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My New [Lazy] One-Fund Investing Strategy

by J. Money on Monday, June 23, 2014

lazy vanguard investing

Today’s post may surprise you, scare you, or even enlighten you (maybe all three?), but I’m sharing it with you anyways because that’s what us financial bloggers do. We dish it out exactly how it plays out in our lives, and then we leave it open for every jackal with an internet connection to either praise us or kindly debate what big idiots we are.

And I love every moment of it :)

[This is the opposite of what financial planners are allowed to do btw - which is why I'll never be one. Sharing general investment advice online with you may be fine, but I'm not interested in generalities here - I want to show you specifics so you can get a real life example of how people manage their money, and then make your own decisions from there. It's what makes blogging so great - real life stories from real life people doing real life things! Just don't sue me*, okay? ;)]

The Background

If you recall, last month I decided to get off my ass once and for all and start paying attention to my investments again. There’s tons of stuff in this life that I’m good at (saving, hustling, getting the money TO invest somewhere), but the one area I’ve failed over and over again in is coming up with a robust investing strategy. Though I was never shy at getting creative.

Here were the last two strategies I used in maxing out my RothIRA:

It’s literally been years (2? 3?) since I last paid real attention to all my investments (other than pouring in the money), so I finally pulled the trigger and made the switch from USAA to Vanguard, effectively ending my “all accounts under one roof” mantra I had lived all these years. That tells you how much I believe in this new strategy though. Or, more specifically, Vanguard.

I won’t go into all the details again as to why I want to make sweet passionate love with them chose them (you can read all about it here), but in a nutshell:

  • I wanted to simplify
  • I wanted to be lazier
  • I wanted extremely low fees
  • I wanted a place I could trust and love as much as I do USAA
  • And at the end of the day I didn’t want to think about it any more

These are the three main posts that eventually led to this “a-ha” moment:

Prior to this move I had a total of 5 separate investment accounts – A SEP IRA, a Roth IRA, and three Traditional IRAs (remember my crazy IRA Test??) – and I was finally done dicking around once and for all… I needed a plan that was much more aligned with my new found vision here, which was basically:

Find a smarter, lazier, way to grow my money

Meaning, set up a plan that EMBRACES laziness, but one that makes sense and fully allows you to “set it and forget it” while making a decent amount of money too. Keyword being, *decent*. I’m not out to become a billionaire over night (though that would be nice!) but I do want to make a fair amount over time and I’m totally fine being patient and waiting for it. The whole 80% type deal. I’ll gladly take 80% of a total 100% amount of money for minimal effort vs 90-100% and killing myself to get it. Which of course is never guaranteed since we all know you can’t time the market anyways (you do know you can’t time the market, right?).

So after all my reading and thinking, I came to the conclusion that it’s all about INDEX funds for me. No more fancy stock picking, no more weird strategies of picking out my favorite companies, just plain ol’ “you make money when the overall stock market makes money, and you’ll lose money when the overall market loses money.” (Which is when you pick up even MORE shares, btw!). And if you believe in the markets all around, as I do, then why not cast a wider net around it?

Here’s a graph on how the Dow has performed over the past 100 years, even though it needs to be updated (we’re now hovering around the 17,000 mark):

stock market history

(Hat tip to Thriftygal / Wikipedia)

If you think it’ll continue going up in the long term, then you might like Indexing :) It certainly has its fair share of supporters not only from the personal finance blogger world, but also Vanguard itself (d’uh – they INVENTED index funds!) and even the main man himself, Mr. Warren Buffett. Who recently turned heads when he shared that he wants his own estate to go almost entirely to index funds once he’s outta here. And he’s the smartest investor of all time!

I called up my stock broker friend to get his advice on this too, and he just laughed at me. I asked if he hated Vanguard, and he said no. He hated how boring it was! I told him luckily I wasn’t in it to have fun (even though “fun” is in index FUNds – zing!), I was in it to win it ;) And according to everything I’ve read, statistically the odds are in your favor going this route than others long term anyways. Even my stock friend gets it wrong and he spends 60 hours a week researching this stuff!

But I digress…

Here is what I used to be invested in:

To put things in perspective, here are all the stocks I used to own as of a month ago. $350,000+ invested, and I couldn’t tell you what half these funds consisted of, nor their expense ratios (partly because I never paid attention, and partly because it’s confusing as hell):

  1. USEMX — USAA Emerging Markets Fund
  2. USAAX — USAA Growth Fund
  3. USHYX — USAA High Income Fund
  4. USAIX — USAA Income Fund
  5. USISX — USAA Income Stock Fund
  6. USIBX — USAA Intermediate-Term Bond Fund
  7. USIFX — USAA International Fund
  8. USAGX — USAA Precious Metals and Minerals Fund
  9. USRRX — USAA Real Return Fund
  10. USSPX — USAA S&P 500 Index Fund Member Shares
  11. USSBX — USAA Short-Term Bond Fund
  12. USCAX — USAA Small Cap Stock Fund
  13. IIBWX — Voya Intermediate Bond Fund Class W
  14. UCAGX — USAA Cornerstone Aggressive Fund
  15. USCRX — USAA Cornerstone Moderately Aggressive Fund
  16. USSPX — USAA S&P 500 Index Fund Member Shares
  17. URFFX — USAA Target Retirement 2050 Fund
  18. USAWX — USAA World Growth Fund
  19. ABEYX — American Beacon International Equity Fund Class Y
  20. DDVIX — Delaware Value® Fund Institutional Class
  21. SGOIX — First Eagle Overseas Fund Class I
  22. HLMIX — Harding Loevner International Equity Portfolio Institutional Class
  23. HNVIX — Heartland Value Plus Fund Class Institutional
  24. HWSIX — Hotchkis and Wiley Small Cap Value Fund Class I
  25. EMBIX — Lazard Emerging Markets Equity Blend Portfolio Institutional Shares
  26. LISIX — Lazard International Strategic Equity Portfolio Institutional Shares
  27. LKSMX — LKCM Small-Mid Cap Equity Fund Institutional Class
  28. MFEIX — MFS® Growth Fund Class I
  29. PTTRX — PIMCO Total Return Fund Institutional Class
  30. SEMNX — Schroder Emerging Market Equity Fund Class Investor
  31. TGEIX — TCW Emerging Markets Income Fund Class Institutional
  32. AMZN — Amazon.com INC
  33. PNRA — Panera Bread Company Class A
  34. SBUX — Starbucks Corp
  35. TGT — Target Corp
  36. TJX — TJX Companies INC New
  37. ALLE — Allegion Public LTD
  38. AXP — American Express Company
  39. T — AT&T INC
  40. CSCO — Cisco Systems INC
  41. KO — Coca-Cola Company
  42. COP — ConocoPhillips
  43. ETN — Eaton Corp PLC
  44. GE — General Electric Company
  45. IR — Ingersoll Rand PLC
  46. WFC — Wells Fargo & Co NEW
  47. XLP — Sector Consumer Staples Select Sector SPDR ETF

47 total stocks/funds. Ridiculous.

