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I don't use T. Rowe at the current time. I have some very good funds in my employer's retirement plan...but I do have some IRA assets I'm considering moving over to T. Rowe.
My sister and a friend of mine both have the T. Rowe Capital Appreciation fund and they're both happy with it. My sister put $5K in the fund before the market crashed in 2008, but regained all her losses. I think her balance is around 6K now. Not bad considering the crash.
My friend who has the fund has been doing the $100 a month in the auto-investment plan (ROTH IRA) and she's doing great! She ended up getting a lot of extra shares by continuing to buy in 2008 when the fund was down.
There's nothing wrong with Vanguard, though. I perticularly like Vanguard Wellington. It's the same kind of fund as T. Rowe Price Capital Appreciation in that both invest in a mix of stocks, bonds, and cash....but the T. Rowe Price fund has better long term performance. That extra percentage point in performance adds up to a LOT over a decade or two. Even more so over an investing lifetime!
EG...Vanguard Wellington has returned 8.5% over the past 15 years, while T. Rowe Price Capital Appreciation has returned 10.12%. Both are great funds with above average returns compared to similar funds. But that 1.62% different in returns adds up to a lot of money!
$10,000 invested in the Vanguard Wellington fund 15 years ago would now be worth: $33,997.
$10K in the T. Rowe Price Capital Apprecation fund 15 years ago would now be worth: $42,461.
If you save $2000 a year (166.67 per month) over 35 years you'll have: $277,072 @ 8.5%
If you save $2000 a year (166.67 per month) over 35 years you'll have: $389,797 @ 10.12%. That's a lotta' money!
The trickky part is that future investment returns for the 2 funds may be different. It's entirely possible the Vanguard Wellington fund will outpace the T. Rowe Price fund over the next 15 years..I doubt it...but you never know for sure.
In any case, don't agonize over it too much. The main thing is to get started in a fund with good long term returns with reasonable expenses. Both funds fill the bill. Just get started and keep investing consistently!!! I can't emphasize enough the importancer of getting started and investing consistently every month! Those are the most important aspects of investing, especially if you're young (but even if you're not).
Last edited by mysticaltyger; 05-21-2011 at 07:58 PM..
There's nothing wrong with Vanguard, though. I perticularly like Vanguard Wellington. It's the same kind of fund as T. Rowe Price Capital Appreciation in that both invest in a mix of stocks, bonds, and cash....but the T. Rowe Price fund has better long term performance. That extra percentage point in performance adds up to a LOT over a decade or two. Even more so over an investing lifetime!
In all fairness, they have SIMILAR investment goals. However, Vanguard Wellington has lower investment expenses (0.30% vs. 0.98%) and a lower risk profile per the Morningstar analysis.
Both are solid investments that belong in any portfolio.
In any case, don't agonize over it too much. The main thing is to get started in a fund with good long term returns with reasonable expenses. Both funds fill the bill. Just get started and keep investing consistently!!! I can't emphasize enough the importancer of getting started and investing consistently every month! Those are the most important aspects of investing, especially if you're young (but even if you're not).
I would like to add that find an investment strategy and stick with it. Always churning stocks and funds by going long and aggressive and then selling it all to go short or conservative eats up all your gains in fees....
I've got to redo ours -- I've been in some high flying stuff that isn't doing well, and we're now looking at 5 years till retirement -- could be ten -- but I still need to do some overhauling. I've been ingoring it for over a year, grieving over my mother and I need to get back into it.
In all fairness, they have SIMILAR investment goals. However, Vanguard Wellington has lower investment expenses (0.30% vs. 0.98%) and a lower risk profile per the Morningstar analysis.
Both are solid investments that belong in any portfolio.
Yes, they have similar goals...isn't that what I said?
And if you're going to nitpick...get your facts straight about the expense ratios.
The expese ratio for T. Rowe Price Capital Appreciation is .70% and hasn't exceeded .74% over the last 4 years. I doubt the fund's expense ratio was ever .98%...at least it's never been anywhere near that high in the years I've been following it.
