Hi, this is my first time trading and after some research I decided to put money into ETFs and hold. I have a short term goal of buying a house within 2 years and otherwise long term for retirement. My savings is in a money market fund and my investments will be in a second account that I add to each month. I wanted to see what the Blind community thought about my selections and if anyone else has thoughts on ETFs. Looking at: * VOO or SPY (S&P tracker) * AGG (Bonds) * XLE, XLP, or XLV (defensive) * IEFA (international exposure) I haven't decided how to split my money up between the ETFs. I'm also using Fidelity if that matters for fees. #investments #personalfinance
Does your investment to ETF include money that you will be using to buy house after two years?
Yes... bad idea? I was going to only put my emergency funds in the savings account.
Actually, I am on the same boat as yourself I have started saving for down payment and won't be buying house sooner than 2 years not sure what would the best way be to grow for short term. I only have it in saving account right now.
VTSAX and chill
Thanks for sharing! It looks like this is also available as an ETF with the symbol VTI. Hmm I wonder what the main difference is between going the ETF or mutual fund route for this?
With etf u can trade it like a stock - u need to buy whole shares. With mutual funds, transactions are cleared at end of day, you can invest in fractional shares and platforms like vanguard can help u setup an auto invest plan. I don’t think vanguard supports auto etf invest.
Lazy portfolios are a good strategy. Personally, I like the Gone Fishin’ portfolio, which has 9 or 10 index funds of various types. Vanguard is excellent, with very low fees. https://libertythroughwealth.com/2019/02/26/the-gone-fishin-portfolio-the-ultimate-index-fund-portfolio/ Many other “lazy portfolio” options exist also. Eg see https://www.bogleheads.org/wiki/Lazy_portfolios And, as with any strategy where you want to keep a certain percentage in each fund, make sure you rebalance periodically (eg once every 6 or 12 months).
Also, if you’re going to invest a large amount at one time, spread your purchases over a few weeks (eg 1/4 of total each week for 4 weeks, or 1/8 and 8) to minimize the chance that you invest a ton on a day when the market is high. I.e., use dollar cost averaging when investing.
Interesting, I didn't think about the rebalancing part that needs to happen. If I do this before the year mark wouldn't I incur more taxes (I wouldn't qualify for capital gains)? I like the site you shared! It shows what percentages they suggest too. So either 20% or 40% bonds is suggested here (I also keep thinking of Warren Buffet's 10% bonds recommendation I read somewhere) and the rest into stocks. I'm surprised how many funds also have associated ETFs. I agree, I plan to invest once a month but maybe I should break it down into smaller chunks?
Also, in your first post you made the distinction between your short-term (2-year) goal of buying a house vs long-term investing. Definitely keep that distinction; you don’t want to be forced to cash out investments at any particular time, since it might happen the market’s down when you need the money. Your emergency fund (typically recommended to be 3-6 months of expenses) and money for a near-term purchase just have to be in something very unsexy like a money market fund.
(Sorry, random “oh, I forgot to mention” things keeping popping into my head.) I also recommend reading Suze Orman’s books (or watching episodes of her TV show, if they’re available still). Solid, no-nonsense advice, and very readable.
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You may try index funds as well for long term. Fidelity has zero expense ratio index funds. FZROX, FZILX etc.. I personally invested in FXAIX and FBGRX.
Thanks for pointing those out, I'll look into it! I hadn't thought of index funds after looking at the transaction fees on the Vanguard ones (through fidelity). I'll look into these instead.