And here’s what I’m Invested in now:

  1. VTSAX — Vanguard Total Stock Market Index Fund Admiral Shares

Just one kick-ass fund :) And I know exactly what’s in it (3,671 stocks), and exactly what the expense ratio is (0.05%, lower than 95% of similar funds out there). And the beauty is it holds all my favorite stocks too, like the Amazons and Targets, and even more so Warren Buffett’s Berkshire Hathaway! UPDATE: It also has a dividend of 1.84% – forgot to mention that earlier (hat tip to “Whiskey”).

Here’s more about the fund according to Vanguard:

Created in 1992, Vanguard Total Stock Market Index Fund is designed to provide investors with exposure to the entire U.S. equity market, including small-, mid-, and large-cap growth and value stocks. The fund’s key attributes are its low costs, broad diversification, and the potential for tax efficiency. Investors looking for a low-cost way to gain broad exposure to the U.S. stock market who are willing to accept the volatility that comes with stock market investing may wish to consider this fund as either a core equity holding or your only domestic stock fund.

(Vanguard has an “Investor shares” version of the fund too, fyi, for those who can’t invest $10,000 or more into the fund (VTSMX). The expense ratio is a tad bit higher @ 0.17% (still drastically better than 87% of the competition) but the stocks you hold here are exactly the same)

Now it may look dumb/scary to “have all your eggs in one basket” here – which was my first concern – but the reality is it isn’t just one stock. It’s one stock ticker, but over 3,600 stocks (ie companies). When you invest in index funds you invest in itty bitty fractions of hundreds/thousands of companies. If any one of them die out at any time, it doesn’t kill your money. But on the flip side, it doesn’t grow your money as fast either like, say, if one of them takes off like Apple. It’s an average person’s game, with better than average results over time (and by “average” I mean compared to most of those day traders and probably your friends).

There are, however, downsides to this VTSAX strategy, specifically you’re not invested in bonds or international markets at all. But at this stage and age of my life I’m okay taking on more risk (ie no bonds), and most, if not all, stocks in VTSAX does business around the world anyways. So from my understanding you still do have exposure to the foreign markets, just not directly like, say, by investing in funds that hold actual foreign companies.

This is one area I’d like to learn a lot more about, though, so if any of you care to chime in with thoughts I’d love to hear them! I’m definitely learning as we go here.

VTSAX vs. VASGX

The other fund I was considering, if you’re interested, was VASGX (Vanguard LifeStrategy Growth Fund). This is the fund Mike Piper from Oblivious Investor has every one of his retirement pennies in (see, I’m not the only crazy one!), and which is still aggressive’ish, but less so than VTSAX. I debated hard going this route instead -which would still be just ONE fund, only diversified more, but ultimately chose the more aggressive route – at least for now.

(And btw “aggressive” in index funds is much different than “aggresive” in stock picking :) With one you’re invested in hundreds or thousands of companies and the other you’re invested in a single company. So “risk” here is different)

Here’s the quick bio on this fund:

The LifeStrategy Funds are a series of broadly diversified, low-cost funds with an all-index, fixed allocation approach that may provide a complete portfolio in a single fund. The four funds, each with a different allocation, target various risk-based objectives. The Growth Fund seeks to provide capital appreciation and some current income. The fund holds 80% of its assets in stocks, a portion of which is allocated to international stocks, and 20% in bonds, a portion of which is allocated to international bonds. In addition to stock market risk, the fund is also subject to currency risk and country risks. Investors with a long-term time horizon who are looking for growth of principal over time and who can accept stock market volatility may wish to consider this fund.

And here is what VASGX holds:

  • 56.1% — (VTSMX) Vanguard Total Stock Market Index Fund Investor Shares
  • 24.0% — (VGTSX) Vanguard Total International Stock Index Fund Investor Shares
  • 16.0% — (VTBIX) Vanguard Total Bond Market II Index Fund Investor Shares
  • 3.9% — (VTIBX) Vanguard Total International Bond Index Fund

So as you can see, almost half of the fund covers international exposure along with bonds, and only 56% of the fund I’m currently invested in (again, I’m in the “Admiral Shares” version of VTSMX since I have more than $10,000 invested taking advantage of the lower fees). And this VTSMX has a low expense ratio too of only 0.17%.

When I asked my good blogging friend Jim Collins what he thought between the two, whom I trust heavily since he’s been retired for over 20 years and only invests in index funds & Vanguard himself (he’s in a few vs one due to his age and phase in life), he told me this:

VTSAX is the total US stock market index: 100% US stocks. Holding VTSAX is very aggressive. Recommending it as a sole holding, as I do, is very much an outlier concept. In fact I am aware of no other financial writer who does. So Mr. Piper definitely has the majority opinion on his side.

Holding VASGX is also very aggressive at 80/20, but less so than VTSAX… also with it being a fund of funds, the ER is a bit higher. You are paying for that multiple fund diversification.

It is certainly not a dumb choice. As you know, personally my preference is VTSAX. But I am Very aggressive in my investing and have proven my ability to stay the course during crashes. That’s absolutely critical, with either of these actually.

Looking 20+ years out, VTSAX will very likely make you richer, unless we go the way of Japan. But the race will be close and your savings rate will be the more powerful element in the mix than your fund choice.

I then asked what he would do if he were me and he responded with:

Yep, if it were my money I’d do VTSAX. In fact I do, 75% and the other 25% in bonds. Then I just rebalance occasionally to keep the percents where I want them, Easy peasey and cheaper ERs than with a TRF.

If I were still working and adding new money it would be 100% VTSAX. The new money has the same kind of smoothing effect as the bonds do for me now.

It was at that point I pulled the trigger :) I don’t have a problem with risk(ier) – I’m young and have plenty of time to ride the waves! Plus you can always tweak it later as life changes.

In conclusion…

So, in a nutshell I used to be invested in over 45 stocks/funds across 5 different retirement funds, and now I’m only invested into ONE fund across 2 accounts: my SEP Ira and my ROTH Ira.

(Did you know you can merge Traditional Iras with SEP Iras btw? According to Investopedia, “The only difference is that the SEP IRA is allowed to receive employer contributions. Therefore, you can combine the SEP IRA into the Traditional IRA without any ramifications. When doing so, move the assets as a (nonreportable) trustee-to-trustee transfer.” I had no idea!)

And now, instead of all my investments under USAA’s roof where my other 10+ accounts are sitting, it’s all under the roof of Vanguard. And with a much better peace of mind too. It sucked to research everything and figure out what’s best for our family at this stage of the game (again, this stuff doesn’t interest me one bit!), but it had to be done and now we can go back to doing what we do best – MAKING money vs investing it ;) Or rather, finding the best place to invest it. Now we’ve got a solid foundation!

