Guest angie8179 Posted December 30, 2004 Posted December 30, 2004 I've been reading almost all of the threads in this message board for those starting the roth ira, and it has been plenty of help and very informative, but I'm still unclear on how everything works... I understand some of the things to consider.. such as expense ratio, NO LOAD fund, something that will be a "reasonable" performance.. However, I'm still a bit unclear about the entire process. I have lots of basic questions, so, I hope that it won't be too repetitive to answer. So, just a little background on myself. I'm 20, junior at the university and is planning to open a roth ira, and i'm thinking my initial investment is probably going to be $2,000. I'm thinking that I'm going to go with Fidelity rather than vanguard, still unsure, but more than likely fidelity. First, i know that i should be investing in more aggressive stocks? since i'm starting young. I'm not too sure if this really does matter, since it's only going to be starting off and trying to learn how this entire things works.. When i was looking at vanguard's website, I would probably consider myself a "balance" stock risk taker.. I'm not too sure which one those are, so I was hoping that people could give me some examples.. like, I'm thinking (FDEGX) which is fidelity aggressive growth fund?? i have no clue if that's a wise idea, or simply idiotic. or if I should go with something like the spartan 500 index fund (FSMKX), i know it's been suggested to go with index fund... and are these all mutual funds as oppose to stock?? no idea. So, the next part of my question where I'm a bit confused is,.. let's say i choose the index fund, is all of the $2000 going to just (FSMKX)? and if so, then the next year, if i put in another $2000 or i choose to put it in monthly, do i put into FSMKX again or should i choose another one??? don't understand what happens afterwards (the first year i suppose).. but i'm sure that shouldn't be a main concern at this point, just curious. Anwyays, I also understand that no one could possible tell me which is the right one to choose from.. but i have no direction.. which leads me to my other main concern. When peopel open up roth ira, is it mostly done online? I tend to like face to face interaction. I was thinking of going to see a fidelity representative to actually start this whole roth ira for me; but from my understanding.. this would cost more? Is it worth it? or if i should try to figure everything out and do the entire process online? If i do end up seeing the fidelity, do they charge much for it? thanks in advance to those who do respond back for any help and insight!
SoCalActuary Posted December 30, 2004 Posted December 30, 2004 You should become familiar with a fact of long term investing - dollar cost averaging. Since it is hard to pick the best time to purchase an investment at its lowest price, giving you the highest gain, you should consider making regular investments over a period of time. When prices are relatively low, you buy shares cheaply. When they are relatively higher, you cannot buy as many shares with the funds you have. But with many of the mutual funds, you don't know where the prices are going with certainty. It may still be a bargain compared to future prices, so you may be well served to buy despite the higher price. The dollar cost averaging method assumes you have selected a competent investment fund with good long term potential. Buying regularly gives you the chance to even out your prices without worry over buying at the "right time" to beat the market. As you learn more about investing, you can become more selective about your timing. Meanwhile, think long term in selecting your fund. You want funds that will grow for 40 years until you reach age 60.
John G Posted December 30, 2004 Posted December 30, 2004 Dollar cost averaging can be done with both stocks and mutual funds. Additional comments: First, i know that i should be investing in more aggressive stocks? since i'm starting young..... When i was looking at vanguard's website, I would probably consider myself a "balance" stock risk taker.. (FDEGX)... spartan 500 index fund (FSMKX).... are these all mutual funds as oppose to stock?? REPLY: They are all mutual funds. Anything with five letters ending in X is a mutual fund. Since you are wisely starting early, any general purpose mutual fund representing broadly the stock market is a reasonable choice. For some people, "aggressive" is investing in any stocks. I view "aggressive" more as narrowly cast investments such as sector funds, high growth companies, micro-caps... in other words any narrowly defined investment that seeks above average returns at higher risk. You are going to be investing for way more than 40 years (40 just gets you to retirement age, you will likely live many decades beyond that point) so you can get good results with even a fund that has a stock/bond blend. Don't worry too much about what you choose initially, you will learn more as you go. So, the next part of my question where I'm a bit confused is,.. let's say i choose the index fund, is all of the $2000 going to just (FSMKX)? and if so, then the next year, if i put in another $2000 or i choose to put it in monthly, do i put into FSMKX