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Investing - ETFs and Mutual Funds

harobikes333

harobikes333

Platinum Member
Hey guys,

I've been actively investing for about six months now and would love some suggestions on some main stay ETFs and mutual funds I should invest in.

I have around $2,500 I would like to sock away in some funds / bonds. ( Part of my IRA contribution in my brokerage account )

* I currently have free trades for around one more week ( Using TD Ameridtrade ) so let me here what you all think! *
 
It's hard to go wrong with an S&P 500 index ETF or mutual fund. It includes shares of 500 large US corporations so you're already diversified without needing 10 different funds.
 
Any suggestions on such ETFs or Mutual funds...? ( I realize this is asking questions that cannot be answered "right or wrong" but I'm always open to ideas.
 
really, you only need 3 funds to be pretty darn diversified:

1. total US stock market (VTSMX or VTI)
2. total international stock market (VGTSX or VXUS)
3. total US bonds (VBMFX or BND)

this page gives all sorts of details: http://www.bogleheads.org/wiki/Three-fund_portfolio

3 fund is a great place to start! and bogleheads.org is a good place to get a lot of solid investing info. that page also gives different fund names if you are buying from different brokers. the ones i listed above are for vanguard, but each large brokerage place has their own which are similar and may give you better trading costs.

if you are just starting out or are looking to create an account, i would recommend vanguard or fidelity.

one other thing - if you are investing this for retirement, do it in an IRA/roth IRA/401k instead of just a taxable brokerage account. or at least fill any retirement accounts up first before buying in taxable. the tax advantages are very good and you can only put so much a year in. it took me years of working to learn this, i kick myself now because i could have saved a lot on taxes if i knew it sooner.
 
harobikes333 said:
Hey guys,

I've been actively investing for about six months now and would love some suggestions on some main stay ETFs and mutual funds I should invest in.

I have around $2,500 I would like to sock away in some funds / bonds. ( Part of my IRA contribution in my brokerage account )

* I currently have free trades for around one more week ( Using TD Ameridtrade ) so let me here what you all think! *
Click to expand...

If you're with TDA make sure you also enroll in their commission free ETF program. There's just over 100 specific ETFs you can trade in without commission as long as you old them for 30 days. Have to actually be enrolled though.

Also your free trades won't impact any mutual fund purchases. Completely different pricing schedule. Find some no load/no transaction fee funds and hold for 180 days.
 
Broad market ETFs are the best and cheapest way to go.

VOO is the "best" S&P 500 Index Fund if you consider the combo of a smidge more accurate tracking (according to analysts) and ultra low expense ratios (.05%). SCHB is another alternative with a lower ER of .04%, but also a touch less performance.

Since you have some free trades, you could mix it with VYM for the higher bond-like quarterly dividend payout than an S&P500 Index fund. If you did an analysis of what put more money into your pocket in terms of total return and dividend reinvestment from 1/2011 to 4/2013, VYM would have given you $800+ more on a $10k investment than VOO. However, you still still have to account for VYMs slightly higher .10% expense ratio, which whittles that gain down a bit. VYM and VOO also beat out VTI (someone recommended it earlier in the thread) during that same time frame. Be aware that an S&P500 Index should outperform VYM over the longer term (as it did in '09 by 9% and '10 by .86%).

Horses for courses.

Bottom line, both VOO and VYM are worth owning.
 
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brianmanahan said:
really, you only need 3 funds to be pretty darn diversified:

1. total US stock market (VTSMX or VTI)
2. total international stock market (VGTSX or VXUS)
3. total US bonds (VBMFX or BND)

this page gives all sorts of details: http://www.bogleheads.org/wiki/Three-fund_portfolio

...
Click to expand...
I'll throw in this bit about the forums over there: It's nothing like Anandtech, or at least not ATOT.
- Stay on topic.
- Minimal chit-chat, unless it's very relevant to the thread.
- Trolls are not tolerated, at all.
- No politics, at all.
- Some people there really do know what they're talking about.
 
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Arcadio said:
Vanguard Total Stock Market Index Fund.
Click to expand...

brianmanahan said:
really, you only need 3 funds to be pretty darn diversified:

1. total US stock market (VTSMX or VTI)
2. total international stock market (VGTSX or VXUS)
3. total US bonds (VBMFX or BND)
Click to expand...

