Advice on Mutual Fund, keep or change. (bonds, IRA, trading)

[jaekn]

I started mutual fund investing about 1.5 years ago. All of the contributions are in a Roth IRA in the fund VASGX, trading at roughly $28.20 per share.

I realize now that I should ideally be 100% invested in stocks over the next several decades; however, is it worth it to make this switch? Is it cost effective?

Comparison

VASGX
$28.20
0.17 in total fees

Vanguard Total Stock Market Admiral Shares (VTSAX)
~$47.70 per share
0.05 is total fees

VTSMX
~$46 /share
0.17 in fees

Is it worth it to switch to VTSAX in order to lower fees and be invested 100% in stocks, or is it better to just keep dropping 5.5K into VASGX each year. Let me know what you think!

Thanks in advance.

[tommy64]

Of course!! Look at the fees on VTSAX w/Admiral shares-upgrade. Less than one tenth of one percent to own the entire market?

Can't lose.

[mysticaltyger]

Originally Posted by jaekn

I started mutual fund investing about 1.5 years ago. All of the contributions are in a Roth IRA in the fund VASGX, trading at roughly $28.20 per share.

I realize now that I should ideally be 100% invested in stocks over the next several decades; however, is it worth it to make this switch? Is it cost effective?

Comparison

VASGX
$28.20
0.17 in total fees

Vanguard Total Stock Market Admiral Shares (VTSAX)
~$47.70 per share
0.05 is total fees

VTSMX
~$46 /share
0.17 in fees

Is it worth it to switch to VTSAX in order to lower fees and be invested 100% in stocks, or is it better to just keep dropping 5.5K into VASGX each year. Let me know what you think!

Thanks in advance.

I don't know why you think you need to be 100% in stocks. A lot of people can't handle a 100% stock allocation, even if they are young and financial planners tell them that's the allocation they "should" have. VASGX is about 80% stocks, anyway. The best asset allocation is the one you actually stick with over decades. Most people are more apt to stick with an allocation that has at least some bonds to cushion the blow in stock market downturns. The expense ratio difference between the two funds is negligible, so I think you should stick with VASGX.

[stoutboy]

If you have a horizon of several decades, absolutely go all-in on VTSAX.

[mathjak107]

while 100% equities may fit your own pucker factor you really know nothing about the op's ability to withstand pain.

one thing i learned through decades of investing is never assume anyone else will follow your course because of their tolerance.

one of the worst blunders the financial industry makes is try to age base invest . they do so for liability reasons and it easy to tell a client to do but it is just wrong on so many levels.

that is why most small investors get only 1/3 to 1/2 the markets gains during volatile times. they have no stomach for the swings.

telling the op to go all in will do nothing but lose his money if he does not have the pucker factor to endure the next drop. better to take a half or 3rd and go through a bad drop and see how you feel and want to react.

it is just as important not to lose money as it is to make money.

[stoutboy]

OP said himself he wanted to be 100% in stocks. "Is it worth it?" Most scenarios show that over time 100% stocks beat other allocations. "Is it cost effective?" VTSAX at .05%, I would say 'yes'. The emotional stuff, OP has to work out on his/her own.

[mathjak107]

op said " i realize i should be 100% in equities " he did not say he knew he had the temperment for it since it is apparent he has not tried it. he has not much money in at this point so he has no real clue as to what he will do in a drop.

i can tell you being on the 401k committee at work, i have seen so many youngins lose their money in the last downturn and get scared off and they never came back in again.

they too believed they should be 100% equities and then the drop came and they could not get themselves to stay the course.

typically folks think they are a lot more aggressive then they really are and get burned over and over.

succesful investors can handle their volatility levels and stay the course and add more during downturns, most folks cannot.

[jaekn]

I appreciate the responses. I am not the type to sell at a loss, I think I'd rather die than sell a long-term Mutual fund at a loss. I am usually waiting for a market correction so I can buy more of my funds cheaper.

That said, I think bonds are really holding back my fund. Therefore I think I should be 100% invested stocks for at least the next twenty years. I am a little scared of moving my money, just because I don't want to be a temperamental investor. Also, like some other posters mentioned, the savings is minimal.

But how minimal? I'm good with numbers but maybe not knowledgeable enough to know how to calculate the potential savings by moving funds (without regards to predicting market volatility of course) .

[mysticaltyger]

Originally Posted by stoutboy

OP said himself he wanted to be 100% in stocks. "Is it worth it?" Most scenarios show that over time 100% stocks beat other allocations. "Is it cost effective?" VTSAX at .05%, I would say 'yes'. The emotional stuff, OP has to work out on his/her own.

But you're missing the point that most people don't get the market's published returns because they don't have the "pucker factor" (as mathjak says). Of course, they think they do, but they're usually wrong.

15 year published returns for Vanguard's S&P 500 fund VFINX:

4.37%

What investors actually got out of VFINX over the last 15 years:

2.32%


Vanguard 500 Index Inv (VFINX) Fund Performance and Returns

[mathjak107]

it is pretty easy to telll how small investors are doing by tracking the money flow in and out of the funds which research companies can get data on.

small investors run about 1/2 of the funds returns.