/biz/ - Business & Finance

1. Low fees. Fees matter. A lot.
2. Vanguard is owned by everyone who invests, not by some leeching corporate parent.
3. Huge selection of funds and ETFs.
4. Solid, low-cost actively managed funds for the sectors where active management is desirable.
5. Benefits for having larger amounts invested (lower fees, free services).
6. Brokerage services (including margin accounts and options trading) available for those who want to consolidate under one roof.

>All that being said, Fidelity and Schwab are fine too.

>>414939
>4
What actively managed funds do you think that they offer are worthwhile?

Otherwise, what more should I diversify in? I basically run the 3 fund portfolio. Roughly 50domestic stock - 40 international - 10 bonds

May toss some REIT's, health sector's, emerging markets or get some small cap/growth to tilt the portfolio a little

>Why is international best in taxable?
I don't really get it, like some interaction with dividends and foreign countries withholding taxes or some shit?

>>414939
This plus they were the original Index Fund providers. And because Bogle founded them, so naturally us Bogleheads will gravitate towards Vanguard.

>>415006
>What actively managed funds do you think that they offer are worthwhile?
I get a ton of value out of their tax managed funds (VTMSX, VTCLX). My income is sufficiently high that I'm always looking for ways to reduce my tax burden without sacrificing too much alpha. Vanguard does a nice job here.

The Primecap managed funds (VPCCX, VPMAX) are a great bargain: absolute top tier management at index-level fees.

I like a few of their small-cap, value oriented funds, such as Vanguard Explorer Value (VEVFX) and Vanguard Capital Value (VCVLX).

>May toss some REIT's, health sector's, emerging markets
Big fan of Vanguard Health Care (VGHAX). Stellar performance through volatile years in the industry. I own the REIT fund (VGSLX) and its fine. I don't rave about it, but I'm pleased with it.

>>415018
All true. They used to be the only good option for low-cost indexing. Fidelity and Schwab have pretty much caught up on fees, and ETFs level the playing field a bit too.

I only hesitate to say that Vanguard is "the best" because people accuse me of having some bias or hidden agenda. I'm not sure how that would work, but that's 4chan for ya.
>But yeah, Vanguard is the best.

>>415006
>>Why is international best in taxable?
>I don't really get it, like some interaction with dividends and foreign countries withholding taxes or some shit?
Just saw this question. Yes, its because of the foreign taxes paid by the fund. This can be claimed as a credit on your U.S. tax return. Note: I said CREDIT, not deduction and not expense. It's a dollar-for-dollar reduction in your tax liability. It doesn't get better than that.

>>415043
>I only hesitate to say that Vanguard is "the best" because people accuse me of having some bias or hidden agenda. I'm not sure how that would work, but that's 4chan for ya.
...
>2.5 trillion dollar company
>advertising to neckbeards on 4chan

>>415046
>foreign taxes can be claimed as a credit
god fucking damnit, that means I've lost a few thousand dollars on previous tax returns.
>found 1116 form after 2 seconds of googling
shit. It's fucking easy too...

>>415063
If you can get your hands on the brokerage statements listing the taxes, you can try to claim the credits on a 1040X. You should be able to recover for at least two years back.

>>415047
>suggesting a 2.5 trillion dollar company can't afford to hire one person to convince neets to use Vanguard

I came into about 200k USD recently, and one thing led to another and I opened a HSBC brokerage account (had a premier checking account) and signed up for 1.5% annual fee fund (which is a mix of about 30 mutual funds that a financial guy made, and we decided to invest a little less than 100k.

How much did I fuck up? I read the print on fees and it says for the mutual fund fees "are paid directly out of fund assets and are indirectly borne by shareholders of mutual funds." So I'm guessing it's 1.5% on top of the expense ratios, PLUS tax for payouts.

Looking over the info the adviser gave me, the mutual funds have expense ratios from 0.15 to 2(!!) percent.

I already signed the contract which states the fee is 1.5% of the investment per year; he said he will give me a call when he think it's a good time to enter.

Should I just try this out for a year, since I know nothing about investments? or should I ask to hold off for a while (maybe indefinitely?); can I even do this as I signed the contract?(and they forgot to give me a copy of the parts I signed, so I'm not exactly sure what it entailed.)

>>415111
You fucked up.

