Author Topic: PRIMECAP vs Total Stock Market Index  (Read 4020 times)

whitetailugys

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PRIMECAP vs Total Stock Market Index
« on: April 12, 2016, 06:41:21 PM »
PRIMECAP made almost $6 last year, Total Stock Market $1 and some change.

I understand the Expense Ratio is a factor but is it enough of a factor not to use a high paying dividend fund? I don't know how the Expense Ratio is calculated at all and would like to understand that too.

Trying to figure out how to set myself up. Everyone here is great and this forum really helps me. Thank You in advance.

Roots&Wings

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Re: PRIMECAP vs Total Stock Market Index
« Reply #1 on: April 13, 2016, 06:46:08 AM »
What Primecap fund are you looking into? You can easily plug into Morningstar fund compare, e.g. VPMAX or POAGX (both Primecap funds that I own) with VTSAX. Of course past performance is no guarantee...and there's no point chasing returns, best to figure out your asset allocation and IPS first if you haven't already.

whitetailugys

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Re: PRIMECAP vs Total Stock Market Index
« Reply #2 on: April 13, 2016, 06:07:39 PM »
The Vanguard Primecap is what I'm looking at. Even though the expense ratio is a little higher than the index fund, the dividend is much greater. Just led me to thinking which I wanted to put my money in.

A lot of looks at my post but your the only response. I though maybe I had said something wrong since most here are index people. But I am sincere and just learning. Problem is I am leaving EJ and need to make choices with 150k. I will continue to scour the forum because the opinions here are so great.

Still trying to figure out how the expense ratio is taken from my cash added to a fund annually and also would like to know what the terms are like FIRE and there was another one I went hmm....I want to know more about that.

All responses are heartfelt and soaked in. I really thank you for your responses.

adrianmorrell

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Re: PRIMECAP vs Total Stock Market Index
« Reply #3 on: April 13, 2016, 07:58:19 PM »
The two PRIMECAP funds that I see are both closed to new investors, so except for your own education, the question is irrelevant. Beyond that, you can look to see what index that fund follows, and attempt to find another that tracks that same index if you're really set on it.

The idea behind using the total stock market fund is that you're probably not smart enough to pick the fund that's going to beat the market. That's not to say you can't experiment and enjoy the journey, but the one thing you can absolutely control is expense ratio, so total stock market is very attractive from that standpoint. Also, you get to (more or less) MATCH the market, since you probably can't beat it.

Also, FIRE means Financially Independent, REtired. I'm learning a lot here, too. Been reading a while, but this is my first post.

Forgive any typos, I posted from my phone.

Adrian

Curbside Prophet

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Re: PRIMECAP vs Total Stock Market Index
« Reply #4 on: April 13, 2016, 08:14:06 PM »
The two PRIMECAP funds that I see are both closed to new investors, so except for your own education, the question is irrelevant. Beyond that, you can look to see what index that fund follows, and attempt to find another that tracks that same index if you're really set on it.

The idea behind using the total stock market fund is that you're probably not smart enough to pick the fund that's going to beat the market. That's not to say you can't experiment and enjoy the journey, but the one thing you can absolutely control is expense ratio, so total stock market is very attractive from that standpoint. Also, you get to (more or less) MATCH the market, since you probably can't beat it.

Also, FIRE means Financially Independent, REtired. I'm learning a lot here, too. Been reading a while, but this is my first post.

Forgive any typos, I posted from my phone.

Adrian

Actually FIRE stands for Financially Independent Retired Early.  It's an acronym.  There's a post here that lists all of the common ones used.

adrianmorrell

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Re: PRIMECAP vs Total Stock Market Index
« Reply #5 on: April 14, 2016, 04:56:04 AM »
The two PRIMECAP funds that I see are both closed to new investors, so except for your own education, the question is irrelevant. Beyond that, you can look to see what index that fund follows, and attempt to find another that tracks that same index if you're really set on it.

The idea behind using the total stock market fund is that you're probably not smart enough to pick the fund that's going to beat the market. That's not to say you can't experiment and enjoy the journey, but the one thing you can absolutely control is expense ratio, so total stock market is very attractive from that standpoint. Also, you get to (more or less) MATCH the market, since you probably can't beat it.

Also, FIRE means Financially Independent, REtired. I'm learning a lot here, too. Been reading a while, but this is my first post.

Forgive any typos, I posted from my phone.

Adrian

Actually FIRE stands for Financially Independent Retired Early.  It's an acronym.  There's a post here that lists all of the common ones used.

My mistake, thanks for the correction.

Adrian

Roots&Wings

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Re: PRIMECAP vs Total Stock Market Index
« Reply #6 on: April 14, 2016, 07:07:30 AM »
Still trying to figure out how the expense ratio is taken from my cash added to a fund annually

Sorry, missed that part initially. The expense ratio is taken out of the funds assets (not your cash). See Bogleheads or Morningstar for more details about expense ratios.

Problem is I am leaving EJ and need to make choices with 150k.

Nice job moving to a lower fee brokerage! If you outline how the $150k fits into your overall portfolio/asset allocation, you might get more feedback. You could post on Bogleheads forum too for more ideas/portfolio advice.

whitetailugys

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Re: PRIMECAP vs Total Stock Market Index
« Reply #7 on: April 14, 2016, 05:51:52 PM »
Re: Nice job moving to a lower fee brokerage! If you outline how the $150k fits into your overall portfolio/asset allocation, you might get more feedback. You could post on Bogleheads forum too for more ideas/portfolio advice.

Msg: that is everything. No other assets. 20 yrs+ to work if needed.

MustacheAndaHalf

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Re: PRIMECAP vs Total Stock Market Index
« Reply #8 on: April 14, 2016, 11:43:03 PM »
"PRIMECAP made almost $6 last year, Total Stock Market $1 and some change."

You should state percentages.  One fund doing 0.2% and another doing 1.2% is 6x, but not very interesting.  A fund doing 3% while another does 18% is at least interesting.  Here's the data I have from Vanguard covering the past 12 months (to March 31 2016):

PRIMECAP (adm) -1.59%
Total Stock (adm) -0.45%