again or should i choose another one??? don't understand what happens afterwards (the first year i suppose).. but i'm sure that shouldn't be a main concern at this point, just curious. REPLY: Keep things simple initially. Just choose one general purpose fund and put it all year 1 contributions in that fund. You can put all of year 2 there as well. After your assets grow beyond 10k and you have a better feel for your choices, you might want to have two funds.... but some folks use one general fund for a very long time. A general purpose stock mutual fund gives you a lot of diversification - often holding 500+ different stocks. Note, at your age you can contribute up to 3,000 in 2004 and next year the max jumps up to $4,000. Monthly or lump contributions - the choice is yours, both work. Monthly would be the dollar cost averaging approach. Some folks like to max out in January so that funds are in the tax shelter longer. Both approaches have advantages. Do what works for you. If you were to just do 2k each year for till your are 62 and obtain an average 10% gain, you would have just over $1 million in your Roth. You probably did not expect to be a millionaire some day, but in all likelihood you will do even better than that if you have the discipline to stick to a plan. I also understand that no one could possible tell me which is the right one to choose from.. but i have no direction.. When peopel open up roth ira, is it mostly done online? I tend to like face to face interaction. REPLY: If you live in a major city, you will find some local "branches" of Scwab, Fidelity, Scottrade, Etrade, etc. For face to face choices, look in your phone book under stock brokers or mutual funds. Remember, some of these folks make their money by selling you commission products... so ask for NO LOAD funds, ask about fees and commissions. If you have trouble decifering what they say, post again here. Lots of folks also are very comfortable with online transactions - just be sure you are dealing with a reputable firm. Virtually all brokerages and funds have "I'm just a beginner" material. Ask for it. They want the business of young customers (retirement investors tend to stick around for many years) and my experience is that they will spend some time with you on the phone or in person to get you started. You might want to contact three custodians, ask for assistance and beginner info and then decide on who will be your custodian. You always have the opportunity later to change custodians and change investment choices. SUMMARY: Don't overcomplicate your initial step. While you want your investments to grow, equally important is learning more about investing. You are wise to consider investing early - time is your friend. On your investing education, I suggest that you get a subscription to Kiplinger Financial (about $14/yr) and spend 2 hours a month reading about investing, credit cards, careers, etc.
Guest angie8179 Posted December 30, 2004 Posted December 30, 2004 thanks for such a prompt reply to john and socal. I definitely live in major city, seattle. So, I'm going to plan on talking to someone from fidelity and see what their suggestions and recommendations are. I will definitely post again, if i don't understand a word they say. Are there other things that I should be asking them other than fees and commission at this point?
dh003i Posted December 31, 2004 Posted December 31, 2004 You are going to be investing for way more than 40 years (40 just gets you to retirement age, you will likely live many decades beyond that point) so you can get good results with even a fund that has a stock/bond blend. Don't worry too much about what you choose initially, you will learn more as you go. I would mirror this sentiment, but suggest that you don't pursue gaining investment and finance knowledge in a lackadaisical matter. Time is a one-way arrow. Once it goes by, you can never get it back. Knowledge gained earlier can serve you longer than knowledge gained later, and once an opportunity passes you up, you never get a chance to go back in time and grab it. You said you'll probably be investing $2,000 initially in your Roth IRA. If at all possible, I'd suggest you make it $3,000. Once a year goes by in which you haven't invested the maximum in your Roth, you lose that opportunity forever. If there is anything that you can do without, do without it. In 40 years, you will almost certainly not care about the things that you diverted an extra $2,000 from your Roth IRA to obtain. If you become a customer with Fidelity, you will be in the fortunate position of getting a magazine discussing money matters. Fidelity also has articles on their website, which are helpful. On personal finance, I would recommend books by Suze Orman (particularly The Road to Wealth, which is organized like a FAQ). Useful websites include: The Motley Fool RothIRA.com 403(b)wise 401(k)HelpCenter Dept. of Treasury Health Savings Accounts Roth401k LifeTimeSavingsAccount FinancialSense.com (a really good website for investors) For specific books on investing, I recommend Common Stocks and Uncommon Profits and Other Writings (Philip Fischer) The Intelligent Investor (Benjamin Graham) Security Analysis: The Classic 1934 Edition (Benjamin Graham and David Dodd) One