I know this post was pretty damn long, and I probably forgot a few things along the way, but I DO hope it helps :) Even if just a little. Remember that there is never a one-strategy-fits-all here with investing (just like with managing your money), but there are templates that get you close. And I hope this gives you another idea to either love on or hate on depending on your own style .

Let me know what you think in the comments below! Was this a smart move? Would you have done something differently? Are you doing something similar now? Please share any and all thoughts with us (even your OWN portfolio mix!) so we can all learn more… Most people get more out of the comments here than they do my posts anyways (hah!) so if not for me, do it for them ;)

Here’s to financial freedom!

cat canoe gif

———-
* Seriously, I’m not a licensed profession. Please take all this as informational purposes only and do your own research before investing in anything. I love you and want to keep blogging transparently but I can’t if it becomes a problem :)

PS: Btw, for anyone who’s making the switch to Vanguard, make sure to ask them the best way to xfer your funds from your old account to theirs – specifically with “cashing out” of your old funds and into new Vanguard ones… There’s ways you can save the selling fees that they can help you with – the one question saved me at least $400 when doing all the trades at the end. And fyi you can also just move your same funds to theirs too and then pick the new funds later. Just ask them what’s best as they’re customer service is killer :)

PPS: I have no affiliate with Vanguard at all and certainly not getting paid to say kind words – I’m just their newest fanboy!

[Funny cat canoe by Elvis Weathercock]


{ 110 comments… read them below or add one }

1 Clarisse @ Make Money Your Way June 23, 2014 at 5:24 am

I haven’t invested in any of the stocks that you listed, but I have tried to invest in a farm land before. It was a pretty good investment, but after 2 years the owner claimed his loan farm land to me.

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2 J. Money June 23, 2014 at 7:19 am

Farm land? How does that work?

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3 Whiskey June 23, 2014 at 6:47 am

Nice. I too have considered Vanguard and will probably make a jump once the employment situation changes. Their 401k stinks but its free $ so…
I dont remember if you said you use Personal Capital but if so, have you run the tool before and after to see what you will be saving in fees?
It also looks to return dividends which is freeeeeking sweet. Looks to average .15 per share so @ 3500 your getting $555 per year. Extra cash, yessss! Do you plan to reinvest?
Keep us updated on its progress. It keeps us minions motivated.

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4 J. Money June 23, 2014 at 7:31 am

Yeah, that’s the prob with 401(k) – outside of our control :( But you’re right – can’t pass on the free money! I’d take that over great funds any time – your investments compound like crazy!

RE: Personal Capital – I have poked in there before, but still need to go back and really check it out. People have been raving about it (especially investor people since it focuses on investments) so thx for the reminder :)

RE: Re-investing – Hell yeah man! All day, every day! Can never touch that money – gotta keep re-investing and pouring in more over time to speed up the compounding :) And fortunately it’s all automatic these days so you don’t have to lift a finger!

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5 Whiskey June 23, 2014 at 7:51 am

Ooof! Just realized that its not 555 per year, its more like over 2300 per year. Thats uber sweet!

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6 jestjack June 23, 2014 at 7:45 am

Hmmmm…Gonna be the “devil’s advocate” because…well…I worry. I have an investment with Vanguard’s competitor TIAA-CREF….and the returns the last couple of years have been no less than remarkable. BUT when you start looking into the many funds and how they are invested into other funds inhouse it’s like a “house of cards”. Secondly in a time when it costs me $125 just for repairman to show up at rental property, the folks at Vanguard are going to manage the investment for .05%? Sooo to manage a $300,000 account they recieve $150…per year… for their work….How do they keep the lights on? I reviewed my Tiaa-Cref accounts and saw that these guys were “killing me” at .45%. Sooo that same $300,000 account would pay $1350 in management fees per year. A lot of money BUT last year these funds returned 36 and 38% respectively …so maybe the fee was worth it. I worry about the “herd mentality” BUT what I worry most about is energy prices. Make no mistake higher energy pricing is a “direct tax” on business and life in our Country.

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7 J. Money June 23, 2014 at 8:02 am

I don’t know squat about energy prices, but here’s a good quote from Kiplinger on why Vanguard rates are so low – it’s pretty unique:

“From the day John Bogle started the firm in 1975, after being fired by Wellington Management, Vanguard was a different kind of fund company. Instead of being owned by a money-management firm (or a bank or an insurance company), it was set up essentially as a co-op, to be owned by the shareholders of its funds. Unlike other fund companies, Vanguard makes no profit. It sells all of its funds without loads, or commissions, and the company insists on ultra-low fees because that’s what the owners want and because lower costs lead to better results. The alignment of Vanguard’s interests with those of its customers is the foundation of the trust the firm engenders among its clients.”

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8 jestjack June 23, 2014 at 8:17 pm

Sorry J. ….I’m a worrier and Bernie Madoff is fresh in my mind. I think John Bogle is a wonderful gentleman…however Vanguard has “overhead” like everyone else and they need to pay a decent wage to keep competent help. Not a fan of Kiplinger any longer they have truly lost their way and when they say Vanguard is “unique”….I put that in the same category as …”it’s different this time”. I can appreciatte you “simplifying things” but take a moment and take a look at TIAA-CREF. IMHO these guys are “really unique”….like “thinking out of the box”…to the point that TIAA-CREF is now one of the largest owners/producers of almonds in California. For the record almonds in this neck of the woods are almost $9 a pound….

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9 Frank June 24, 2014 at 9:24 am

Vanguard has over $2 trillion AUM (assets under management). Their revenue is quoted as $2.3 billion which puts them at an average fee load of .115%.

Not sure what there is to be skeptical about. They are making almost $200k per employee for funds that aren’t actively managed. They don’t pay their employees the most, either (I have multiple friends who work there). Frugality pumps through their veins – employees share hotel rooms, don’t take accela or business class when taking amtrak, etc.

Vanguard is unique in that they are the low cost leader of the investing world.

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10 Natalie @ Financegirl June 23, 2014 at 7:56 am

I am happy to find out that we share the same investing strategy! haha. It’s a great one. I will say that maybe in the future I’d like to be more involved in evaluating companies and picking stocks. But right now, since I can’t commit to that kind of time, I go with the index funds and that is just fine with me.

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11 J. Money June 24, 2014 at 10:10 pm

Exactly. In a perfect world we’d all have time to spend learning all kinds of things! But sadly we have to prioritize and at this point I’m perfectly fine setting it up and then letting it ride while I go and live my life :)

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12 Jon @ Money Smart Guides June 23, 2014 at 8:00 am

When I saw the list of what you did hold, my jaw dropped! That was A LOT of investments. When I worked for a financial planner, I typically dealt with new clients so I would have to organize all of their holding onto a spreadsheet. Some people hundreds of funds. This one guy had 7 printed Excel pages worth of holdings. I just shook my head.

