I have a new Vanguard account with VFINX AND VMGIX both with $3000. i would like to have at least one more fund. I am 37 and just starting so all is new, any thoughts? I have more $$$$ to put in just want to get set up first, appx $20,000 Since you're already at Vanguard (a fine choice, by the way), you might find it convenient to stick with them for a 3rd choice. You have large caps and midcaps so the obvious choices to diversify into are foreign and smallcap.
Smallcap stocks/funds have had a really really good run the last few years, so you might want to wait on that on the theory their run is about up. (For the long term, of course, you really ought to have some smallcap exposure.)
So foreign would seem to be the ticket. This is also good since most of us suspect that the dollar will continue to fall against other major currencies. Vanguard has several foreign/global choices, but the one that looks good right now is Vanguard Global Equity (VHGEX) (largecap value) or Vanguard Total International Stock Index (VGTSX) (largecap blend). VHGEX will have some minor percentage of US stocks; VGTSX has none.
Another primo fund for foreign would be Dodge & Cox International (DODFX). I like this fund and in fact just put my 2006 Roth IRA $5K into it. The Dodge & Cox folks have an excellent reputation and the return on the fund has been quite good. Jo likes T Rowe Price and Janus funds,, Vanguard is a REALLY smart place to be, so congratulations.
At 37, you have almost 30 years before retirement, so for the next 20 years or so you can afford to be fairly aggressive (depending on your "personal" tolerance for risk)...
You should google "asset allocation" + "risk tolerance", and you'll find bunches of easy ways to measure your risk tolerance and consequently the ideal mix of funds for you.
Good luck!
(You should check out the Motley Fool, too...) looks like you have S&P 500 amd midcaps. consider international large caps and some small caps for diversification.
As far as sectors I like oil, healthcare and consumer
http://letsgobble.com/ I really like the FEAOX the free enterprise action fund. Sure it's somewhat politically based but I like the way they work. They practice shareholder activism and keep CEO's focused on capitalism... which is what most shareholders want. There is a Blue fund also and it comes in small and large cap. They tend to own similar securities (ironic isn't it) but claim different styles. I have to add my voice to Enoriverbend's. Vanguard is the best place to stay - excellent choices available, everything is in one place (to view on web) and low cost (more of your money working for your) is assured. The going recommendation is 30% International equities but I would keep whatever you intend to invest in Prime Money Market until the day after a "bad day" though over the course of time, it won't matter that much. Get a Roth IRA started with them if you haven't already, first off which is $4000/year. In a taxable account, index funds are best to soften the tax bite (low turnover hence fewer capital gains). International Index is great and super-diversified with its slight exposure to the volatile emerging markets. Good Luck! I am a little suprised no one has said this one yet. VFWIX its the Vanguard all world minus us mutual fund. This is your BEST CHOICE! And it offsets your other two funds. I own the ETF version of this (VEU) and have proudly hit 10% since I bought it a month ago (even bought more on a downturn on apr 11th and rebounded with a better than 2.5% gain on it. Now 20k is too much I would put in say 5-7500 and the rest in your other two that you have. For full deatils on this fund look here. Hi,
Hey! Do your own homework - it's safer. When you follow other people's advice (OPA) and it fails, what have you learned? Zip. Nada. Zero. OPA is for suckers. Don't fall into that trap.
When you do your own homework even if it turns out to be wrong, you learn from it and get better - it's called experience.
Investing is like a scientific hypothesis - you hypothesize that based on your investigation and knowledge, this stock should go up and make a profit. Sometimes your hypothesis is wrong and it's back to the drawing board.
If I were young, I would be investing in small cap growth mutual funds or stocks. Go here for excellent low cost advice (http://www.aaii.com/aaiiportfolios/comme...
Don't be alarmed at the low cost - it has some of the best financial advice on the Web.
If you have lots of time before retirement the magic of compound interest will just keep building and building. It really works and if you keep investing and re-investing your proftis every year, in 10 or 15 years you will be surprised at how it mounts up. In 30 years you could be a millionaire which probably won't amount to much in 30 year owing to the the ravages of inflation. But stocks are a good hedge against inflation.
By that time you may need a money manager to manage your money - probably before when you reach the $500,000 mark. Heck! If you have achieved that much, you probably don't need a money manager - you are the best judge of where to invest your money by that time.
And that's the primary reason to keep investing in small cap growth stocks - they will flog inflation to death.
When investing in mutual funds, select the no-load funds only. Do not invest in mutual funds with a "load", an up front commission that you have to pay before when they sell you the mutual fund. Some charge as much as 10% which is a rrip-off. Many studies have shown that the no-load funds do as well as the load funds and sometimes a lot better.