2% annual fees is fucking ridiculous. Mutual funds are a long term investment, think of 2% of 10k over 10 years. The thought is you'll contribute to these funds over time too. Compound interest is supposed to work in your favour, not the opposite.

The whole point of why everyone is firmly planted on Vanguard's velvet cock is because of their ridiculously low fees. You should have done some research before jumping head first into this.

>>414930
Lowest cost to manage . Basically an i dex fund following the s&p 500 will make 7% a year ( averaged over time) .

Go play with a compound interest calculator and see how much of a difference 1% makes over time

Then ask yourself why you would pay someone even 1% higher than you needed too when all fund managers consistently fail to beat the market (the 7% you would gain from simply investing in an index fund tied to the s&p for example)

Its a no brainer

>>415043
>I only hesitate to say that Vanguard is "the best" because people accuse me of having some bias or hidden agenda. I'm not sure how that would work, but that's 4chan for ya.

William Bernstein said something similar:

>I have occasionally been accused of being a "shill" for Vanguard; if wanting to be the owner of my fund company and so pay rock-bottom fees makes me a shill, then I plead guilty.

>>415111
>>415171
See if you can break it off. I mean, if you can break it off for even 5% loss(mumble mumble), that's still only 3 years of fees you lose out on.

>>415043
What are PRIMEcaps all about? I know other companies offer them as well. So just actively managed and dependent on whichever sector

so VPCCX = small cap
VPMAX = large cap

I guess if I don't have that much $, is there any benefit of switching VTSAX into those?

I don't have enough money for VTMSX nor VTCLX.

VEVFX looks cool as does VCVLX.

I'll look into VEVFX and VCVLX....should reach $100,000 in my accounts in the next few years.

>>415046
Wow! I called Vanguard and asked them about this. The girl phone rep was clueless and was like are you talking about tax advantages via like an IRA or a 401(k)? I laughed and said don't worry about it.

Thank you iHaz. I'll save the info you posted for future reference (once I get more capital/money)

>>415067
I've honestly never done my taxes, I hope it's easy enough to figure out/do come tax season next year when I actually have to do it. I don't think I earn enough money to have a tax advisor to look at saving $ for me though.

Boglesheads offers very in-depth information on tax efficiency:

http://www.bogleheads.org/wiki/Principles_of_tax-efficient_fund_placement

Here's the info on foreign tax credits:

http://www.bogleheads.org/wiki/Foreign_tax_credit

>>415221

The Primecap funds are closed, meaning they don't take new investor's money.

I think they're some flavor of quantitative strategy picking healthcare and tech stocks. They certainly seem to have shitloads of alpha, so it makes sense to dump a lot of cash in them if you already own them (like iHaz, lucky cunt)

>>415229
Very nice.

In regards to tax efficiency, it seems obvious to put REIT's in tax deferred accounts....should health care funds be in tax deferred/sheltered accounts?

>>415232
That's unfortunate. I feel like investing would be so much more fun if I made more $. Sucks making like $45k.

>>415221
>What are PRIMEcaps all about
PRIMECAP is a fund management company (primecapmanagement.com). They offer their own funds, and they also contract their services to other shops (like Vanguard) to run outside funds.

>>415221
>I don't have enough money for
The fund symbols I listed may be Admiral class, which have a higher minimum. Any Admiral class fund at Vanguard will also have an Investor class, which is the same fund but with significantly lower minimums (and slightly higher fees).

>>415221
>The girl phone rep was clueless
Vanguard isn't a tax advisory firm, and you were talking to a retail sales associate anyway. Tax advice isn't her job.

>>415232
>The Primecap funds are closed
Ah, my bad. If you have enough money at Vanguard, they let you into closed funds, so I tend not to think about that stuff.

>>415235
>should health care funds be in tax deferred/sheltered accounts
VGHCX should go into a tax advantaged account if possible. Although the dividend yield is modest, it throws off a lot of cap gains.
>Pic related.
>P.S. All this tax info is on the Vanguard website. It would be good if you learned to figure this out for yourself, of course.

>>415275
Hi
I'm 21
Got 2500$ that I want to put to work
What do?

>>415285
Get a job. A good job with upward prospects. Invest in yourself so you can take advantage of those upward prospects. Set aside an emergency fund so you don't ruin your life when things get temporarily bad.

Come back when you've accomplished all of the above.

would you recommend investing with vanguard if i'm outside of the United States?