Personally, I’ve never heard of this one fund being someone’s entire portfolio. I have heard of (and even recommend) just 3 fund portfolios). While you are completely diversified here in the US, the lack of international exposure could be an issue. Yes, many of the companies in this fund do have international sales, but the question is what percent of the companies and what percent of their sales. Personally, I wouldn’t want to do that research to figure it out. My guess is that is rather low. I would want some more exposure to international markets. But that said, things are different now. We live in a global economy. Back when people were recommending portfolios, economies were more insulated.

In the end, I say just run with what you have and see what happens. As with what Jim Collins said, your greatest risk is that we turn into Japan. But I think everyone will feel that if it were to happen.

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13 J. Money June 24, 2014 at 10:12 pm

Yeah, I might eventually go the 3-fund portfolio route, especially after seeing everyone else’s comments below talk about it too, haha. It very well could be smarter, but for now I’ll lay low and enjoy not worrying about it for a while :)

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14 Anne June 23, 2014 at 8:12 am

Investing scares the crap out of me. Most of our investments are tied up in 401Ks but we inherited some individual stocks a couple years ago. The returns have been fantastic, but part of me really would like to move some of that money into index funds. Too much of our stocks revolve around the banking industry, which is terrifying. We somehow need to emotionally detach ourselves from these stocks, but since they were inherited it’s hard not to mentally link them to the person who passed on.

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15 J. Money June 24, 2014 at 10:13 pm

Emotions are everything with investing! And not always for the good, as you’re finding :( Definitely might be worth talking with someone, or reading some of those links I posted above to get an unbiased opinion on things. It’s always much easier for an outside person to share advice since their emotions are out of it (unless they’re getting paid to sell you something, haha…).

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16 Rob June 23, 2014 at 8:23 am

Absolutely love it. J$, welcome to the good life!

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17 J. Money June 24, 2014 at 10:16 pm

I was partially prompted by our chat on your podcast :) Next time I’m on you’ll have to ask me how it’s going so I can redeem myself!

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18 John @ Wise Dollar June 23, 2014 at 8:24 am

Wow, 47 different holdings! The crazy thing is I used to speak to people that had at least double that. I always wondered how on earth they managed that many and the fact is they probably didn’t manage it very well as who can keep up with 100+ holdings…unless you’re Buffett of course. ;)

I was at the Berkshire annual meeting in May and they were asking him about his statement on Index Funds and it was just crazy. They thought he was trying to say something about his company and he finally said something along the lines of “Listen, being with the market is much better in the long run and will do quite well for my heirs”. Point being, if he thinks it’s good enough for his family then I think it’s good for many. With all that being said, I’m at about a 70/30 mix between several index funds and the rest is largely some solid dividend paying stocks.

Re: Personal Capital – I just started using it several months ago and it’s a great tool to use.

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19 Liz June 23, 2014 at 9:23 am

It’s all about working smarter. Sounds like you streamlined your investing process in a way that works for you. Bravo! It’s nice to feel organized and in control. Gives you a lot of peace of mind that’s for sure : )

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20 tnspr569 June 23, 2014 at 9:33 am

Same story here, but in went with a Vangaurd a Target Date Retirement Fund. Even less work for me to do! Automatic rebalancing!

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21 J. Money June 24, 2014 at 10:18 pm

There you go! Slightly higher expense fees, but worth it for 100% laziness! :)

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22 Million Dollar Ninja June 23, 2014 at 9:38 am

Holy Cow you were investing in 42 different things?… there’s diversification and then there’s that! hahaha

I have Vanguard for my Roth and couldn’t be happier. The fees are very low and I love the fact that I don’t have to worry about what I’m investing. I’m just as lazy as you and stayed with an index fund.

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23 Addison @ Cashville Skyline June 23, 2014 at 9:41 am

My Roth IRA is composed as follows: VTSAX (60%) and VTIAX (40%). I maxed out the account at the beginning of 2014 and have barely looked at it…except when I receive the quarterly dividends. Lazy, indeed.

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24 Big Guy Money June 23, 2014 at 10:05 am

Hey man,
I also LOVE VASGX, and we have all of our retirement funds in the fund (or model the fund in the case of my 401k). One thing though – it isn’t a retirement fund like Mr. Collins mentioned, and currently as structured will not add more bonds as time goes on. VASGX is a fixed 80/20 stock/bond fund, not a TRF (Target Retirement Fund). If you’re looking for a TRF with a current 80/20 stock/bond allocation, that would be either VTTHX (currently 84/16 stock/bond), or VTHRX (currently 76/24 stock bond).

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25 jlcollinsnh June 23, 2014 at 10:41 am

Hi Big Guy…

You are absolutely right!

VASGX is what Vanguard calls a Life Strategy fund. Very similar to a TRF with the exception that, as you point out, the allocation remains fixed.

Thanks!

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26 Big Guy Money June 23, 2014 at 11:48 am

No problem – glad I could help :)

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27 J. Money June 24, 2014 at 10:20 pm

Updated the post so it’s more accurate – thx guys :)

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28 Crystal June 23, 2014 at 10:21 am

With my Roth IRA, I have been lazy since the beginning in 2007. It’s always been in a Vanguard target date mutual fund – invested high in lots of stocks now and adjusts as you get older to shift more into bonds.

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29 Zee @ Work-To-Not-Work June 23, 2014 at 10:51 am

Your last Vanguard post actually inspired me to open up a Vanguard account. I have a chunk of my money in the Admiral shares too just so I don’t have to think about it. I’m also (still) planning to rollover my old 401(k) there to do the same strategy too.

I still play around with some money in other investing strategies but over time that pot of money has gotten larger and the volatility stresses me out more because of that. So taking some money out of my hands and putting it somewhere I don’t have to think about it eases my mind.

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30 J. Money June 24, 2014 at 10:26 pm

Oh, great! Welcome aboard – we’ll be newbie members together :) Now hurry up and get that old 401(k) moved over! I literally just called them and they did it all for me over the phone – it’s pretty easy…

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31 jlcollinsnh June 23, 2014 at 10:59 am

Very nicely expressed post, J$…

Thanks for the kind mentions. Although you did promise not to use that picture of me in the canoe…

Let me also add, I use VTSAX not only because investing in index funds is easier, which it surely is, but because it is more effective. If better results were to be had holding a more complex mix, that’s what I’d do.

I laughed when I saw that huge list of holds you used to have. Yet, while I never had quite that many, I wasted the 80s and 90s doing much the same.

May I add another to your list of three influential posts?
http://www.gocurrycracker.com/reminiscing-about-the-glory-days-of-2008/

GCC is one of my favorite travel bloggers and he does a fine job of writing financial post when he so choses.

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32 J. Money June 24, 2014 at 10:28 pm

Big thanks to you for giving me the final push to take action :) And, really, the first few pushes too as it usually takes me a while of hearing the same thing over and over again – and in different ways – for it to finally sink in! I guess that marketing saying that we need to see stuff 7 times holds some truth. Only the application here is much MUCH better for your ultimate worth ;)

Going now to add that link to my bookmarks to check out later – thx.

