I am going to invest $50,000 in...
 

I have been looking at the various types of funds and a deciding between Fidelity and Vanguard.

I am looking for someone to educate me on what to look for in a fund, in terms of aggressive, small cap, mid-cap, etc

Any help or links would be greatly appreciated. If you would like to work out an educational offer in exchange for something, please PM me. I can offer poker coaching I guess as I beat the 5-10, 10-25 nl games for a healthy clip.

Re: I am going to invest $50,000 in...
 

If you're already sold on going the mutual fund route (as opposed to say index funds), the most important thing to look for is a low expense ratio. Far more important than the individual funds you pick will be your asset allocation (how much to put in an aggressive small-cap fund versus an international fund). Based on your age, income, and other goals, you should be able to find plenty of suggested asset allocations. Since you're probably young and have enough money from poker, I would recommend the most aggressive allocation (100% equity) and then determine your sector and market-cap weightings from there.

I would also recommend you take a look at index/passive investing, and throw a large portion of your money in Vanguard funds that track the S&P 500, a fund that tracks small caps, and a fund that is international in nature.

Also, don't put too much stock in past performance in mutual funds. Managers change frequently, and the influx of money that flows into a high-performance fund is often a death knell as they can't find enough good investment ideas to dispense of that capital. There's a much higher correlation between low fees and high performance than between high past performance and future high performance.

Hope that was helpful. If you give the forum more information about your goals, income, and age, you could get more specific advice.

Re: I am going to invest $50,000 in...
 

Tupacia, thanks for the response.

I am currently 21 years old and will be a college senior come Fall. I am currently at a paid internship and am pretty confident I can net around $55,000 to $60,000 a year out of college if I decide to get a job right away. That being said, yes I have made some money from poker and am looking to invest it, or more importantly, learn about the best way to invest it.

I am currently reading a few books on equity investments, i.e Peter Lynch, Ben Graham, etc and want to be able to pick my own stocks in the future.

I have not ruled out indexes, from what I've read they perform quite well. I am just trying to learn the most that I can while investing my money wisely. I hope that gives the forum more information for advice. I appreciate it.

Re: I am going to invest $50,000 in...
 

Probably something like the following for a decently diversified portfolio.

60%Vanguard Total Stock Market Index Fund Investor Shares (VTSMX)
40% Vanguard Total International Stock Index Fund (VGTSX)
Or if you don't want 100% exposure to stock just cut about 10% off of both of those and put 20% in something like Vanguard High-Yield Corporate Fund Investor Shares (VWEHX) a high yield bond fund.

Re: I am going to invest $50,000 in...
 

[ QUOTE ]
Probably something like the following for a decently diversified portfolio.

60%Vanguard Total Stock Market Index Fund Investor Shares (VTSMX)
40% Vanguard Total International Stock Index Fund (VGTSX)
Or if you don't want 100% exposure to stock just cut about 10% off of both of those and put 20% in something like Vanguard High-Yield Corporate Fund Investor Shares (VWEHX) a high yield bond fund.

[/ QUOTE ]

thanks, will definitely look into this. I would really appreciate it i you could post your reasoning for selecting these funds whether it be a short blurb or a link or something. i.e you are 21, you can take some risk, therefore you should have over 50% of your money in x,

just so i can see the reasoning of you experienced investors, thx again.

Re: I am going to invest $50,000 in...
 

Your 21 and since you have so long to invest you can afford to take a lot of risk by going 100% equity type of portfolio. The two funds cover pretty much the whole market domestic and international so you are very well diversified.

Re: I am going to invest $50,000 in...
 

When I was looking into where to put my money I found fundadvice.com very helpful. I know I post that a lot, but it's the truth. They have an article on the "Ultimate Buy and Hold Strategy" and another one on how much to invest in equities that might be called asset allocation or something like that. I would also suggest 100% equities btw but I'm fairly new to this as well.

Re: I am going to invest $50,000 in...
 

Definitely 100% equities because you are young (i.e. can handle variance and don't need the money in the near future for retirement) and also because you seem to have enough money short-term where you don't need to tap your investment funds. 40% international seems a little high to me even for an aggressive asset allocation. I usually see aggressive allocations allocate 20%-30% on the high end to international holdings.

Post deleted by Mat Sklansky
 

Re: I am going to invest $50,000 in...
 

[ QUOTE ]
This may sound crazy but use 5% to invest in life goods if the world ever goes crazy. Glaxiers may all melt put 1% in land that would not be effected by a rise of 8-10 ft of ocean sea level. Put 1% in non-powered water purifiers incase your stuck in the next Katrina. Put 1% in Fire arms and ammo. Think of your own if you think that there is any chance in 20 years that the world may differ from today. Be safe, be secure that is a large some of cash and if you dont need it to live right now that $$$$ will give you freedom, finacally, and in many other ways as it grows.

[/ QUOTE ]

Ummm...wtf? Even if the world goes crazy, why not invest now so you can buy even more shotguns/water purifiers/space shuttles? Also, if I may make another suggestion, instead of buying water purifiers in the event that the polar ice caps melt, spend it on strippers and good meals because you are going to die very soon.

Re: I am going to invest $50,000 in...
 

Tupacia and all,

Are there any funds you would recommend to fulfill this purpose? I agree that it needs to be 100% equity, but it seems that there a lot of different roads to this destination.