>>415275
>Primecap
I recall hearing this name from somewhere, a friend of mine (works in IBM, makes 130k already Jesus)....he got massive growth in a PrimeCap Odyssey Aggressive Growth

The Healthcare Admiral is like 0.30 versus the Healthcare Investor (0.30)...the difference is really surprising though like usually its $10,000 minimum buy in for Admiral and $3,000 for Investor (but for Healthcare the Admiral minimum is $30,000!)

Also I am aware that the VTSAX has health care and REIT exposure in it, I suppose I could always tilt it by buying into those.

I'll save up/devote some space in my Roth IRA to buy into the Health care most likely. I'm deciding between that and REIT at this point.

>Primecap closed
Not a problem, just going through the American Dream (Struggle)...making small peasant sum but my job isn't super demanding and has upward mobility...but we're looking at 60-70k in 2 years which isn't great. I'll work towards a CFA and hopefully that opens up some doors.

>jpg
Thank you for that I'm still really new into this.
My investing time horizon is the biggest upside (in my early 20's).

`My 401(k), I'm in a S&P500 - would they make me overweight on large cap domestic stock if I have a VTSAX in my portfolio? Given, I don't have enough $ to probably even worry/care at this point.

>>415317
The fees are higher for non-U.S. investors, based on what I've seen posted by others. Really, it depends on what alternatives you have. Compare the alternatives, and all other things being equal, go with the shop that has the lower fees.

>>415321
>.the difference is really surprising
Not really. Admiral fund minimums are $10K for index funds, and $50K for most actively managed funds. Health Care is an actively managed fund, so the minimums are higher.

https://investor.vanguard.com/mutual-funds/admiral-shares

Besides, people stress too much about getting Admiral class shares. It causes them to overconcentrate their investments, at the cost of diversity. While I respect the attention to fees, Investor class funds are an excellent value. And, you can always convert your funds to Admiral (tax free) in a few years.

>>415333
Do you think 30k$ is enough to get started in investing in funds?

>>415339
Yes but most likely you will just dump it into a broad index - like VTSAX and VTIAX which is basically what I'm doing...

But my 401(k) only offers the S&P500....so I don't know what to do lol

>>415333
That's true man people sweat expense ratios at the cost of a lack of diversity. $3000 at Vanguard is super reasonable as a buy in minimum.

And really 0.10 expense versus 0.24 is the difference of $10/10000 versus $24/10000 which is whatever.

I did post on Bogleheads and they basically told me just ignore the specialized funds, the small/mid cap ones, international/emerging in my 401(k) as those expense ratios range anywhere between 0.5-3.0 in expense ratios...and just to dump my money in like a 80-20 stock: bond into the only low cost index funds I have....

that corresponds to
80% S&P 500 (index expense: 0.08)
and 20% Barclays Aggregate Bond Index (expense: 0.13)....

and I'm planning on near maxing it every year going forward.

I have some room to play around with in my Vanguard Roth IRA...but not that much seeing as you can only invest $5500 a year. If I were to leave the current company I'm at, I could always roll it in there....

(But hopefully get a CFA whilst they pay for it, get vested and be promoted within before I do that)

I wish this board was around when I was in high school would've taken your motivation ihaz and done law or something prestigious instead of fucking around with an Econ degree

>>415339
>Do you think 30k$ is enough to get started in investing in funds?
In my opinion, the prerequisites for sound investing are:

1. Stable income (wages, salary, or other) that at least covers your basic living expenses.

2. Emergency fund of 6-12 months living expenses in cash, money market, or CDs.

3. At least $3000 of free cash that you do not expect to need for at least the next five years.

Different considerations may apply to 401k and IRA contributions, depending on your circumstances and options.

>>415351
>that corresponds to
>80% S&P 500 (index expense: 0.08)
>and 20% Barclays Aggregate Bond Index (expense: 0.13)....
Looks like a solid plan if those are your options. Consider adding small/mid caps and some international exposure when the opportunity arises.

>>415378
Thanks!

I meet all the requirements listed, but i still want to learn more about investing before i get started, because i still got big problems with the "language" you people speak.

Is there some kind of Investing-Dictionary you would recommend? Maybe even online?