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33 Jeremy @ Go Curry Cracker! June 25, 2014 at 10:52 am

Thank you Jim, you are too kind. I’m blushing all shades of red over here

The picture of Jim in the canoe was my 3rd favorite part of this post

We managed to get over the “diversity through too many different funds” phase at some point, and I think are better off for it. We are getting closer to 100% VTI / VTSAX and I don’t think it aggressive at all, primarily because of 3 things

- come nuclear war, the next black plague, or Armageddon, we will never sell
- our withdrawal rate is low enough to allow us to never sell (the closer you get to living exclusively off the VTSAX effective payout, the better off you are)
- did I mention we will never sell?

With those 3 very important things in mind, going 100% stock is a great move. I approve ;)

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34 Even Steven June 23, 2014 at 11:00 am

I’m more aggressive as well when it comes to investing, retirement investing is a little different as I prefer a good mix of boring. My investments are spread out over 4/5 index funds. I agree with Mr. Collins it might be just a big aggressive, but I don’t think it’s the craziest thing I have ever heard of(45 different funds sounds crazier to me).

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35 Brian@ Debt Discipline June 23, 2014 at 11:04 am

The general concept of a index fund over a single company stocks works for me. I see Target was one of your single stocks, I wonder how they preformed since the identify theft / credit card issues during last Holiday season? I’d take the slow and steady path in the index fund over single stock path any day.

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36 J. Money June 24, 2014 at 10:30 pm

That’s a good question? I bet you can find out with a quick online search or two… I won’t do it though in case it tanked, haha… I have happy thoughts with Target after all these years of investing in them!

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37 Shannon @ Financially Blonde June 23, 2014 at 11:16 am

47 line items!?!?!?!?!?! You had more than clients of mine who have 3x the investments, but I am glad that you have finally seen the light. 90% of investment returns come from asset allocation and only 10% on the type of asset you have. So it really doesn’t matter much how you get stock, bond and other exposure, just that you have some mix of it. I like life strategy funds like the one you mention because in essence you are telling the portfolio manager what your goals are and they manage and rebalance you all the way there. Your strategy isn’t lazy, it’s KISS – keep it simple stupid which is the best way to manage money over the long haul.

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38 J. Money June 24, 2014 at 10:31 pm

I’ll be KISSing my money come 20-30 years, that’s for sure!

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39 Not Quite Sexy June 23, 2014 at 11:39 am

I’d like to add an important point to this…

The strategy is great and I’ve been following the same one since 2004 (I got the lowdown from fool.com and went 100% into VFIAX). It only works if you can stomach the crashes. Those risk profile tests could be beneficial. Imagine that tomorrow, the stock market crashes 10%. Then 8% the next day. Oh no, what is the bottom going to be? What do you do? If your answer is “sweet, I’m dollar cost averaging like a boss and getting some cheap shares,” then this is the strategy for you. If your answer is, “Shitballs, I’m going to sue J. Money while I move these to bond funds,” then you shouldn’t do this strategy. I believe this strategy works, but that people don’t. For the record…I can stomach the crashes like a boss.

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40 J. Money June 24, 2014 at 10:34 pm

Nice!! VFIAX, eh? Didn’t come across that one in my readings but seems to be similar – I love it. And great point indeed. I typically freak out just a little, but never to the point that I’d ever hit cash out since I’m in it for the long haul and always plan on picking up more to your point of dollar cost averaging. So I’m like 75% boss in those situations, which is fine by me :) You need the risks to get the rewards!

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41 Financial Underdog June 23, 2014 at 12:12 pm

0.05%??? Holy macaroni, that’s cheap!

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42 Sam @ Frugaling.org June 23, 2014 at 12:13 pm

Here’s the deal: I think this is a fantastic strategy. From the standpoint of reducing the amount of time spent worrying and researching investments, it’s a tremendous savings. Think about it: Now you can spend your time doing something else while your money is at work! The one cautionary point is that you may be too diversified in the stock market with a fund like this… It offers little risk protection through bond funds. Otherwise, I like your thinking here. Might just have to follow it!

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43 J. Money June 24, 2014 at 10:37 pm

Let me know if you do! Def. not thinking about investing for quite a while, haha… I had my fill trying to figure out all this over the past cple months :) Only thing I’ll be thinking about is pouring MORE into it now!

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44 FBIV June 23, 2014 at 12:54 pm

Did you look into VMVAX as it has an expense ration of .09 and has outpaced VTASX for the last three years. I have most of my money in it.

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45 Josh June 23, 2014 at 6:28 pm

I don’t know if it’s entirely fair to compare the returns of VMVAX against VTSAX. VMVAX had its inception only 3 years ago, and one of those years (2013) was a HUGE bull market. So that will account for a lot of the weight of the returns for VMVAX. VTSAX has been around much longer, so its returns have had more time to average out.

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46 J. Money June 24, 2014 at 10:38 pm

No, hadn’t checked out VMVAX but will, thanks :)

And thanks for chiming in Josh! I suck at keeping things in perspective totally when comparing funds – I rarely look at how long they’ve been around for! Probably need to change that.

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47 Josh June 25, 2014 at 3:26 am

You’re welcome!

I’m no pro myself, but I do read A LOT of personal finance material (obviously including budgetsaresexy.com). It’s always said that past results do not predict future returns, but I feel with huge index funds like this (that hold positions in hundreds or even thousands of companies) this is actually somewhat true (over the long run, which is all we care about right now anyways). So in these instances, it’s good to look at 3,5 and 10 year returns (if applicable) as well as returns since inception (and of course, inception date).

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48 Free To Pursue June 23, 2014 at 2:59 pm

Excellent! John C. Bogle would be proud. His “Little Book of Common Sense Investing” makes it very difficult to argue against this strategy. Here are a few quotes:

p. 83 – Only three out of the 355 equity funds that started the race in 1970—8/10 of 1%—have survived and mounted a record of sustained excellence.

p. 87 – “Even fans of actively managed funds often concede that most other investors would be better off in index funds.” – Jonathan Clements

p. 135 – It may not be as exciting, but owning the classic stock market index fund is the ultimate strategy. It holds the mathematical certainly that marks it as the gold standard in investing, for try as they might, the alchemists of active management cannot turn their own lead, copper, or iron into gold. Just avoid complexity, rely on simplicity, take costs out of the equation and trust the arithmetic.

Bet you’re feeling even better…Congrats for making a great choice.

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49 J. Money June 24, 2014 at 10:39 pm

Oh yeahhhhh, sure am! Thanks for the confidence boost :)

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50 Brian @ Luke1428 June 23, 2014 at 3:53 pm

We’ve been at Vanguard for years and love the “invest in it and forget about it” philosophy. We have the 500 Index fund and the Total International Stock Market fund. I think you made a good choice getting out of those 47 different investments. Seems like there may have been a good deal of overlap there in some of those funds…and a lot to keep track of.