Look at the AAI Shadow Stock Portfolio. I would try and emulate that portfolio if you want to invest in stocks. It was up 25% as of November 2006. The Vanguard Index fund is only up 14%.
AAII has some of the best financial advisers and the cost is very low. They have excellent guides and advice.
You may need a broker so go to e-Trade or Scottsdale who have low commission rates.
Do your own due diligence. Your own ideas are the best. Do not depend on someone else to select investments for you. Learn about investing so you don't have to ask what stocks to invest in.
Be self reliant.
Remember what Emerson said: A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines. With consistency a great soul has simply nothing to do.
Find stocks that have steadily rising net profits (earnings), low debt, and good P/Es, lots of cash, companies buying back their stock..
What interests you? Find stocks that pique your interest and passion.
You need fast growing good stocks with good earnings and in good sectors. You need to learn more about the stock market before you even think about investing in it.
The stocks world is divided into 12 sectors such as energy which chevron belongs to. It is next to last in the sectors list today.
Technology is numero uno, but things can change in a new york minute, but within the sector, the fastest growing are computer services, not Microsoft. Then, Electronic Instruments and controls. Next is computer storage devices.
The next hot sector is Healthcare, but heed the warning below. Go here for sectors: (http://clearstation.etrade.com/cgi-bin/I...
The best software is Vector Vest if you can afford it. It has sector investing.
Here is a free Web site for charting stocks: (http://www.incrediblecharts.com/).
First of all, stay away from "professional brokers" and tips coming to you via e-mail or friends and acquaintances. And tips at Yahoo! Answers. And e-mail tips. Do your own due diligence - don't rely on someone else. Read Emerson's essay "Self Reliance.
Hey! They will say anything to get you to buy their junk. If it's too good to be true, it is.
Remember this, they are just sales people trying to sell you what their firm is pushing. They are not security analysts or financial planners, not even financial advisers. Trust me, I know from experience that they cannot be trusted especially with a million dollars. You risk losing it all. A million dollar account is known as a "whale" and they would love to get their greedy little paws on it and suck it dry. They just want to make commissions on what they buy and sell for the suckers, err...clients..
Get this book: The Market Gurus: Stock Investing Strategies You Can Use from Wall Street's Best (Paperback)
by John P. Reese (Author), Todd O. Glassman
Risk avoidance is the name of the game.
Remember, the harder I work, the luckier I get.
Penny stocks are highly speculative. I would avoid the ones under a dollar a share. For example, Best Buy started at less than $5. So there are some good companies, but it takes a lot of digging to find the good ones. You are looking for companies with good earnings, little debt, low capitalization, and good P/Es. For stocks under $5, very few will meet these requirements.
Stay away from the pharms unless they have patented drugs - do not invest in generic pharms, no growth there.
Check out which business sectors are the most popular and invest in the companies in those sectors. The number one, two and three are: technology, health care, and cyclicals (retail). These change periodically so keep current.
Go here for a list of growth stocks: http://www.thestreet.com/_googlen/newsan...
There are these lists all over the Web - you pays your money and takes your chances.
Watch CNBC, but don't pay too much attention to the talking heads, except for Jim Cramer, the wild man - but he tries to teach you how to invest and has some great advice.
Get Jim Cramer's Real Money: Sane Investing in an Insane World by James J. Cramer
Listen to Jim Cramer on CNBC.com
Go to Clearstation for quotes and tutorials on investing at (http://clearstation.etrade.com/). Sign up is free. Look up a few stocks. Do their tutorials. Check out the sectors.
Get this book: Value Investing: From Graham to Buffett and Beyond (Wiley Finance) by Bruce C. N. Greenwald, Judd Kahn, Paul D. Sonkin, and Michael van Biema.
Another good book: The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of (Motley Fool) by David Gardner, Tom Gardner, and Selena Maranjian
Jim Cramer's Mad Money: Watch TV, Get Rich by James J. Cramer and Cliff Mason
I Want to Make Money in the Stock Market: Learn to Begin Investing Without Losing Your Life Savings! by Chris M. Hart\
Sensible Stock Investing: How to Pick, Value, and Manage Stocks by David P. Van Knapp
Stock Investing For Dummies (For Dummies (Business & Personal Finance)) by Paul Mladjenovic
All About Stock Market Strategies : The Easy Way To Get Started by David Brown and Kassandra Bentley
The Motley Fool Investment Guide and their Web site (http://www.fool.com/).