Up on Wall Street (Peter Lynch) The Warren Buffet Way (Robert Hagstrom) The Essays of Warren Buffet: Lessons for Corporate America The Theory of Investment Value (John Burr Williams) Tomorrow's Gold: Asia's Age of Discovery (Marc Faber) I would also recommend some excellent books on economics, for a broader background. These books cover money, banking, the gold standard, inflation, and the business cycle: The Theory of Money and Credit (Ludwig von Mises). Probably the best book ever written on money, online here On the Manipulation of Money and Credit (Ludwig von Mises). Probably the best book ever written on the business cycle, available online here America's Great Depression (Murray Rothbard), online here The Austrian Theory of Money (Murray Rothbard). A very brief overview of The Theory of Money and Credit A History of Money and Banking in the United States: The Colonial Era to World War II (Murray Rothbard). Available online here. The Mystery of Banking (Murray Rothbard). Available online here. The Panic of 1819: Reactions and Policies (Murray Rothbard) What has goverment done to our money? (Murray Rothard)
John G Posted December 31, 2004 Posted December 31, 2004 "make it 4,000" - not allowed for 2004. The max contribution is $3,000 for 2004 unless you get the $3,500 max if you are over the age of 50. DH, you keep flooding newbies with books that are way beyond the scope of the person who first posted. It does not make a lot of sense to recommend books on banking, economic cycles and the great depression. Flooding folks with too much information can backfire, suggesting that you must read all these books before you can get started. Beginning investing is just not that complicated, and the books your list for the most part far removed from "how do I do this". Please keep your response focused tightly on the question and what the author has disclosed about their circumstances. Before you post, read your draft carefully so as not to inadvertently mislead folks, such as the current year maximum contributions. As one of the moderators of this message board, I will step in to close a thread, delete posts, etc. when answers are either non-responsive, include errors, use inappropriate language, drift too far from the question, appear primarily self promotional, or make commerical plugs.
Guest angie8179 Posted December 31, 2004 Posted December 31, 2004 thanks dh003i for your comment about trying to max out the allocated amt each year for roth ira. I'm starting with 2000 as my intial investment, and do plan to contribute the full amount whenever I obtain a "real" job, one that is actually salary based.. yeah! Hopefully, immediately after I finish college. I also have read many of your threads and have picked up on the fact that you are a little bias towards fidelity and suze orman as well... but no big deal, i know John G, you always suggest the kiplinger financial for starters like me! I do have to admit, I find it very interesting to learn more about investings and finance in general. I actually do want to read up on it.. To John, I did talk to someone from fidelity, and I'm not too sure if your familiar with their business, but she kept suggesting for me to invest in their "fidelity freedom fund" it's bascially a has a mix of equity, bond, and money market fund. It's basically aggressive and eventually after 20-30 years, it will less so.. they say its very diversified.. and she suggested that it will be better than their S&P500 index fund?? at this point, I shouldn't be too worried about it right?? the freedom fund is a NO LOAD fund but it has an expense ration of .91?? I feel really ignorant about it all, are there other things i should be concerned about?
Guest angie8179 Posted December 31, 2004 Posted December 31, 2004 just to add on to my previous post, I was browsing through vanguard's website, and they also offer the same thing with fidelity freedom fund. I'm not too sure if your familiar with it, but it's basically the fund where they accomodate according to the year one will retire... for vanguard's this 45 year fund till retirement mutual fund, is a expense ration of .21.. i know you suggested less then .5% stupid question, but this expense ratio is fixed, correct? Also, i guess i just wanted your opinion, but should i just stick with the S&P 500 or do you know much about these retirement mutual fund that i've mentioned?
ElGuapo Posted December 31, 2004 Posted December 31, 2004 angie, the good news is you're clearly on the right track. if you're deciding between these two funds at Vanguard and Fidelity, you've already weeded out the 99% of stuff out there that's inappropriate for you right now. if you do continue studying mutual funds and saving more money to invest, within a few years you'll develop your own preferences and start branching out from these all-in-one types of funds. i probably own 15 or so funds right now that i've carefully chosen to complement each other, but the first mutual fund i ever owned? Fidelity Freedom 2030! bottom line, you can't go wrong with either of these. Vanguard's expenses will always be lower because of their passive management approach (known as indexing); Fidelity's will be as low as you'll find in the actively managed arena, and both are very well respected.