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51 Kristin @ Brokepedia June 23, 2014 at 5:35 pm

Awesome. I actually have VTSAX written on a post-it note by my computer from comparing/researching my funds a while back (I have a few different funds. Not 47, but a few, haha). I’m pretty new at the whole investing thing, so it’s good to read that I’m on the right page.

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52 J. Money June 24, 2014 at 10:40 pm

Sweet! You sure are :) At least if you like index funds and keeping things simple, haha… Let me know what you end up doing later :)

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53 John C @ Action Economics June 23, 2014 at 5:37 pm

I do index investing at Vanguard as well. My only problem with using just the VTSMX fund is that it is highly weighted on Large Cap US stocks, so I would try to add in a small cap index fund (VSMAX), a mid cap index fund (VIMAX), and an international fund (VFWAX). I just recently added the REIT index fund (VGSIX) to my portfolio as well. 5 funds total, a bit more complex than 1 index fund, but no where near as hectic as 47! All still index funds, but giving a broader overall exposure.

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54 J. Money June 24, 2014 at 10:42 pm

Probably a safer bet for sure… Doesn’t it get annoying to split up the money though every time you put some in? or do you do it at the end of the year or something? Probably not the biggest deal in the world, but enough to get me to pause – as sad as that is :) We’ll have to see how many I get into down the road though, or if I’ll stick w/ just the one. Either way, I’m totally convinced index funds are the way to go for me, which is the biggest battle.

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55 John C @ Action Economics June 25, 2014 at 7:10 pm

We basically just have one fund in each account. My wife has a 401K at work that we use the Total stock market fund in. We each have an IRA and a Roth IRA, and we have an HSA. Each account and fund there in gets an automatic investment every week, so no work splitting them up required. All I have to do is make sure the bank account has some money. I suppose this could get troublesome if/when we decide to do some re-balancing, right now we are in the early stages of acquisition so re-balancing isn’t a big concern right now.

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56 J. Money June 27, 2014 at 5:19 pm

Ahh gotcha, yeah that def. makes things easier – good call.

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57 Christine @ The Pursuit of Green June 23, 2014 at 6:13 pm

Welcome to Vanguard! I love having my accounts there! It’s always good to simplify unless you’re into the world of stocks. I’m not so I use Vanguard:P I still have my retirement accounts in a good place and I just check it every now and then.

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58 Jacob June 23, 2014 at 7:03 pm

Are we twinsies? I just moved my entire Roth over to VTSAX last week. wtf?!

My 401k only index option is VINIX, but it’s MUCH lower cost (and performs better overall) than all the other crap in there.

Here’s to “losing” half our money in the next crash! ;-)

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59 J. Money June 24, 2014 at 10:43 pm

HAH! Would you look at that :) And we have BUDGETS in our blog names too – BAM x TWO!

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60 Jacob June 26, 2014 at 3:00 pm

Woot! Great minds…

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61 GE Miller June 23, 2014 at 8:19 pm

Awwww yeaaaah!! Vanguard fanboydom commence. Glad you finally pulled the trigger.
I do think a little international and real estate index exposure would be wise, but VTSAX is a good strategy.

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62 J. Money June 24, 2014 at 10:44 pm

Hey, any company that mails you a mug and coffee after a Twitter convo is a-okay in my books ;) Just strengthened my decision even more! (Yes, I can be bought pretty easily)

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63 Ben June 23, 2014 at 10:21 pm

Wow, that was quite a cluster of funds you used to own. I like the fact that you are simplifying your fund line-up and making things less complex. But I think you could diversify just a bit further by adding the VG Total Int’l Stock Fund. Yes, US companies are much more global than they’ve ever been, but int’l mkts have different industries, growth prospects, dividend yields, etc. They also don’t always perform in line with one another so you could take advantage by rebalancing periodically between the two funds to increase performance.

Either way, the biggest drivers of your success with be your willingness to stick with the fund(s) you choose and your ability to invest when stocks inevitably fall — so you need cash flow coming in for new contributions with no bonds to rebalance.

Sounds like an interesting experiment. Good luck…

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64 J. Money June 24, 2014 at 10:46 pm

Thanks man :) Appreciate the thoughts regarding international stuff too – I could def. use some more schooling in that area.

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65 J @ the expat investor June 23, 2014 at 11:48 pm

Nice J
I’m also a big fan of vanguard and try to follow the 3 fund portfolio which consist of the total stock market, total international, and total bond index funds. That’s my core portfolio although I do hold some individual stock also, and I am investing a little bit in P2P lending. I might consider adding REIT index funds in the future with vanguard for more diversification. Not sure if you have heard of the boglehead forum board but it is dedicated to jack bogle and follow his philosophy, you can find a lot of information there http://www.bogleheads.org/forum/index.php.

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66 J. Money June 24, 2014 at 10:47 pm

Thanks man. Heard of it but still haven’t spend any time there yet – I have a feeling I’ll be sucked in and smiling the whole ride :)

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67 MMD June 24, 2014 at 5:53 am

You can’t beat that 0.05% expense ratio. This is very similar to what “The Smartest 401k Book You’ll Ever Read” recommends: Basically all your investments can go in one of three mutual funds with Vanguard: Index stocks, index bonds, and index foreign stocks. It’s simple, and because you’re simply indexing you know you’ll do better than at least half of the active investors out there.

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68 Brian June 24, 2014 at 7:32 am

I do love me some vangaurd. I have a taxable account over there and a roll over IRA over there. The taxable is 85/15 stock fund/bond fund and the IRA is in a 5 ETF lazy portfolio. Those are my Ronco (Set it and forget it… remember that guy?) investing accounts. I also have a ROTH IRA where I get pretty risky and pick some individual stocks, because well, I love doing the analysis of them.

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69 Nate June 24, 2014 at 9:09 am

Did you look at VMRAX when making your decision?

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70 J. Money June 24, 2014 at 10:50 pm

Nah, didn’t come across that one – are you invested in it? Looks to have multiple managers handling stuff?

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71 Stefanie @ The Broke and Beautiful Life June 24, 2014 at 12:32 pm

I have three funds, all at Vanguard, and they have all served me well thus far- The Total Stock Market Index Fund, The International Total Stock Market Index Fund, and the LifeCycle Fund . Sometimes lazy is better ;)

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72 Kassandra June 24, 2014 at 12:49 pm

I am 100% invested in the same Vanguard index fund as you. I am an aggressive investor who is willing to accept a higher rate of risk but I don’t have the desire to be micromanaging my investments. Good call J. Money.

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73 J. Money June 24, 2014 at 10:51 pm

Nice!!! Love hearing that!