1. Are there any recommended funds from the forum?
2. Is there a difference between brand/managers between let's say Fidelity and Vanguard.

I guess what I'm trying to say is that is it pure luck that you will run into the next Peter Lynch or is there a way to actually see which managers are more competent?

Lastly, is it feasible to have a Scottrade, Fidelity, Vanguard accounts? Or is it better to just do your business all from one site?

Re: I am going to invest $50,000 in...
 

it doesn't matter whether or not you use more than one site, except for convenience. Most people recommend Vanguard b/c they almost always have the lowest expense ratios.

People like the mix of:
Vanguard Total Stock Market Index
Vanguard Total International Stock Market Index

b/c people assume that if you aren't an experienced investor, you can't BEAT the market, you can only hope to match the market. Investing in these two funds will match the market at the lowest expense so you will get closest to market returns you can without doing a decent amount of research.

[ QUOTE ]
2. Is there a difference between brand/managers between let's say Fidelity and Vanguard.

[/ QUOTE ] Fidelity does a little more active management (in general) but has a higher expense ratio.

Re: I am going to invest $50,000 in...
 

[ QUOTE ]
it doesn't matter whether or not you use more than one site, except for convenience. Most people recommend Vanguard b/c they almost always have the lowest expense ratios.

People like the mix of:
Vanguard Total Stock Market Index
Vanguard Total International Stock Market Index

b/c people assume that if you aren't an experienced investor, you can't BEAT the market, you can only hope to match the market. Investing in these two funds will match the market at the lowest expense so you will get closest to market returns you can without doing a decent amount of research.

[ QUOTE ]
2. Is there a difference between brand/managers between let's say Fidelity and Vanguard.

[/ QUOTE ] Fidelity does a little more active management (in general) but has a higher expense ratio.

[/ QUOTE ]

Yea me and Zeebo are on the same page here. I once again maintain my assertion that you should do something similar to what I suggested.

Re: I am going to invest $50,000 in...
 

I'm surprised a lot people have just recommended two funds, while the majority of advice I have read elsewhere consisted of perhaps 3-5 funds in varying %s.

Is this because the two funds stated here are already so well diversified that there is no further need to diversify with more funds?

Re: I am going to invest $50,000 in...
 

[ QUOTE ]
I'm surprised a lot people have just recommended two funds, while the majority of advice I have read elsewhere consisted of perhaps 3-5 funds in varying %s.

Is this because the two funds stated here are already so well diversified that there is no further need to diversify with more funds?

[/ QUOTE ]

Basically. The Total Stock market fund owns a ton of stocks in the US market. The total international fund owns a ton of stocks in the international market as you might guess by the name. With just those two funds you basically cover the whole world.

Post deleted by Mat Sklansky
 

Re: I am going to invest $50,000 in...
 

Isn't there a tax-benefit to the International Index fund if you have $10K to put into it?

VG's Inter. Index funs has a $3K minimum, but my friend was telling me there is a 'better' (tax-wise) inter. fund if you have $10k.

With 50k to invest, surely you'd be able to get 10k into that fund, so I'm bringing it up incase anyone knows more about this. My non-retirement portfolio isn't large enough to put 10k into that fund, so I can't speak about it.

Re: I am going to invest $50,000 in...
 

I like the Tax-Managed Funds in taxable. In retirement what is being suggested here isn't bad, though I run a 50/50 domestic/international split with a value and small-cap tilt. Those 2 funds will offer some decent diversity though, but I believe they are market-cap weighted (which may or may not be what you want).

Re: I am going to invest $50,000 in...
 

index that are trying to mirror the same index are all almost exactly the same( you can find long term comparisions online if u want proof) Just go with the lowest cost.

The plan of basically buying 2 or 3 indexed (a foreign and a domestic and then maybe putting 10-15% in emerging markets is what Graham suggests if you just want to buy and then wait 30 years.)

Oh yeah, if ur just opening a fidelity account you can get 50K free airline miles through aa.com. Make sure u open the account through the link on aa.com

(I have nothing to do with American Airlines...)

Re: I am going to invest $50,000 in...
 

Does anyone know if the tax managed funds are more or less tax efficient than ETFs?

Re: I am going to invest $50,000 in...
 

[ QUOTE ]
Probably something like the following for a decently diversified portfolio.

60%Vanguard Total Stock Market Index Fund Investor Shares (VTSMX)
40% Vanguard Total International Stock Index Fund (VGTSX)
Or if you don't want 100% exposure to stock just cut about 10% off of both of those and put 20% in something like Vanguard High-Yield Corporate Fund Investor Shares (VWEHX) a high yield bond fund.

[/ QUOTE ]

this is pretty much what I did except I put short term cash reserves in vanguard prime money market fund.

Re: I am going to invest $50,000 in...
 

You should definitely read All About Asset Allocation and The Four Pillars of Investing. I was in your position a couple weeks ago and I guarantee after reading AAAA you will have a great idea of how you want to invest your money. The people on this forum can only give you a guideline but you are the one that determines the actual %s for your various funds.

Read them.

Re: I am going to invest $50,000 in...
 

[ QUOTE ]
Does anyone know if the tax managed funds are more or less tax efficient than ETFs?

[/ QUOTE ]

I'd imagine it is close. Tax-Manged Funds are probably more tax efficient but they have a slightly higher ER. ETFs haven't really been around long enough to be able to say their tax-efficiency with any certainty. It's all pretty theoretical at this point.