He's below the minimum investment of $3000 for those funds. Only their target retirement funds are available for less than $3000. Fidelity has slightly lower entry levels at $2500 for some of their index funds. For example:

https://fundresearch.fidelity.com/mutual-funds/summary/315911404

That said I have had some success with Vanguard allowing the funding of an account with less than the minimum required balance when a regular contribution is setup

Using your free trades to buy the ETF versions (VOO or SPDR as mentioned are good options) will get around this but you'll need to be aware of trade fees down the road. If you are looking to make regular smaller contributions I would perhaps move away from TD and into a brokerage account at a large fund company as they won't charge fees for buying their ETFs. So if you move to Vanguard you can by their ETFs without the additional cost that TD would charge you. I believe the other major companies do the same for their own ETFs but YMMV!
 
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MomentsofSanity said:
If you're with TDA make sure you also enroll in their commission free ETF program. There's just over 100 specific ETFs you can trade in without commission as long as you old them for 30 days. Have to actually be enrolled though.

Also your free trades won't impact any mutual fund purchases. Completely different pricing schedule. Find some no load/no transaction fee funds and hold for 180 days.
Click to expand...

Interesting - I didn't know that they offered that many fee free options. Not quite the ones I would choose but there are some good Vanguard Spyder and iShares options in there. Pretty good alternative if you want access to a couple of different companies

As a side note - do you know how often those change? (If at all) I can't find anything other than 'Chosen by Morningstar'. I'd be pretty miffed if 6 months down the road my chosen fund was changed from no commission charge to commission charge

brianmanahan said:
the etfs would have no minimums though. plus, low expense ratios that you usually cant get until you reach 10$k in the mutual funds.
Click to expand...

See the edit I was working on when you posted 😉
 
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So long as you aren't afraid to lose the $2,500 I would say just play around. Why not just buy QQQ and see what happens.
 
OverVolt said:
So long as you aren't afraid to lose the $2,500 I would say just play around. Why not just buy QQQ and see what happens.
Click to expand...

QQQ is top heavy on some stocks like Apple (11.55%...recently was over 13%), which is why it's underperforming for quite some time versus an S&P500 Index fund. It's great when Apple is doing great and a dog when its top heavy components are dragging. In addition, QQQ has a not so cheap .20% expense ratio. http://www.invescopowershares.com/products/holdings.aspx?ticker=qqq

Exterous said:
....Using your free trades to buy the ETF versions (VOO or SPDR as mentioned are good options) will get around this but you'll need to be aware of trade fees down the road. If you are looking to make regular smaller contributions I would perhaps move away from TD and into a brokerage account at a large fund company as they won't charge fees for buying their ETFs. So if you move to Vanguard you can by their ETFs without the additional cost that TD would charge you. I believe the other major companies do the same for their own ETFs but YMMV!
Click to expand...

This is very true and more advisable IF one really focuses specifically on Vanguard Mutual Funds. It really depends on one's plans. But there are caveats.

If one wants to play different funds, Vanguard charges $35 for their Standard Plan versus $20 with Etrade. On NTF Funds, they charge you 1% if held less than 6 months. Also $1k-$3k minimum investment depending on fund.

Vanguard also charges a $20/yr fee (waived if you put in over $50k)
https://personal.vanguard.com/us/whatweoffer/stocksbondscds/feescommissions
https://personal.vanguard.com/us/help/FAQBrokerageFeesContent.jsp#a

That $20/yr fee alone covers 2 ETF trades at a brokerage. If you invest twice a year, you break even with having an account at Etrade/Ameritrade vs. Vanguard. Also, brokerages offer free trades and bonuses when you open an account in addition to offering better services, research and free online investing classes.

If fees were an issue for a very frequent purchaser, you can program a mutual fund you purchase to automatically take money out of your checking, thus avoiding the fee.

Sharebuilder.com came out with a good product where auto investing is $4/trade or 12 trades for $12. That can be very desirable for the right person seeking this.
http://www.sharebuilder.com/sharebuilder/investment-options.aspx

There are no right answers and depends on the investor objectives and tolerable fees versus the competition.
 