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74 Mom @ Three is Plenty June 24, 2014 at 3:32 pm

Holy cow! 47 different funds?!? And you were paying fees on all of them. I’m not at Vanguard at the moment because everything I have is at Fidelity – which is doing pretty well on competing with Vanguard for low expense ratios (for their Spartan funds). But we’re about 55% total US, 20% international (ex-US), and 17% bonds – all in low cost index funds. We’re a bit older, and Dad’s not that aggressive, so we want the bonds in our portfolio.

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75 J. Money June 24, 2014 at 10:54 pm

The sad thing is I couldn’t tell you WHAT fees I was paying, and for what funds… In fact I never really cared about fees until I started reading about financial independence by the early retiree crowed. I figured as long as I was making money it’s all good! But apparently you can make even more when watching the fees :)

I’ve heard great things about Fidelity too – my parents use them and always seem pretty happy. Glad their fees are competitive!

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76 Done by Forty June 24, 2014 at 7:36 pm

I love it! We only own four things, but they’re all indexes. The biggest pain is rebalancing, but I’m such a nerd that I get pleasure out of doing it.

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77 EL June 25, 2014 at 10:28 am

Pretty bold J to be all in on 1 fund. I have been with vanguard for 10+ years now, I have a total stock fund as well, a REit Fund, and a long term bond fund. Pretty boring, but I have been happy with the results so far.

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78 J. Money June 27, 2014 at 5:29 pm

Go bold or go home, right? ;)

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79 Agatha June 26, 2014 at 12:53 am

You inspired me!

I finally got off my butt (sexy though it is) and organised an index fund.

Mine is with Vanguard Australia — so very similar, only slightly “down under” so to speak – haha.

Thanks!

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80 J. Money June 27, 2014 at 5:31 pm

There we go!! Congrats on taking action! :)

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81 kyith June 28, 2014 at 6:11 am

you are probably not diversified enough even if you are holding VTI which is the US. if we revert to the mean, USA might have ran its course. Perhaps one of VT, which is the vanguard total world stock market ETF might make sense

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82 Izzie June 28, 2014 at 1:40 pm

Thanks to you J. Money! after reading this blog( three times!) I opened my first Roth last night, you know, its been years in the making but you actually gave me the extra push I needed. I followed your advice although my pocket can only afford to open an index driven with 3k. Finally this is it!. I will commit to maxing it out and next year open one for my hubby and will find a way to max both. You are very inspirational!

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83 J. Money July 1, 2014 at 9:37 am

Rock on!! Love to hear that, Izzie – you’re gonna amass the $$$ in no time :) Thanks so much for letting me know this morning – totally made my day.

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84 Jeni July 2, 2014 at 3:10 pm

Do you invest your retirement for both your wife and you in Vanguard? I’m trying to decide if I should do my husband’s in Vanguard and mine in Fidelity. Thoughts

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85 J. Money July 5, 2014 at 4:20 pm

Don’t know much about Fidelity other than I hear great things about them as well, but no – right now only *my* investments are in Vanguard, though of course it’s still “ours” :) I do want to move my wife’s money over to them too though, just have to have “the talk” with her as she likes having everything in one place and hates talking about money… So we’ll see what happens with that – hah!

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86 Chris H July 4, 2014 at 11:57 am

I like Vanguard and I also like keeping all of my finances under the USAA umbrella. You are probably aware, but you can invest in VTSAX (and most other Vanguard funds) through the USAA ‘Mutual Fund Marketplace’ and still keep things under one roof. I am probably a bit too obsessive about the under one roof concept, but it helps to keep my mind calm…

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87 J. Money July 5, 2014 at 4:23 pm

Yup! I did know that, but the sucky part is they charge something crazy like $40 a transaction to buy/sell? At least that’s what I paid when I first invested in a Vanguard fund the other year… I really REALLY didn’t want to move my stuff out of USAA, but deep down I knew it was the better route long term so decided to finally suck it up. If there were no fees involved at USAA like with Vanguard for investing in them I probably would have stayed!

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88 Taylor Larimore July 4, 2014 at 11:57 am

Excellent article.

Taylor

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89 desper-otto July 4, 2014 at 12:26 pm

Jeni, both Vanguard and Fidelity are good companies — I’ve used both for decades. But there’s no question that Vanguard is the low-cost leader, and costs do matter…a lot! When I retired I transferred all of my Fidelity 401k funds into my Vanguard IRA’s (traditional and Roth). Between BH and myself we have 5 Vanguard accounts: joint taxable, my IRA, my Roth, her IRA, her Roth. It’s easier keeping track of things when everything’s in one place.

As retirees, we can’t be so aggressive with our investments. For the record we’ve got 47% stocks (80% domestic VTSAX and 20% int’l VTIAX), 47% bonds (90% intermediate VBILX and 10% Hi-yield Corporate VWEAX), plus 6% in cash equivalents — enough to carry us for two years, so we won’t feel forced to sell at the bottom. Is that a perfect allocation? Probably not, but it’s one we can live with (and that we don’t lose sleep over).

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90 J. Money July 5, 2014 at 4:26 pm

“It’s one we can live with (and that we don’t lose sleep over).” – That’s exactly the mindset we have too, and many others… The unemotional people won’t agree, but most everyone is affected by them ;)

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91 John Madison July 4, 2014 at 4:55 pm

Another Vanguard fan here. Smart move.

One thought on the 100% VTSAX move: studies have shown that a small (10%-20%) allocation to bonds doesn’t have a huge impact on long term portfolio returns (vs. being 100% VTSAX). I like them being there (even if you’re an aggressive investor) to slightly lower the risk, but also (more importantly) to be a source of funds within the account to rebalance into VTSAX when the periodic correction in the market arrives. All it would require of you is to rebalance periodically (annually, semi-annually…..whatever works for you). It would only take a few minutes to complete with only 2 funds.

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92 J. Money July 5, 2014 at 4:29 pm

You’re probably right, but at this stage of the game just feels too conservative for me… like having cash in a money market or savings account :) I’m okay with the risk of losing more as long as it has the chance to earn more as well. I’m sure I’ll change my tune as the years go by though…

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93 Hoppy July 4, 2014 at 6:42 pm

I think your 1-fund portfolio is better than what it replaced, by why not add an international fund? Home-country bias could be dangerous. Ask a Japanese investor circa 1990. Or a Russian investor in 1913. International diversification is almost a free lunch. The fees for Vanguard’s Total International Index Fund (VTIAX) are just a little more than your fund. Your total returns might not change much, but your portfolio volatility should reduce slightly and you’ll be partially protected from worse case scenarios should the US economy falter in a way we don’t expect (sorry to write this on Independence Day — how unpatriotic of me). FYI, I’m at 65/35 US/International, up from 70/30, and I’ll probably move gradually more toward equal-weighted.

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94 J. Money July 5, 2014 at 4:31 pm

Hah! Even better you’re writing on Independence day :) I’d def go the international route sooner than I would the bonds route as others have mentioned. Just want to go with the flow with the one main fund for a while and see how that feels… I’m def. keeping my options open down the line for sure.

