WAY OT ~ Vanguard funds

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I'd suggest to open your yellow pages phone book, and look for financial planners. Call four or five of them. Go with the one who sounds easy going, and who makes sense when he speaks.
In my case, what very small bit of retirement funds I have, I like to support business and industry. I figure they are doing useful work with my money. As opposed to government, who are hiring paper shufflers, and hiring people like DHS and TSA and other agents to take away my freedoms.
Christopher A. Young Learn more about Jesus www.lds.org .
"gonjah" <gonjah.net> wrote in message
I've got to put some money (> $5k but less than $10k) in a IRA to avoid Fed income taxes
Anyone have a suggestion on which Vanguard fund they would pick?
Sorry for the OT post and my lack of $ knowledge. I've got until April 15.
Jim
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Stormin Mormon wrote:

Most of them are smooth talkers who seem like they're making sense even when they're selling something ridiculous or bad for the customer. The worst financial planners play way too much to people's fears about about taxes or losing money on investments and try to make financial matters seem more complicated than they actually are, just to make customers think they can't handle anything on their own but need a Certified Expert.
It may take as much skill to properly choose a financial planner as to choose mutual funds. That's not to say financial planning is only about investing, but it's usually best to avoid retail sales people.
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On 4/8/2012 2:07 PM, larry moe 'n curly wrote:

I hear the term CPF kicked around a lot these days. I think if I had millions to invest it might make since.
BTW: The first thing I did was call the bank and asked about IRA's. They gave me a brochure and a name to call. I talked to a financial planner who tried to sell me a load-fund. Sirens went off. To his credit: he told me I could go to Vanguard and do it myself. Conversation over.
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gonjah wrote:

There are a lot of certifications, and one I've heard of is CFP, Certified Financial Planner, which has certain college education requirements and passing a test by the CFP trade group. There are some other certifications that require no testing, just paying a registration fee.

It's rare for a commissioned financial planner to do that because most just spout lies about how their products are better than Vanguard's, and a few will even "prove" that their products are cheaper.
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On 4/8/2012 2:54 PM, larry moe 'n curly wrote:

Being tax time, he was probably too busy to go through the routine. I was expecting some pressure but because it was through my CU he maybe working at some kind of discount.
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On the other hand, my advice to call several financial planners...... might not hvae been the wisest thing to advise. Glad you have internal warning sirens.
Christopher A. Young Learn more about Jesus www.lds.org .
"gonjah" <gonjah.net> wrote in message
BTW: The first thing I did was call the bank and asked about IRA's. They gave me a brochure and a name to call. I talked to a financial planner who tried to sell me a load-fund. Sirens went off. To his credit: he told me I could go to Vanguard and do it myself. Conversation over.
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Sounds true, to me. I've not shopped for financial planners, but your counsell sounds right.
Christopher A. Young Learn more about Jesus www.lds.org .
Stormin Mormon wrote:

Most of them are smooth talkers who seem like they're making sense even when they're selling something ridiculous or bad for the customer. The worst financial planners play way too much to people's fears about about taxes or losing money on investments and try to make financial matters seem more complicated than they actually are, just to make customers think they can't handle anything on their own but need a Certified Expert.
It may take as much skill to properly choose a financial planner as to choose mutual funds. That's not to say financial planning is only about investing, but it's usually best to avoid retail sales people.
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On 4/7/2012 8:01 PM, gonjah wrote:

You have received a lot of different suggestions, most of which are much too specific - given that no one knows anything about you other than your age and that from your questions, you have little knowledge or experience investing.
Fortunately, from my perspective, you have stumbled on to an excellent mutual fund family. Vanguard is an extremely well managed fund family known for low administrative expenses and a slightly more cautious approach to their portfolios than most of their competitors. I've been investing in Vanguard funds since the early 1970s and have been extremely pleased with them.
As some others have suggested, Vanguard itself offers a lot of sound advice on its web site and through some publications that you can order from them.
Your decision to invest in mutual funds is a good one for someone who does not have a lot of money to invest and does not know much about the market. The advantages of a mutual fund is that the well managed ones are advised by people who are less likely to make major errors choosing stocks than are total laymen, and the funds own shares in many more securities than you would be likely to own as an individual, thereby spreading the risk if one or some of those securities bomb. The disadvantage is that you are forfeiting control over precisely which securities you own and are paying a management fee that somewhat reduces potential profits. (However, don't forget that if you were buying shares of individual stocks, you would be paying brokerage commissions that in many cases are a larger percentage of the investment price than you pay as a mutual fund expense - especially for purchases of a small number of shares, also known as odd lot purchases.)
Vanguard funds generally have an expense ratio lower than their competitors offering similar funds.
I completely disagree with the one poster who indicated that timing is everything and that you can make a bundle by "timing the market" - knowing when to buy low and sell high. The bottom line is that even the experts can not and do not consistently predict accurately how individual stocks, much less the entire market will move. Many well done analyses have shown that the overwhelming percentage of people who trade frequently end up making less money than those who largely buy and hold and ride out the downturns. Every time you sell at a profit, you are going to be paying capital gains taxes. If you sell in less than one year, the "short term capital gains" are taxed at the same rate as bank interest and ordinary dividends. After one year, the "long term" capital gains tax rate will usually be lower than the taxes you pay on your other sources of income. A lot depends upon when you believe you may need or want to sell in order to have access to the dollars you invested versus wanting to live off the dividends/interest/capital gains that a particular investment earns for you. That time frame is known as your investment horizon. If it is very short, only a few months, you are unlikely to make substantially more in a risky investment than you would make in something much safer.
You also really need to try to understand your own tolerance for risk. Can you sleep well at night knowing that your investment may periodically dip 5%, or maybe 10%, or even more lower than the price you paid when you bought it? Or would you "sell low" because you are too afraid that the price will never come back before you need to reclaim the money you invested? That's known as your risk tolerance. Everyone's personal circumstances differ, as do their investment horizons and risk tolerances. There is no one size fits all investment.
I also am not a fan of investment advisers for small investors. If you are even modestly intelligent, you can teach yourself what you need to know to avoid the worst mistakes. Investment advisers are likely either to push the products that make the largest sales commissions for them, or if they are independent of any investment house and charge an hourly flat rate for advice, you may spend money to hear the same advice you will read on your own.
One final thought, which I didn't see referred to in any of the other postings. Mutual funds come in 2 flavors, no-load funds and funds that charge fees either when you buy or when you sell the shares of those funds. The funds with fees (often call front loaded when the fees are charged at the time of purchase) often claim that they provide a higher percentage of income to their investors than do no-load funds. The truth however, is that when all the management costs and investor expenses are factored into the equations that calculate true investment yield for the investor, the difference between no-load funds and loaded funds disappears and in many cases, the no-load funds provide a higher net yield than their loaded counterparts. In many cases the difference between the 2 types is substantially less than 1% averaged across an entire category of funds or fund family. If you will be buying and selling frequently, the no-load funds are much cheaper as you are not penalized by a commission for every transaction. Vanguard funds are all no-load funds.
In summary, do some reading, try to understand your own needs and attitudes, and don't sweat it if you make a little mistake. I don't want to demean the amount that you are investing, but $5K-$10K is not going to make the difference between being able to retire or not, and in any case, you can't make such a big mistake with any well regarded mutual fund family that you are likely to lose more than 20-30% of your investment and the likelihood is that you would at worst be likely to lose a lot less, and more likely make more after taxes than you would in a money market account or CD. One final word of advice - do not be greedy! You are more likely to win the lottery than you are turn your modest investment into major money over the next 2-3 decades. Slow and steady and sleep well at night with whatever decision you make. Good luck!
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On 4/8/2012 10:53 AM, Peter wrote:

Yeah. It's a just to get our taxes down. This appears to be a no-brainer. We have a considerably larger amount in a employer contributed 403B and other investments like equity. We're not set but better off than most.
All Vanguard IRAs are all no-load I believe. But there maybe exceptions (?). The one I picked is no-load. If I learned anything from Clark Howard it's that.
I took the "timing" remark is in context of Greg's experience. On the ER comment, I finally put 2 and 2 together.
Vanguard's site is pretty good for first time IRA investors from what I can see. Looking back on it, I could probably come to a reasonable conclusion just using Vanguard but these comments helped.
BTW: Excellent post.
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gonjah wrote:

Even compared to a Roth IRA? Unlike other IRAs, Roths are never deductible, but all profits are tax-free, not just tax-deferred, and there's no requirement to start withdrawing money from the account after age 70.5 and thereby start pay taxes on that money. Also with Roth IRAs you can withdraw contributions at any time with no penalty or tax (not so with the profits).
The Hulbert Financial Digest has found that Morningstar's 5-star funds have tended to underperform in the future, which isn't unusual for funds with high ratings, regardless of who does the ratings. Forbes magazine says its Honor Roll and Best Buy funds also tend to became underachievers, and it's probably the only publication that very openly admits that flaw of its rating system. Forbes instead recommends paying more attention to costs, risk ratings, and asset allocation.
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On 4/8/2012 2:31 PM, larry moe 'n curly wrote:

POV it seems like a no-brainer.
If you read all my threads, you would see I haven't opened a financial text since grad. There's a reason for that. I want someone to say: Trust me and put your dough here.
Thanks for making me feel like a fool. ;)
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Does the buy and sell and paying capatial gain taxes apply with an IRA ?
Say buying a fund, going in and out of the fund and into and out of a money market account .
I thought you mainly payed taxes on an IRA when you actually got the money in your hands.
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Ralph Mowery wrote:

No.
No tax bills then.

Yes.
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This group has been SO helpful to me over the years. ;)
But I knew I was pushing it with a OT post of this nature. I was very pleasantly surprised.
Thanks to everyone. Very good comments IMHO.
BTW: It's in a moderate risk no-load fund appropriate for my age with a low ER. The 403B is in a similar fund. I'll sleep well tonight. Now I can file and get $80 bucks. Casino here I come! ;)
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You don't plan to keep your money, then? Casinos lead to bankrupcy and crime, not retirement.
Christopher A. Young Learn more about Jesus www.lds.org .
"gonjah" <gonjah.net> wrote in message
Now I can file and get $80 bucks. Casino here I come! ;)
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A couple friends of mine went to Disney in Florida. They said all the food and concessions were quite expensive. I can imagine leaving with less money.
You could get a Scrooge costume, and go around, doing stickups? Naah, better not.
Christopher A. Young Learn more about Jesus www.lds.org .
The key to casinos is to take a certain amount of money and when gone, leave. I liken that money to the cost of admission to that particular theme park. However, unlike Disney World, I sometimes get out of the casino with more than I came in with. Ain't NEVER had that happen in Orlando (g).
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I was at Disney in Orlando for a soccer tournament for my daughter a bit more than a year ago Took my son along as well.
We stayed at Disney's sports theme hotel where ironically sports were not allowed. It was all for show Some of the girls were just kicking the ball around while waiting to go to a field. Security showed up and told them to stop. Food at the hotel was not only expensive, but bad enough that the kids were willing to walk a mile to go have breakfast at MacDonald's which by the way offered a better breakfast for about half the cost. It actually was cheaper to get a cab and go into town for supper than eat at Disney Food and service were better too.
AS for the tournament, It was supposed to be a "select" level. WE got better competition in Iowa in April than we got in Florida.
If anyone proposes Disney for another tournament, I will do everything to not go.
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gonjah <gonjah.net> wrote:

Investment advisors will always tend to put themselves in a safe mode when handing out advice. Luckily when the market was heading downward 2008 , I went safe. As the market bottomed, I said, how much lower can it go. Much of my money was put in vanguard capital value fund. It outperformed everything. As a result, I gained 50% over what I would had had, had I done nothing. The first thing an investment advisor will say, put more money in. Sure. When I first started in vanguard, they said diversify. Fools. I lost money 25 years ago. Should have been all good stock funds. High risk vs low risk, I say your age and retirement date is not the most important issue.
Greg
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On 4/8/2012 1:16 PM, gregz wrote:

My wife's motto is "Buy high and sell low." ;)
"Go with what you know."
My quickest and best gains were in real estate and I enjoy it. You can touch it and work on it.
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