The Little Black Book of Microcap Investing: Beat the Market with NASDAQ/AMEX Microcap Stocks, OTCBB Penny Stocks, and Pink Sheet Stocks by Dan Holtzclaw
How To Make Money In Stocks: A Winning System in Good Times or Bad, 3rd Edition by William J. O'Neil
Trading for a Living: Psychology, Trading Tactics, Money Management by Alexander Elder
Big Trends in Trading: Strategies to Master Major Market Moves (A Marketplace Book) by Price Headley
Extraordinary Popular Delusions & the Madness of Crowds (Paperback)
by Charles Mackay (Author), Andrew Tobias (Foreword) This book talks about the Tulip craze in Holland where people would mortgage their homes to buy Tulip bulbs. Same thing happened in 2001 - 2002 with the Internet bubble that brought the stock market to its knees. The dot com companies were the Tulip bulbs.
Buy Investors Business Daily. It has lots of tutorials and I like it better than the stodgy Wall St Journal.
Money Game by Adam Smith
Common Stocks and Uncommon Profits and Other Writings (Wiley Investment Classics) (Hardcover)
by Philip A. Fisher. Recommended by Warren Buffet who took $100,000 and grew it to $34 billion!
Value Investing with the Masters by Kirk Kazanjian
Valuegrowth Investing by Glen Arnold
The 5 Keys to Value Investing by J. Dennis Jean-Jacques
The Intelligent Investor Rev Ed. (Collins Business Essentials) by Benjamin Graham. Warren Buffet was his student at Columbia.
The Money Masters by John Train
The Bogleheads' Guide to Investing by Taylor Larimore
Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor by John C. Bogle
Why Smart People Make Big Money Mistakes And How To Correct Them: Lessons From The New Science Of Behavioral Economics by Gary Belsky
Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week! by Phil Town . See his Web site at (http://www.ruleoneinvestor.com/). Free sign-up. I got the book at the library.
Listen. You don't have to spend a lot of money on these books - most can be found at your library and those that your library doesn't have they can usually get from other libraries in your state.
Most of these books talk about stock and mutual fund investing, but for a good introduction to other forms of investing Gerald Appel has a great book called Opportunity Investing - How to Profit When Stock Advance, Stocks decline, Inflation Run Rampant, Prices fall, Oil Prices Hit the Roof and Every Time In Between.
First, Break All the Rules: What the World's Greatest Managers Do Differently by Marcus Buckingham and Curt Coffman Not a book on investing, but it's a nice segue into the next book.
Now, Discover Your Strengths by Marcus Buckingham and Donald O. Clifton
Go Put Your Strengths to Work: 6 Powerful Steps to Achieve Outstanding Performance by Marcus Buckingham
Finding your strengths is important when investing. These books teach you to build on your strengths, what you a good at. Everyone is good or passionate about something. Why not get better at what you are good at?
Another good book is: Opportunity Investing: How To Profit When Stocks Advance, Stocks Decline, Inflation Runs Rampant, Prices Fall, Oil Prices Hit the Roof, ... and Every Time in Between (Hardcover)
by Gerald Appel
Most mutual funds do not even keep up the the return on the S&P. That's like 99% of them.
Vanguard Index funds are a no brainer.
A CD is better than a savings account. They range from six months to several years. You cannot touch your money tho until the time limit is up.
Check out this Web site on Direct Investment Plans where you can buy shares directly from companies: (http://www.fool.com/School/DRIPs.htm). Usually no fees and you can buy one share at a time.
Bonds are probably the safest. But they are not for the young. You might try a bond fund. They might return 5 or 6 percent. At 5% a million would return $50,000 a year - not a bad income. Remember, you have to pay taxes on the $50,000.
There are also municipal bonds and the income from them is taxfree especially if you buy them in a state that offers them, but they only pay about 3%, but it's mostly taxfree.
Look into Fidelity sector funds. Buy the top three, then in six months look how they are doing and if not so hot, select the next three that are best. Do this for a few years and you will make lots of money.
Kindest Personal Regards,
Walt Brown
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P.S. This is a life-long learning process. Reading these books and applying the rules to analyzing stocks that may be good It takes time. Be patient and keep reading and listening. Don't be a sucker and follow someone elses advice. Be your own man or woman. Depend on no one except yourself. You can only get smarter and stronger that way.
P.P.S. Internet has lots of good stuff, for example (http://stockcharts.com/school/doku.php?i...
Stockcharts.com is very good and their discussion of MACD is one of the best, barring its originator, Gerald Apple, but now we are getting into Technical Analysis and that is not for beginners. But it is an important factor in finding good stocks that are going up and growing. Remember, tiny acorns grow into mighty oaks. Do you have a mortgage loan? I suggested to do the refinance and lower your monthly payment and it will increase your house equity as well. |