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95 Andy July 5, 2014 at 8:28 am

Too much home bias. No international stocks, no emerging markets. I really don’t understand why given the opportunity to diversify internationally you would choose to put everything in the US. Even the Lifestrategy Growth has too much of a US bias for my liking.

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96 J. Money July 5, 2014 at 4:34 pm

You can read some of the comments I’ve responded to above for more info (or the article again, for that matter ;)) but really it comes down to it just “feeling right” right now. And a $hit ton better than the previous set up too… I never say forever with any choices though, so I’m sure it’ll be tweaked as time goes on.

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97 Christopher July 6, 2014 at 7:28 pm

Vanguard is great!

Did you consider a bit more diversification across asset classes, as recommended by (e.g.) Personal Capital, Wealthfront, or Betterment? We took a look at all three of those (they don’t agree on the details, more so on the concept) and decided to mimic the Wealthfront portfolio of Vanguard ETF’s. Mainly because we already had IRA and employer retirement accounts at Vanguard, and Wealthfront uses Vanguard’s funds for almost all asset classes.

So today’s portfolio is:
Fund Alloc ER
LQD 10% 0.15% (the only non-Vanguard fund but a similarly low ER)
VEA 18% 0.09%
VIG 15% 0.10%
VNQ 14% 0.10%
VTI 22% 0.05%
VWO 15% 0.15%
VWOB 7% 0.35%
TOTAL 100% 0.12%

According to Personal Capital (fantastic FREE analysis tool) this gives us the following:
Stocks 70%
Bonds 15%
Alternatives 15% (mostly real estate)

Cutting it another way
International Stocks/Bonds 42%
US Stocks/Bonds 43%
US Real Estate 15%

You could have Wealthfront do the investing and rebalancing for you but why pay them 25bp for that — it could really cut into your long run earnings, and besides, isn’t one of the big objectives to get fees to rock bottom?

We will have to periodically do some selling/buying to keep our target allocations where we want them. Maybe twice a year? I need to do more research on this point but it seems that more frequent rebalancing is better (assuming no transaction fees). In any case this portfolio is spread among asset classes and domestic/foreign with low fees an not too much care and feeding. We are definitely buy and hold investors.

I should add that we are in our 50′s so the allocation is influenced by our proximity to retirement.

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98 J. Money July 15, 2014 at 12:13 pm

That very well could be smarter, but it already gives me a headache looking at it :) I think there are a lot of different ways to reach the finish line, so as long as this looks good to you it’s all that matters my friend. You’re much more in tune with this stuff than I!

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99 Westerly Falcon July 7, 2014 at 7:25 am

Why do we think that there is money to be made by tracking the index in the first place? Why do we think that the index is going to go up?

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100 J. Money July 15, 2014 at 12:48 pm

‘Cuz it’s always gone up over time? And most people suck at stock picking? (At least I do :)). I wouldn’t advise investing in the market if you don’t believe it’ll eventually pay off.

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101 Christopher July 23, 2014 at 4:54 am

J. Money’s answer is solid.

Here is another way of saying the same thing, from my own experience:
Many years ago I realized that every quarter when I got my 401(k) statement — this being in the days of paper statements and before online visibility — anyway, every time I got my statement I looked at the return on the various mutual funds in my account, and then I looked at the S&P 500 index to see whether they had done better or worse. Then one day I noticed the S&P 500 Index Fund and realized if I just put all my money in that it would never do worse and I could stop worrying about it. That was the moment I committed to being a long term buy-and-hold investor from then (age mid 20′s) until retirement.

Now it is 30+ years later and all those 401(k) contributions with employer match have compounded to about $500,000. A nice nest egg to retire on. Of course there was that little bump about five years ago when it was down under $300,000 but thank goodness the market came back. There is no guarantee that the index (market) will go up but over the long haul that’s the way to bet.

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102 J. Money July 26, 2014 at 8:12 am

Way to go man! It’ll keep growing as time goes on too!

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103 JMac July 15, 2014 at 3:13 am

J. Money,

One question: why VTSAX over VTI (Vanguard Total Stock Market ETF)? I see the expense ratios (0.05%) are the same for both, but realize some recommend ETFs if we’re talking a long-term investment game (YNAB’s 9-day email Investment Course comes to mind for the ETF discussion). Maybe it’s splitting hairs?

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104 J. Money July 15, 2014 at 12:51 pm

The real answer is because all my blog friends talk, and rave, about VTSAX and I didn’t see VTI come up much, or at all :) So once I started looking into it and agreed with the overall principle (and chatted with some people) I just pulled the trigger knowing it’s 1,000 x better than what I was doing. VTI very well could be even sexier, I just don’t know much about it other than what you just said and doing a quick google search :)

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105 Jessie August 17, 2014 at 10:14 pm

Thanks for the review! Are you familiar with Betterment at all? Not knowledgeable with investing/Roth IRA’s in the least but really want to get started. Vanguard seems a bit more complicated.

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106 J. Money August 18, 2014 at 7:04 am

I’ve heard their name pop up a number of times – and know some people that love ‘em – but haven’t researched personally myself. Here’s a review my friend John did on them if it helps:

http://www.frugalrules.com/betterment-review-investing-option/

Interestingly enough, I see they have vanguard funds to choose from ;)

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107 Andrew September 5, 2014 at 11:28 am

I am presently invested in TIAA-CREF with my employer (401k) and in Ameriprise with my old 401k, Roth, and SEP IRA. I can’t do anything about my current 401k, but decided to move all the Ameriprise stuff over to Vanguard because of fees. Right now I am slated to go into one of their target retirement funds. Do you think that is the best or should I put it all in VTSAX? Also, do you think I should move everything over to TIAA-CREF so everything is in one place?

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108 J. Money September 6, 2014 at 3:12 pm

Hey Andrew :)

Honestly I’m not the best person to ask on what’s best cuz I can barely figure it out on my own for my specific situation, haha… I will say that in general I haven’t heard anyone complaining about Vanguard though and they DO have low fees. So I’d def. check them out. Also check out the Bogelheads forum (http://www.bogleheads.org/) and drop your question (you can just copy and paste!) into Jim’s Q&A page in the comments and I’m sure he’ll answer it for you real well:

http://jlcollinsnh.com/ask-jlcollinsnh/

He’s a pro at this stuff while I’m just a tadpole :)

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109 Brandy @ TESOLifestyle November 1, 2014 at 10:38 am

My husband and I have been with Vanguard since we started investing which was at the beginning of this year. But we have gone from VTSMX to VTSAX in a short time. We’ve added more money when the stocks were down and been pretty happy with the results. No panicking for us I tell you! Feeling confident with Vanguard and moving towards FI.

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110 J. Money November 3, 2014 at 2:45 pm

Good! Best time to buy is when everyone’s panicking and pulling out – well done :)

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