Exterous said:
Interesting - I didn't know that they offered that many fee free options. Not quite the ones I would choose but there are some good Vanguard Spyder and iShares options in there. Pretty good alternative if you want access to a couple of different companies

As a side note - do you know how often those change? (If at all) I can't find anything other than 'Chosen by Morningstar'. I'd be pretty miffed if 6 months down the road my chosen fund was changed from no commission charge to commission charge



See the edit I was working on when you posted 😉
Click to expand...

Not sure how frequently but it's not often. There's a 30 day notice period before one is removed so you'd have to stay on top of watching it if you were determined to not have a commission at all upon selling one you hold.
 
I appreciate the feedback so far!

I also have a Employer sponsored 401K that is through Wells Fargo.
To my knowledge, when you move money around to different investments inside the 401K, there isn't any fees? Correct me if I'm wrong?

Here's a list of investments I can put my 401K contributions into... I currently have the majority of mine allocated in my "target retirement date 2050" any suggestions...?
Year to date it's made a 7.9% return. When I look up some of these Funds, I find they seem to be quite highly valued at the moment... should I stick with the Target Date Fund or spread my $$$ elsewhere...

The Stable Value Fund

PIMCO Total Return/Inst

Vanguard Inflation- Protected Sec Inst

AllianzGI NFJ Small Cap Value Fund Inst.

American Funds Growth R6

Vanguard Instl Index 500 #

Invesco Growth and Income Fund R5 #

Vanguard Mid-Cap Idx/Inst #

Vanguard Small Cap Growth/Instl #

Oakmark International/I

Vanguard FTSE All-World Ex-Us Index Inst #

EII Global Property Institutional
 
harobikes333 said:
I appreciate the feedback so far!

I also have a Employer sponsored 401K that is through Wells Fargo.
To my knowledge, when you move money around to different investments inside the 401K, there isn't any fees? Correct me if I'm wrong?
...
Click to expand...
Theoretically, no. Or rather, I haven't seen any costs.
However, I'm sure that the mutual fund company incurs some kind of expense to do the shuffling, which they'll just roll up into the cost of their investment options.



- What are the expense ratios of those fund options? I see some Vanguard index funds there; those are typically very inexpensive.
- What's the expense ratio of the Target Date fund options? If those are cheap, that's a very simple way to save for retirement. 1) Buy Target Date fund. 2) Keep contributing. 3) Don't fiddle with it or panic when the market trips and throws up on its pants, as it tends to do from time to time.
- Are there any sales loads when you buy or sell shares?
- Does your employer offer matching, and if so, how much?
 
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dr150 said:
QQQ is top heavy on some stocks like Apple (11.55%...recently was over 13%), which is why it's underperforming for quite some time versus an S&P500 Index fund. It's great when Apple is doing great and a dog when its top heavy components are dragging. In addition, QQQ has a not so cheap .20% expense ratio. http://www.invescopowershares.com/products/holdings.aspx?ticker=qqq



This is very true and more advisable IF one really focuses specifically on Vanguard Mutual Funds. It really depends on one's plans. But there are caveats.

If one wants to play different funds, Vanguard charges $35 for their Standard Plan versus $20 with Etrade. On NTF Funds, they charge you 1% if held less than 6 months. Also $1k-$3k minimum investment depending on fund.

Vanguard also charges a $20/yr fee (waived if you put in over $50k)
https://personal.vanguard.com/us/whatweoffer/stocksbondscds/feescommissions
https://personal.vanguard.com/us/help/FAQBrokerageFeesContent.jsp#a

That $20/yr fee alone covers 2 ETF trades at a brokerage. If you invest twice a year, you break even with having an account at Etrade/Ameritrade vs. Vanguard. Also, brokerages offer free trades and bonuses when you open an account in addition to offering better services, research and free online investing classes.

If fees were an issue for a very frequent purchaser, you can program a mutual fund you purchase to automatically take money out of your checking, thus avoiding the fee.

