Interested in opening a vangauard account...Suggestions?

[bdams19]

I am 20 years old and a junior at university. From poker and other investments i managed to scrape together about 38k that I would like to invest. I currently manage my own stock portfolio on tdameritrade, but I have a feeling that its a bit of a crap shoot (up 21% since i started) with my investments. As a result, I would like to open a Vangaurd account. I did the questionnaire and they pointed me towards opening a general investment account (i answered no to having a steady income in case poker doesnt count). Do you guys have any suggestions? Should I go conservative or moderate? I am not sure how Vangaurd accounts even work as far as fees or commission, but I have heard that people are pleased with them so I would like some feed back.

[meditate89]

If at all possible I would try to set up a ROTH IRA. The maximum you can put in is 4k a year, but it is a great tax shelter. You must have 'earned income' that you paid taxes on to contribute to this vehicle.

I know many people on this site believe that Index funds are the way to go, but I believe you can get a much better return in individual stocks if you're willing to put some work and research into it.

Use a calculator- put in your 38k. See how much you have after 10-20 years with an annual return of 12% / 15% / 18%. These numbers are all very possible to achieve- I'm not going to sit here and tell you that you can make 20/ 30/40%- that seems unrealistic for most people. You will see you come up with very different numbers at the end, depending on the rate you use- this rate will be proportional to the time and effort you put in.

HOWEVER, I WOULD STRONGLY ADVISE AGAINST EVER BUYING ANY INDIVIDUAL STOCKS EVER YOU THINK ITS A "CRAP SHOOT."

If you go with index funds-->
I would recommend investing in 100% equities because you are young, have a long time frame ahead of you, etc. I'm assuming you won't need this money for 10-20 years? I would recommend a portfolio with plenty of international and small cap exposure. Fees are very reasonable at Vanguard, but you might want to look into a target retirement fund ( like 2045? 2050?) if you want to keep it simple and stay in one fund. Vanguard charges a negligible fee of like $10/ year if you don't have a certain minimum per fund ( I think it's 10k, might be 5k on some funds)

I would recommend buying 5-10 books on investing; I believe there have been plenty of threads already discussing books to read- and one of them might even be stickied up top. Intelligent investor, one up on wallstreet, etc might be good if you haven't read them.

Cliff's Note: I think you can get a much better return in individual stocks than index funds- but ONLY if you are willing to do a fair amount of reading and research. If you aren't willing to do this, then I would recommend Index funds. If you believe that individual stocks are a 'crap shoot,' why would you invest in them?

p.s. what stocks are in your portfolio and when did you start investing? and if you want to say how much $ you have in tdameritrade that might be helpful too although dont feel obligated by any means.

[bdams19]

I think I may have been a little vague. I currently have 38k to my name; I keep about 6-7k on the poker site which i play at (i can no longer deposit really so I use it to phase variance), and I keep the rest in my stocks.

I know a bunch of people who dont like to disclose stocks so I will tell you that I have recently sold CHL and LFC, two of my better picks that have come out of the Chinese market. It was recently suggested that the Chinese market bubble is going to burst so I have sold my positions in hopes that I can buy them again eventually at a discount.

I do not invest in stocks I do not believe in; as far as a crap shoot goes, perhaps wrong wording. It's just that I believe I can achieve similar gains with lower risk. I have been successful with stocks thus far but over a small sample and although I like to think I know what I am doing who knows.

I have read intelligent investor and The Warren Buffett Way and I am generally a value investor. I spend alot less time now than I did before reading annual reports looking for small caps that are under the radar to scoop up before they explode.

[bdams19]

I recently bought dell for the longterm since michael dell is a pimp and will inevitably turn the company back around to an industry leader again.

Also purchased DirecTV recently since the hdtv boom is going to basically make regular cable channels obsolete and DTV is the industry leader.

I also currently hold VE and DEO.

[meditate89]

To be honest with you I need to look into many of your picks before I can really comment on them... I'm just not that familiar with the companies. I'll get back to you though. In the meantime...

Where did you hear the Chinese market bubble is going to burst? I recently read that the Chinese market was going to do well this year...
could you give me a time approximation on when the bubble might occur? Within the next 3 months? 6 months? 1 year? How much of a correction do you think we can expect? 10%? 20%?

I really don't know much about these companies as I said earlier- but do you believe that VE or DEO may not have much potential future growth ahead of them? I ask this because their payout ratios are rather high, suggesting that they don't need to retain more earnings to grow their businesses... A brief glance at their income statements for the past few years wasn't particularly impressive in terms of growth, but as I said- I'm really making assumptions here because I don't know the story behind either company. These are just questions you might want to ask yourself.

[meditate89]

You also mentioned that you stopped reading annual reports and started looking for small caps that are under the radar and ready to explode - this sounds like it has a lot of potential. Have you found any small caps that you're interested in yet? One you might want to consider is NICK. Desertcat, a respected poster here, did a write up on the company that should still be on the first few pages.

[bdams19]

My internet is sucking major ass right now, but I can recall that DEO was a fund type stock and is not risky at all but rather I threw it in for diversification (low risk, low reward). I cannot comment on VE yet.

LFC (China Life Insurance) seems to be a company with ALOT of potential and longevity. Think about it, they are going to be writing a TON of policies in china before anyone else can and I'm sure they have done their research to set the rates (like any insurance company must to be profitable). However, the stock has gone up like crazy which made me believe that it was perhaps overvalued. I'm not sure anymore, and I probably will pick it back up at some point when I hear more news on the China situation.

CHL is China Mobile, also a big growth oppportunity. I am by no means an expert with much of a track record, but I have done well in my limited experience (<2 years). I will look into NICK, it is a recommended buy i assume?

[squiffy]

Why not put some of your money in the Vanguard funds and keep some in Ameritrade and see how your returns compare over 5-10 years?