>>415385

>Is there some kind of Investing-Dictionary you would recommend? Maybe even online?

http://www.investopedia.com/tags/investing-basics/definition/

http://www.bogleheads.org/wiki/Main_Page

>>415378
6-12 months of an emergency fund seems kind of much, 3-6 months should be enough if you want to participate in the market (I think at least).

>consider adding small/mid cap/int'l
I would but I know you value low expenses and just take a look at how disgusting some of these are!

I have 11k~ to play around with in my Roth IRA but I don't really want to switch out of VTSAX at the moment it seems very solid...changing that into a Vanguard Extended Market [VEXMX](small + mid cap) sort of makes sense so I have the large cap exposure in my 401(k) and the small/mid cap but I'm not sure if it's meaningful. The Bogleheads said to just stretch out like performance charts of VEXMX (small mid), VFINX (Vanguard's S&P500), and VTSAX to inception and they are relatively similar, just I guess as of late (past few years) small mid caps have been performing quite well.

I definitely will get either REIT or Health in my Roth IRA.

I have 8k in VTIAX (Vanguard International) in taxable but the yields are so poor on that but at the same time I feel I need the international exposure.

>>415388
Just read everything on bogleheads and investopedia

>>415391
>>415388
Thanks, i'll read into it.

>>415391
> 3-6 months is enough of an emergency fund

It's worth noting that Roth contributions can be withdrawn penalty-free, since they were contributed post-tax. So money that you put into your Roth IRA could also be your emergency fund, just don't touch the gains.

>>415402
I'm pretty sure you have to hold it for 5 years at that institution to do that

>>415351
> That's true man people sweat expense ratios at the cost of a lack of diversity. $3000 at Vanguard is super reasonable as a buy in minimum.

Except that VTSAX gives one the exposure to the entire U.S. market. The only reason to pay the premium of higher fees by going for an investor share S&P index and med/small cap indexes is if you're a savvy enough investor that you think you can do better by fine-tuning your fund allocation to different market caps or sectors (pro tip: Most people here can't). In other words, there's no reason to pay any extra fees if it won't translate into real gains.

Hell, 12% of VTSAX is in healthcare, so it's rather silly to hold both VTSAX and a healthcare fund.

Going with some combination of VTSAX, an broad international fund, and a bond fund will give you fairly diverse market exposure without needing to forecast where various market sectors are heading.

>>415410
If I could just pick 3 funds those would be it (total US stock, total int'l stock, total US bond....bond is probably going to make up 5-10% of my allocation at best). I definitely want all my domestic (stock) exposure to be through VTSAX but the 401(k) I am in does not offer something comparable (in terms of market exposure and a low expense ratio)...at best S&P 500 which probably should be fine at this point.

So
TL;DR overweight in US domestic stocks, specifically S&P 500 vs. getting more exposure based on limited plan options I have through a 401(k) with higher expense ratios?

>>414930
-can't afford hedge funds
-think saving 1-2% per year on expense ratios is more important than avoiding the 50% losses that indexes experience every 7 years or so ("it's cheap" they convince themselves)
-can't do their own analysis; don't want to learn how themselves
-actually believe passive investing exists, EMH, etc., ie drinking the kool-aid

Does anyone know how good Vangaurd UK is? Is it somewhat comparable to the praise Vangaurd US gets? I have about £30k($50k'ish) to invest, and I'd really like to get started!

Ofcourse I will do the reading at bogleheads and investopedia but these seem very US centric, any good UK sources of info anyone would recommend??

>>415440

The only reason a rational individual should ever allocate capital to a hedge fund is if you work for it and know their strategy, ie can determine ex ante that they have alpha. Otherwise you have no way to know if you're getting suckered by paying two and twenty for s shitty structured beta product with no alpha that will lose huge amounts of money when the next 1998/2007/2008/2013 comes (pick a year depending on the strategy).

>>415444
fwiw, the Bogleheads wiki seems to have a decent section for Britfags here: http://www.bogleheads.org/wiki/UK_investing

>>415465
Oh shit thanks m8, missed that one. Cheers.

>>415440
>hedge funds
hedge funds are scam
If a person cannot afford a hedge fund, should he/she not invest at all?

>>414939
Because this faggot shills for them all the time.

They're a great platform, don't get me wrong, but it all started with him literally never shutting the fuck up about "muh indexes" thinking that buying in at the end of a crash (already having money from a law career) makes you a successful trader.

>Implying his entire story isn't made up anyways

>>416146
>successful trader
No such thing. Only "lucky traders".

