you liked FZROX (Fidelity ZERO Total Market fund), you need a Fidelity brokerage account.  Anywhere else, fees will be involved with each purchase.  With an ETF, like ITOT (iShares Total Stock Market ETF), it can be bought at any brokerage - it trades on the stock market.

bacchi

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Re: New index fund investor and need help! What platform to invest in!?
« Reply #6 on: October 03, 2021, 10:21:52 AM »
I would recommend Vanguard and their Total World Stock Mutual Fund VTWAX as the most set it and forget it option.

M1 Finance also looks good, just be sure to set up low cost funds. Actually it looks like M1 lets you set up a custom allocation and it automatically directs new purchases toward keeping your allocation in balance, which is nice. Plus you might get a small bonus for transferring enough money in.

Is this a taxable account?

First Read:
https://forum.mrmoneymustache.com/investor-alley/investment-order/
https://www.etf.com/docs/IfYouCan.pdf
https://jlcollinsnh.com/stock-series/

For a tax-advantaged account, like an IRA, M1 is great. For a brokerage account, there are better choices that offer an option of selling by tax lots.

cool7hand

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Re: New index fund investor and need help! What platform to invest in!?
« Reply #7 on: October 03, 2021, 03:16:29 PM »
We like Schwab. The fees are low. They offer their own low-fee index funds, plus those from other vendors including Vanguard. We found a local branch office advisor who is pretty sophisticated and gets our goals. He helped us kick the tires on whether to use insurance products to max out my wife's pension. As I recall, you get three wire transfers a quarter, which is nice if the need ever arrives. We also linked our credit cards and my wife's 457, which we can't transfer, so we can see our complete financial picture in one place. The 800 number also has robust support from US-based people.

This review of Vanguard, Fidelity, and Schwab also has food for thought: https://www.youtube.com/watch?v=rAewPVEjeLM.

cheflife27

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Re: New index fund investor and need help! What platform to invest in!?
« Reply #8 on: October 03, 2021, 07:46:39 PM »
Hello everyone thank you for the useful reading materials and advices you are giving out. Iíll give you a better breakdown about my financial background to gain a better understand.

Iím receiving a disability pension monthly  and going to school as a full time student, receiving extra money as well. Iíam currently not employed and the only taxable account that I currently have is my bankís  checking account/ savings account.

I do have money saved up to invest but just want to make sure Iíam doing the right moves before anything. Iím still fresh to the investing game and still learning lots of new things.

My plan was to open my M1 finance account, which I already have and will like to create a 3-fund portfolio on there. The 3 funds that I have in mind through research are; vanguard total stock market ETF, Vanguard total bond market ETF, and vanguard total international market ETF. I was going to do a 90/10 portfolio, 90% begin  stocks.With that begin said, would that be a good choice knowing that I would be placing money in every month and keeping it for the long term?

So with your Valuable inputs,  mutual funds and etfs are understandable to me now, leaving me with a question. Is there an better advantage of having the mutual fund through the brokerage account compared to the etf through M1 finance? The only reason why I wanted to go with M1 finance is because I wouldnít need to pay the minimum entry fee of $3000 for the index mutual fund S&P 500. I do have the money for it but I  just want to know which will be more beneficial for me. Also once I pay the $3000 minimum entry fee from there on would that be the recommend amount that I would need to put monthly or can I put any amount after that? Thank you guys

cheflife27

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Re: New index fund investor and need help! What platform to invest in!?
« Reply #9 on: October 03, 2021, 07:53:10 PM »


First Read:
https://forum.mrmoneymustache.com/investor-alley/investment-order/
https://www.etf.com/docs/IfYouCan.pdf
https://jlcollinsnh.com/stock-series/
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Thank you for the good reads. Iím currently reading the etf article!! I can say woah!!! This is opening my mind to things I never knew about! Thank you. Iím only 28yrs old and this is something very valuable for my road ahead! Thanks once again!

Radagast

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Re: New index fund investor and need help! What platform to invest in!?
« Reply #10 on: October 03, 2021, 10:51:04 PM »


First Read:
https://forum.mrmoneymustache.com/investor-alley/investment-order/
https://www.etf.com/docs/IfYouCan.pdf
https://jlcollinsnh.com/stock-series/

Thank you for the good reads. Iím currently reading the etf article!! I can say woah!!! This is opening my mind to things I never knew about! Thank you. Iím only 28yrs old and this is something very valuable for my road ahead! Thanks once again!
[/quote]
Not a problem! I need to do that more often. When I first learning investing was a thing I could do, I read ten books about it, followed shortly by ten more. But since then I often forget that people are like me and want reading material, not curt off-the-cuff answers.

The ETF.com article is by my favorite investing author Bill Bernstein. I highly recommend his books, in order "The Four Pillars of Investing", "The Delusions Of Crowds: Why People Go Mad in Groups" (about market bubbles mostly), booklets "Skating Where the Puck Was," "Ages of the Investor," and "Deep Risk," and all his other stuff shortly after.

You might be best putting this into a Roth IRA.

 

Wow, a phone plan for fifteen bucks!