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Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
34,694 posts, read 58,012,579 times
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If you are adding new money to the market, you need to get in on a correction, or dollar cost average (buy periodically to average your costs). I watch the 50 and 200 day moving average charts and add $$ when dips are apparent, tho I don't buy on the way down... wait for a move up, and preferably catch 'the bounce'. (lag between institutional and private buying)
Buy ones that have High volume, good diversification, and low expenses. Avoid overlap of investments within different funds.
I have about 8 ETF's and currently positioned at 40% foreign (a bit high...) 40% US equity, 10% bonds, 10% cash (a little low)
I don't place more than 5% in emerging markets or small cap growth (Higher volatility stuff; best potential for gain/loss). I keep the majority in major indexes (EFA, VGK, VTI)
But... do your research and your own thing, as everyone has a different feel for this stuff. It might be getting late to realize the gains you might be hoping for. It is likely things will be quite different in about a year...
Just buy VV from a discount broker... it is a low cost Vanguard ETF that follows the MSCI US Prime Market 750 index. It is very hard to time the market so just jump in and put your money to work... over the long term a few points one way or another will make little difference. If you don't have a brokerage account just contact Fidelity, Vanguard, or Schwab to open one.
Right now I have some money in CDs and Money Market Funds. I want to switch my money over to Vanguard and get into the Vanguard 500.
My question is when do I get into the stock market? Vanguard requires an initial $3,000 investment, and I'm leery of the stock market at this time.
Thoughts?
- Greenie
Because I don't normally deal with mutual funds, I needed to do some research before I could answer your question. Is this Vanguard 500 the one with the symbol VFINX? Is there any particular reason you want to invest in this fund? I am asking because there are better funds to choose from. This fund is huge. It has about $68B in net assets. Its net asset value is $140. It is the IBM of mutual funds. Generally, growth is much slower when a fund or company becomes too big. It has a YTD return of 9.05%. That is not a great return. Its best days are gone. Here is the related information for you to peruse.
Here are some funds that easily outperform this Vanguard thing: JORN, ALMRX, JAOSX. Funds such as these are much smaller, and their potential best returns are still ahead of them. Here is how they perform comparatively. The vanguard fund is at the bottom.
Your other question "when do I get into the stock market?" is a little harder to answer. This has more to do with you than with the market. Would the thought of losing keep you awake at night? Do you count on this money to live on in the future? Keep in mind that mutual funds might take years to grow. Mutual funds usually go through several bear and bull markets. Can you leave your money in a fund a for at least a few years? Good luck.
Right now I have some money in CDs and Money Market Funds. I want to switch my money over to Vanguard and get into the Vanguard 500.
My question is when do I get into the stock market? Vanguard requires an initial $3,000 investment, and I'm leery of the stock market at this time.
Thoughts?
- Greenie
My opinion only, based upon the S&P 500 Price to Earnings Ratio the market is neither cheap nor expensive today. It is the single measure I have found to be most valuable when making investment decisions such as your's.
If you have $3000 I would just stick it in now. If you have more than $3000, I would put 20% of what you plan on investing, or $3000 (whichever is higher) in today, and then equal amounts in about 4/8/12/16 months. This should provide some averaging. If a severe downturn happens during that time, you can always just dump your money in at that moment instead of spreading it out. But this is one strategy which might meet your objectives.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
34,694 posts, read 58,012,579 times
Reputation: 46171
Quote:
Originally Posted by GreenMachine
I'm am not sure I follow that last post. I only want to get into the Vanguard 500.
so the 10 second version...
Watch the 200 day moving average on S&P, looks like ~1470 is a good time to get in. (maybe today). Buy some VTI or VV through a discount broker. done...
Keep you eyes and ears open, and trade into cash if market conditions require, then get back in to market as soon as possible.
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comments...
EFT can be superior to a mutual fund for several reasons, most importantly you can get in and out during the trading day rather than eating a loss by getting "end of day" pricing as in mutual fund, or waiting for your check to get mailed, and letting them decide on the day / price they purchase.... Expense ratio is usually lower for ETF, and you essentially have an identical product (with minimal management fees).