>>416144
vast majority of successful long-term investors use hedge fund strategies. it is hard to find a legit hedge fund amongst the shit but anyone with reasonably good maths skills can run a factor analysis to figure out where a fund's profits come from and determine if it's gonna blow before it does.

if you can't afford to invest in hedge funds you should invest, but not in the typical stocks/bonds portfolio. average idiot thinks asset allocation matters because their marketing materials & textbook said so, but 2007 demonstrated how well that works in real life.

>>416173
Bullshit. There are successful traders. Don't take your EMH to such stupid levels.

Nobody on 4chan's /biz/ board is a successful trader, and I dunno about any of these other faggots(cryptocoins, really?) but I know exactly how short my trading career would be.

But there ARE successful traders. There -are- successful investors.

>>416146
You are a fucking retard. iHaz has never said anything good about "trading", he's in fact said he sucks at trading and investing himself.

Furthermore, 90% of people who try to beat the market will fail. It takes lots of time to even attempt to do so, and it's likely all that effort you spent on attempting to do so?

Worthless.

To say nothing of the tiny amounts of money you're attempting to add even a single % of alpha too. Know how worthless that effort was? You're on 4chan, you likely don't even have 100k to your name, so all those hours you spend throughout the year, to, maybe, beat the market?

Likely it wouldn't even come out to minimum wage.

"Shilling" for index funds?

>William Bernstein said something similar:

>>I have occasionally been accused of being a "shill" for Vanguard; if wanting to be the owner of my fund company and so pay rock-bottom fees makes me a shill, then I plead guilty.

P.S. You're not fucking smarter than William Bernstein, just like you're not better than Buffett, faggot. Go shit up a cryptoshit thread.

>>416146
>buying in at the end of a crash
I didn't buy in at the end of any crash, you giant fuckwad. I don't change my holdings or my purchases bases on short-term changes in the market.

Since you don't disagree with the advice that I give, it seems that your only purpose in posting is to be a massive faggot. Congratulations ... you've done one successful thing in your life.

>>416270
>crash
>short-term change in the market

>>416274
Are you fucking daft m8? Do you know how long the 2007 crash lasted? Not even a year, and that was a good ~30% crash or so.

If you're not a nig-nog, than you fucking put some headphones on and ignore the market.

>>416277
>several months to a year
>short-term

>>416277
+1 to this. The 2008 "crash" was notable for its magnitude, but not for its duration. And yes, when your investment horizon is 20-40 years, 16 months is most definitely short-term. Your failure to grasp this epitomizes the difference between an investor and a gambler.

Anyone know if Vanguard Australia is good? Or are there better alternatives?

>>416284

The worst crash on record, the Great fucking Depression, took 15 years for you to get back to the Real World value of your money, if you invested it on the eve of the crash.

iHaz has it fucking right, if your time horizon is measured in decades, than even the worst fucking catastrophe that ever befell the "market", still wasn't that bad over the span of decades.

Source: Stocks for the Long Run, Jeremy Seigel.

>>416281
Short term varies depending on how you define mid-term, but generally it's less than 1-5 years.

For taxes and bonds, 1 year is considered the cutoff.

>>416253
Where are they then?

>>416227
>if you can't afford to invest in hedge funds you should invest, but not in the typical stocks/bonds portfolio.
Ok, so where should you invest then?

>>416449
certificate deposits

>>416227
>vast majority of successful long-term investors use hedge fund strategies. it is hard to find a legit hedge fund amongst the shit but anyone with reasonably good maths skills can run a factor analysis to figure out where a fund's profits come from and determine if it's gonna blow before it does.
How do I do this?

>>415006
No matter what company you go with, actively managed funds end up worse off (on average) than other funds. Also their fees are higher, so I choose not to use them.

>>416227
pretty obvious you have no idea what hedge funds are doing on a practical basis, because the words you've written down are like reading some high school kid's book report about sewage treatment.

>>416454
>>416227

He's just blowing smoke out of his ads.

Hedge funds gouge you with ludicrous fees (2% assets, 20% profits!) and those with the balls to disclose earning lag the market.

They're a vehicle to feel smug about with your country club buddies when you don't actually care about your returns.

I have a feeling the markets may go down....but I have no capital to take advantage of it though ;_;

>>417578
how's the 10th grade?