Wellington does however, have a super cheap expense ratio. Despite that, it has lower long term performance.
Furthermore, I think it's subjective as to which fund is actually risker. Prior to 2008, Capital Appreciation only had 1 losing year (1990) and it only lost around 1.25% that year.
Don't get me wrong though, if someone prefers a lower expense fund like Wellington, I wouldn't discourage them. It's a great fund and as we all know past performance doesn't guarantee future results.
I would like to add that find an investment strategy and stick with it. Always churning stocks and funds by going long and aggressive and then selling it all to go short or conservative eats up all your gains in fees....
I've got to redo ours -- I've been in some high flying stuff that isn't doing well, and we're now looking at 5 years till retirement -- could be ten -- but I still need to do some overhauling. I've been ingoring it for over a year, grieving over my mother and I need to get back into it.
Yes, I agree with you on the consistency. The problem is....most people don't really know their true risk tolerance. Men tend to overestimate it and women tend to underestimate it. Men tend to buy & sell more frequently than women do.
I like balanced funds because the research has shown people tend to stick with them for longer periods of time, so people are much more likely to match or even exceed the published returns. The more volatile a fund, the more people are likely to buy high and sell low, getting far below the published returns in the process.
I know you are the exception to these general rules and seem to be able to handle more aggressive investing...but that's not most of us (myself included).
I am planning to invest 75/ month on my checks and they match it, so that should start adding up really fast. Ive saved up enough now to start getting appreciable returns on the interest as well. I just turned 29, so lots of time to start up a nest egg.
I am planning to invest 75/ month on my checks and they match it, so that should start adding up really fast. Ive saved up enough now to start getting appreciable returns on the interest as well. I just turned 29, so now is the time to start up a nest egg.
Fixed it for you.
I started saving earlier. Start young, and it is MUCH easier. Wife and I are now late 30s-early 40s with no debt, a paid off home, and lower-mid six figures portfolio.
I started saving earlier. Start young, and it is MUCH easier. Wife and I are now late 30s-early 40s with no debt, a paid off home, and lower-mid six figures portfolio.
I'll second that. I'm early 40s, with 200K net worth and have never made more than 52K per year.
I manaaged this despite getting lousy investment returns...partly my own fault and partly market headwinds. I started saving for retirement at 26.....50 bucks every 2 weeks and I kept increasing it every time I got a raise or every time I paid off a debt (like the student loans or credit card debt I had at the time). Life is a lot less stressful when you have significant retirement savings and 8 months' worth of living expenses in the bank.
I'm at the point now where I could just make enough to "get by" and/or spend everything I make and I'd still exceed $1M in retirement savings as long as I got an 8% return and didn't touch what I've already saved.
Last edited by mysticaltyger; 05-30-2011 at 12:57 AM..
I'll second that. I'm early 40s, with 200K net worth and have never made more than 52K per year.
I manaaged this despite getting lousy investment returns...partly my own fault and partly market headwinds. I started saving for retirement at 26.....50 bucks every 2 weeks and I kept increasing it every time I got a raise or every time I paid off a debt (like the student loans or credit card debt I had at the time). Life is a lot less stressful when you have significant retirement savings and 8 months' worth of living expenses in the bank.
I'm at the point now where I could just make enough to "get by" and/or spend everything I make and I'd still exceed $1M in retirement savings as long as I got an 8% return and didn't touch what I've already saved.
The important point is that the OP mentioned he never even missed that $20.
People with low incomes often (always?) use the excuse of not having a penny extra for not being able to save
Most likely they will find that , if serious about saving, they also will not 'miss' a small amount of $10 (for instance) a week but that may add up to enough for short term 'surprises' such as needing a new tire
Half for short term half for long term. It adds up. The $2000 may not be relative to a low income (that single mom) person but $40/$70 often is.
Saving ANY amount is better than none
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