I would chose VTI over VV just due to larger volume of trades (5x) and presumably easier to sell when you need out. (most important if you are trading options). VTI is a bit broader than 500, but performance (13.98% vs. 13.94% (3yr RTN)) and expense ratio (0.07) is quite similar. VTI only has a 4% annual turnover and VV 9%, but far better than most ~25%
Buy ETF's (VTI or VV) from a discount broker (I use Scottrade, $7 / trade). Vanguard and Fidelity are pretty expensive for brokerage services, and probably slower execution time.
It is very ez, if you are in a location that has a discount broker, take them a check, open an acct. and buy something. Otherwise you can fund via wire transfer or mailed / e-check. I wouldn't be wasting any time at the moment
Then you can manage via 'on-line'. and set yourself some limit orders to mitigate downside risk. (Be careful about this, and not over conservative to trigger a sell-off, during a small correction). I just manage my accts weekly. (while listening to Bob Brinker on the radio). But keep an eye / ear open on overall market conditions. (like today...more bad news on earnings)
What is really nice is setting up a margin account, with check writing privileges. Then you can just write a check for a short term large ticket item against your investment value, and interest is very reasonable. (varies by broker). I quit using banks many years ago, and have bought and sold many real estate properties and collector stuff using my brokerage margin acct. When you sell your short term purchase, you pay back your acct.
Here are some funds that easily outperform this Vanguard thing: JORN, ALMRX, JAOSX.
Your comment is a bit odd, maybe you're into short term trading I don't know. The chart you gave shows the Vanguard fund doing better just 9 months ago, so in what sense are they better? Usually when one invests in an index fund its long term, so in that sense the gains over the past 9 months are irrelevant (Not to mention under any form of analysis those funds are over priced). Do you have examples of funds that have done better than the Vanguard fund over long periods of time? That is the only thing that may convince a "random walker" to invest in another fund (Don't know if the OP is such though).
Your comment is a bit odd, maybe you're into short term trading I don't know. The chart you gave shows the Vanguard fund doing better just 9 months ago, so in what sense are they better? Usually when one invests in an index fund its long term, so in that sense the gains over the past 9 months are irrelevant (Not to mention under any form of analysis those funds are over priced). Do you have examples of funds that have done better than the Vanguard fund over long periods of time? That is the only thing that may convince a "random walker" to invest in another fund (Don't know if the OP is such though).
These are the prices for these three funds: VFINX, JAOSX, ALMRX from January, 1999 to October, 2007. This is an 8-year span. That is plenty of time even for mutual funds.
VFINX -- $103 to $140 40% gain
ALMRX -- $8 to $22 almost 200% gain
JAOSX -- $17 to $59 over 200% gain
In the same chart:
Enter each fund individually.
Move the slider all the way to the left.
Move the mouse to the very beginning of the line to find the price for 1-1999.
Now move the slider all the way to the right.
Move the mouse to the end of the line to find the price for 10-2007.
Remember that the only fair way to compare different things is to start them all on the same date and end them on the same date. None of that "but this one did better several months ago." Let me know if you need help.
This is a 9-year span. That is plenty of time even for mutual funds.
I'm not sure why you think this is a way you can meaningfully compare funds. I can find 9-year spans where the Vanguard fund did better, what is special about the 9-year span you picked? Is it because the end date is this month? Unfortunately the OP can't go back in time and purchase the funds you suggested. The real question is what reason is there to believe that the funds you suggest are better in some regard to the Vanguard fund over an arbitrary long term period. Cherry picking time spans and comparing the returns isn't going to answer this question.
Additionally I find your suggests a bit odd too. What sort of analysis are you using that suggests these funds are going to continue their growth? They seem to be greatly removed from fundamentals and their charts don't seem to suggest much either.
Quote:
Remember that the only fair way to compare different things is to start them all on the same date and end them on the same date.
I don't remember this as it's false in general. Maybe this would be a mediocre way of comparing funds that have similar portfolios, but certainly not for funds that don't have similar portfolios. Many investment classes are negatively correlated, that is when one is up the other is down. In these cases the sort of comparison you are suggesting makes little sense as whatever industry/market that happens to be up will be the better one, but that says little about the quality of the fund vs the other (The Vanguard fund is much different than the ones you are trying to compare it too).
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