| 23 year old starting a Vanguard |
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Sdubz
Contributing Member
Cash: $ 10.00
Posts: 46
Joined: 24 Dec 2009
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Would it be better to start an ETF instead? both?
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Mon Aug 01, 2011 2:28 am |
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oldguy
Senior Member
Cash: $ 309.30
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Location: arizona
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quote:
if i open the VTSMX ..should i add 100 monthly or more to it, while continuing to aggressively pay off my loans and put a hold on saving?
VTSMX is a good choice, go with it, it gives you good diversification across the market.
The key thing is your return, an 11%/yr return for 35 yrs really adds up. At $100/m it will be $450,000, It is proportional so it's easy to plan your goal. Ie, $200/m = $900,000. $500/m = $2,250,000, and so on. ANd what account type you chose doesn't affect the final amount, it only affects the tax status. So you can use a 401k, a Roth, a taxable account - I use all 3.
I wouldn't get too aggressive with prepaying debt - you don't want to derail a $2,000,000 wealthbuilding plan just to prepay a $10,000 student loan - put your income to it's highest and best use.
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Mon Aug 01, 2011 3:26 am |
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Sdubz
Contributing Member
Cash: $ 10.00
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Joined: 24 Dec 2009
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Thanks oldguy!
I opened my vanguard with 3k and look forward to adding to it each month.
what more can i do?
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Tue Aug 02, 2011 2:39 am |
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artwest
Member
Cash: $ 3.40
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You asked for opinions so here is mine.
I would take $5,000 from the savings and pay on the student loan. I would then take the $7,000 bonus and pay on the student loan. I would then suspend the contributions to the 401k and apply that to the student loan until it is paid off.
In my opinion, the first step to becoming wealthy is to be debt free. I would pay off all of my debt (except mortgage) first. Then I would start investing in 401k's, ROTH IRA's and Mutual Funds.
Please check out my articles at:
http://artwest.hubpages.com/
and
http://www.helium.com/users/442409/show_articles
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Fri Aug 05, 2011 6:27 pm |
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oldguy
Senior Member
Cash: $ 309.30
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quote:
In my opinion, the first step to becoming wealthy is to be debt free.
But you can also make a case for becoming wealthy by NOT being debt free. 
For example, if I refi one of my houses and add an extra $50,000 to the loan, it costs me about $300/m, ie $108,000 over 30 yrs. And if I place that $50,000 into an 11%/yr Index Fund for 30 yrs, it grows to $1,145,000. Of course I have to pay a 15% capital gains tax on the profit ($164,000) in addition to paying the $58,000 in interest. But over the past 35 years that I've been doing this, I've always found that whenever I'm hit with a 6-figure tax bill, it means that I've had a really good year.
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Fri Aug 05, 2011 11:25 pm |
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Sdubz
Contributing Member
Cash: $ 10.00
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thanks again
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Sat Aug 06, 2011 4:17 am |
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Sdubz
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quote:
Originally posted by oldguy
And what account type you chose doesn't affect the final amount, it only affects the tax status. So you can use a 401k, a Roth, a taxable account - I use all 3.
I need a little clarification as I am still learning...and talking it through helps me learn.
when you say that you use all 3 - a 401k, a Roth, and a taxable account..what are the goals for the taxable account? (Obviously the 401k and roth are for retirement)
Also, do you use different index funds for each?
I currently have the 401k and now the VTSMX but its not a roth ira...
would it be better to get the roth ira and max it out before investing in the VTSMX for a house in the future etc?
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Sat Aug 06, 2011 6:33 am |
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oldguy
Senior Member
Cash: $ 309.30
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Location: arizona
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quote:
when you say that you use all 3 - a 401k, a Roth, and a taxable account..what are the goals for the taxable account? (Obviously the 401k and roth are for retirement)
The goal of all 3 is family wealth building - you need them all becasue the Tax Code changes often as the yrs go by, you don't want to reach age 65 and find yourself 100% invested in the wrong fund type.
I use a mix of index funds in all 3 accounts, they are broadly diversified and provide what I want. When I was young I used 100% stocks/0% bonds to build wealth. Later I used 50/50. And after retirement I transitioned toward 20/80 to provide wealth preservation.
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Sat Aug 06, 2011 1:26 pm |
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eastmn
Senior Member
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oldguy,
If you don't mind; what effect has the last decade of speculators and automated computer trading (skimming) had on your investments and your technique? How's your confidence with this changed market? Do you think that regulation will be able to restore consumer confidence and market stability (validity)?
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Sun Aug 07, 2011 1:05 am |
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oldguy
Senior Member
Cash: $ 309.30
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Location: arizona
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quote:
How's your confidence with this changed market? Do you think that regulation will be able to restore consumer confidence and market stability (validity)?
The automated trading, and micro trading can & will be regulated. Once a problem is exposed and well-defined, it is easily remedied. But this needs ongoing vigilence, with the technology that we have (and will have) there will always be new schemes.
One danger is that, in our honest effort to fix things, we will over-regulate and stifle the motion of the free market. A market has to operate fairly, but also unencumbered, if it is to represent the true instant value of a product. Eg, investers need to freely 'short' a stock as well as buy a stock - a market cannot represent only one side of a trade. And 'margin' needs to be protected, it is the primary risk management tool of investers. But margin needs a limit. And bundling products, adding leverage under a new name, and then re-bundling a bundle and adding yet another level of levergae needs to be controlled - obviously the purveyors of mortgage derivatives had no clue themselves about what they were selling.
The 2300 page Frank-Dodd Finance Bill is a recent example of over-regulating. An overkill of what Frank-Dodd thinks the public wants to hear to make sure that 'Wall Street' is punished. But the public might be smarter than Frank-Dodd think - the public may just want it fixed, not killed?
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Sun Aug 07, 2011 2:45 am |
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coaster
Senior Advisor
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| mod's note |
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Sorry, this should really be in the investing forum and I'm a little slow in catching it. 
~Tim~
Eye Candy : Why Whimsy
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Sun Aug 07, 2011 4:14 pm |
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nodes
New Member
Cash: $ 1.65
Posts: 8
Joined: 08 Sep 2011
Location: Europe
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VTSMX is really a good fund, fees are very low. Unfortunately it representing a US index Russel 1000. You should also try to diversify (geographically for example) a bit more your portfolio, in investing for example in ETF (low fees as well, check for Ishares or Proshares)
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Thu Sep 08, 2011 3:55 pm |
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