Sharebuilder.com came out with a good product where auto investing is $4/trade or 12 trades for $12. That can be very desirable for the right person seeking this.
http://www.sharebuilder.com/sharebuilder/investment-options.aspx

There are no right answers and depends on the investor objectives and tolerable fees versus the competition.
Click to expand...

Vanguard only charges $20 if you get paper statements:

A $20 account service fee is charged annually. The fee is waived for Voyager, Voyager Select, Flagship and those clients who have elected to receive statements and other important information electronically.
Click to expand...
 
brianmanahan said:
really, you only need 3 funds to be pretty darn diversified:

1. total US stock market (VTSMX or VTI)
2. total international stock market (VGTSX or VXUS)
3. total US bonds (VBMFX or BND)

this page gives all sorts of details: http://www.bogleheads.org/wiki/Three-fund_portfolio

3 fund is a great place to start! and bogleheads.org is a good place to get a lot of solid investing info. that page also gives different fund names if you are buying from different brokers. the ones i listed above are for vanguard, but each large brokerage place has their own which are similar and may give you better trading costs.

if you are just starting out or are looking to create an account, i would recommend vanguard or fidelity.

one other thing - if you are investing this for retirement, do it in an IRA/roth IRA/401k instead of just a taxable brokerage account. or at least fill any retirement accounts up first before buying in taxable. the tax advantages are very good and you can only put so much a year in. it took me years of working to learn this, i kick myself now because i could have saved a lot on taxes if i knew it sooner.
Click to expand...

this is my strategy
 
harobikes333 said:
I appreciate the feedback so far!

I also have a Employer sponsored 401K that is through Wells Fargo.
To my knowledge, when you move money around to different investments inside the 401K, there isn't any fees? Correct me if I'm wrong?

Here's a list of investments I can put my 401K contributions into... I currently have the majority of mine allocated in my "target retirement date 2050" any suggestions...?
Year to date it's made a 7.9% return. When I look up some of these Funds, I find they seem to be quite highly valued at the moment... should I stick with the Target Date Fund or spread my $$$ elsewhere...

The Stable Value Fund

PIMCO Total Return/Inst

Vanguard Inflation- Protected Sec Inst

AllianzGI NFJ Small Cap Value Fund Inst.

American Funds Growth R6

Vanguard Instl Index 500 #

Invesco Growth and Income Fund R5 #

Vanguard Mid-Cap Idx/Inst #

Vanguard Small Cap Growth/Instl #

Oakmark International/I

Vanguard FTSE All-World Ex-Us Index Inst #

EII Global Property Institutional
Click to expand...

I recommend reading up at the bogleheads forum. You can post all relevant info and the very nice people there will come up with a whole plan for you. You have to look at all of your investments (if any), as a whole, not just your retirement account. You will need to know the expense ratios of the funds you can choose from, it's super important. Basically, find an asset allocation that makes sense to you (how much bonds, how much domestic stock, how much international stock), stick the money in and let it sit, rebalancing every couple of years.

This is for retirement. The less you fuss with it the better. Just keep saving and stick to the plan.
 
Most large cap index funds are at all time high since 2008, not really a good time to invest a big chunk of your savings right now (IMHO!). Financial crisis is far from over, so turbulence is incoming, just a matter of time. If your investment horizon is 10+ years, consider buying individual stocks or sector specific ETFs.
 
I like LQD which is an investment grade corporate bond fund. 4% ish yield if you just want something to not think about. HYG is a higher yield junk bond fund, but given the print money like crazy credit environment that isnt super risky either, i think it yields close to 6%.


we'll probably have 85 billion a year QE for the rest of the year, but the market is a little frothy. but given QE i dont think bond yields will drop so your principal will be ok in most bond funds. i guess it depends on what type of investment you want to make .

i guess if i just had $2500, i'd wait for the next selloff and buy say intel stock in the 21-22 range and buy it then. or buy some other corporate staple like verizon or BP because it has a dividend and large cap corporates that have a big barrier to entry in their industries are usually pretty solid
 
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bogleheads is a great resource. But you can get quite overwhelmed. Dont expect to hop over there, read for an hour, and know everything there. Ive spent hours browsing there and just scratched the surface. For a quick look though just go to the personal investment forum and browse other people's threads. Youll often find the same sort of patterns for investing.
 
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