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Yeah sorry, it was way early when I posted that. You make a good point about holdings changing constantly so I guess there is no way to totally avoid overlap.
To avoid overlap buy an s&p 500 fund and an extended market fund. You would have coverage in the entire market with no overlap.
Even better is you can control just how much the s&p 500 dominate your return .
If you bought a total market fund there is very little difference in return between just the s&p and the other 4500 stocks since by weight they add little benefit.
By using the s&p and an extended market fund you can customize the weighting and effect the rest of the market has on your return.
Small cap and midcaps beat the s&p 500 by 5-6 points a year every year over the last 5 years .
As dividends rise on the s&p 500 and dow less and less compounding on investor money is happening so if you want growth you may want to tone down the weight the old stodgy guard carrys.
For less volatility increase the large caps.
Last edited by mathjak107; 08-16-2014 at 05:07 AM..
If I buy an index fund of say the S&P I am guaranteed overlap as clearly my other funds have stocks trading on the S&P right? I'm not a big fan of index funds, you trade low fees by investing in hundreds of bad stocks. I kind of like the balanced Vanguard Fund suggested early or something similar.
If you have other funds you will overlap. Many large cap funds that are managed are really closet indexers.
a few bad stocks in an index may not matter depending on their weight.
What i don't like about indexing is the more over valued the stock the greater the weight it carrys in the index.
Right now less than 1/3 of all fund investors index. The more that switch teams the more money goes in to pretty much the same heavy weights making them even more over valued.
In fact if you had not bought the s&p 500 but instead just bought the fortune 500 you would have outperformed by 2% a year almost every year just by side stepping this fact. The stocks that are undervalued get the least money and the stocks that are overvalued get the most.
You can't be sure unless you subscribe to a newsletter that keeps tabs on holdings which a fund can change daily.
With fidelity you can buy 5 or 6 funds and end up with lots of overlap. I use a newsletter who keeps tabs on major changes and weightings. The published holdings you see on line are old data by the time you see it.
Do you know of any good newsletters for Vanguard funds? I've been looking at Dan Weiner's newsletter, but reviews across the internet (including the bogleheads forum) are filled with proponents and critics alike. I think a lot of the criticism boils down to "if it's not indexing, it's not reliable/worth it".
Here is my situation: I am 55 and we are debt free. We just came into $20,000 and I would like to target this money to fix up our house in preparation for sale and a move at retirement. Timeline is probably 8-10 years from now.
My first thought is to open a Roth IRA in a balanced stock/bond fund. My thinking is the money will grow tax free as I won't need to access it until I'm after 60. I've got that correct right? I also do not want to pay a broker but I'm concerned that a fund(s) I pick will overlap my other investments.
Is there a web site that will offer a tool where I can load in my other investments and it can tell me if my selections are redundant? Should I look at funds that offer dividend paying stocks? Index funds to lower fees? What would you do if you were in my situation?
The IRS has limits on what you can invest in a Roth. If you invest the limit now you can invest the limit again in January. Consult Internal Revenue Service for more details.
Since the treasury yield curve is upsloping, there probably is more upside (for stocks) in this bull market. Beware of bonds. Interest rates are low. If you must go with bonds go short term. Avoid index funds. You get the good and bad stocks with them.
You didn't need to clarify OP. The first two posts were idiotic responses not answering your questions. How diversified are you? Thought about commodities? I'm not a financial planner but I did well with a little extra cash I came into in the early 2000's.
You didn't need to clarify OP. The first two posts were idiotic responses not answering your questions. How diversified are you? Thought about commodities? I'm not a financial planner but I did well with a little extra cash I came into in the early 2000's.
Yeah I was trying to be polite with the first 2 posters but that was pretty annoying. To assume this was all the money I had when I clearly referenced other investments in my opening post tells me all I need to know about that poster. The other guy was just being a clown.
To answer the last few posts we are very diverse with holdings in large cap, small cap, international, emerging markets,with bonds at about 20% of total holdings. We also have a lot of equity in a house that is paid off. But no we do not have commodities, utilities, REITs, etc. Tell you the truth I don't really understand them. I am aware of the inverse relationship between bonds and interest rates but rates have been down so long I'm not afraid. Besides with the baby boomers continuing to age and converting stock to bonds supply and demand will keep bond yields up IMO.
As for the IRS limits we referenced that earlier, I can contribute up to $6,500 as I'm over 50. I am married so we can open one in her name too, then the balance in January. I just wanted to make sure a gift qualifies as it's technically not post tax income.
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IRS Limits