GBurns Posted December 31, 2004 Posted December 31, 2004 angie8179 Do yourself a big favor and stop believing what sales reps tell you. Agents of a company, whether sales or not ,are there for the sole purpose of getting you to do business with them. As a result everything they tell you is for that purpose and not for the purpose of educating you or even telling you the truth. Take what is said with a grain of salt, ask for written proof, then go and verify what was said yourself through some other source. I suggest that you do more research before jumping to any conclusions. This includes jumping to the conclusion that any particular fund is good or any particular type is better or that you cannot go wrong. For example you have now found out that no-load does not mean low fees (costs) which is not what you had heard and thought. There will be many more such "surprises" and you have a choice to make regarding paying for any mistakes that you might make. Do you want to pay for the mistake or do want to try and avoid the mistake by learning first? George D. Burns Cost Reduction Strategies Burns and Associates, Inc www.costreductionstrategies.com(under construction) www.employeebenefitsstrategies.com(under construction)
John G Posted December 31, 2004 Posted December 31, 2004 It is good to see that you have taken the plunge. Yes, I am very familiar with Fidelity and many of their products.... my first brokerage/fund accounts were with them. They offer over 175 mutual funds. Do note that Fidelity wants $2500 initial contribution for Roth retirement accounts. This entire message focuses just on Fidelity choices. They are a very reputable firm but I make no endorsement or recommendation - I firmly believe in informed citizens making their own choices. The Fidelity web page list reference is: http://personal.fidelity.com/products/funds/ Angie, I am not surprised that the Fidelity rep talked with you about the Freedom 2040 fund. Most fund families keep inventing new funds as part of their marketing strategy. The Freedom series appears to be designed for the novice investor who might be happy about being relieved of "decisions" about investing over time... its on auto pilot, changing as you get older. Great name - "Freedom". The 2040 fund may do just fine, but basically it is a gimic. From Fidelity's perspective it works if they get your money and since they promote that it is on auto pilot for 40 years, you are likely to stay around. The question is does this choice work for you, and you, not Fidelity is responsible to deciding that. (just straight talk, I am not trying to be overly cynical) Why do I not like these new gadget funds? Well, lets look at this one. As you noted, the fund "leaks" 0.91% for expenses each year, which while in the middle of the range for the industry is high by my standards. Did you look at the "portfolio"? This fund basically farms out blocks of money to a other Fidelity equity and bond funds. There are zero direct holdings. So you are not directly investing but investing in another layer of Fidelity. Layers upon layers is not efficient and some day Fidelity might increase the expenses of this fund - they even told you this "The fund's investment adviser has voluntarily agreed to limit expenses. Without the adviser's reimbursement of some expenses, the fund's total return and yield would be lower. A fund's expense limitation may be terminated at anytime, unless otherwise stated. The Combined Total Expense Ratio for Freedom 2005, Freedom 2015, Freedom 2025, and Freedom 2035 is estimated. " Funds holding other funds does not dramatically change your "diversification", there is a lot of overlap in holdings. I remember one TV guru saying funds holding funds therefore represents the "whole market" - and the moderator queried "Don't we already have whole market index funds that do the same thing?" Bingo. Why have high expenses for a fund of funds when a total market index does virtually the same thing at less expense? To see the data I reviewed before making the following comments, open a second window with the above webpage, click "Fidelity Mutual Funds" on the left, then click on "175 Funds", then click on "Domestic Equity" to display over 40 mutual funds emphasizing stocks in the USA. If you were to go with Fidelity, I would pick from this list of domestic equity funds. (Note, many of these like Fidelity Fund, Growth and Income, and Equity Income are components of the Freedome 2040) No one can tell you which choice will be best or even in the top 20% over any given period of time. Past performance of funds can NOT tell you about future performance - the SEC requires this statement for a reason. I look at the 10 year and "life of fund" annual returns because they suggest how the fund investment theme works. If you have read my prior notes on this message board you will see that I have warned many times about chasing last years performance winners. Lets examine some of these equity funds, keeping in mind the prior performance caveats: A few funds included in Freedom 2040: Fidelity Fund - large company blend of growth/value, 0.61 expense Growth and Income - large company blend, 0.70 expense Equity Income - large company value, 0.70 expense These three funds have all had long run averages above 10%/year which is good. You will meet most of your investment goals if you can average 10% or better. Because the expense ratios of these are a little less than the 2040 fund, you might net more by directly investing with a component fund. I found it interesting that a few Fidelity equity funds I like better are not in Freedome 2040: Contra (FCNTX) - large cap growth / contrarian , 0.95 expense,13.6%/year increase over past ten years, over 13% annual return since 1967 and a Beta of 0.52 (meaning does not ramp up and down as much with stock market, a measure of volatility) MidCap Stocks (FMCSX) - mid size companies and growth, 0.70, averaging 14% annual since 1994 Value Strategies (FSLSX) - small company growth/value blend, 0.84% expense, averaging 13.65% in the past ten years and 14.15% since 1983. Contra has been a champ for a very long time and seems to not get hurt as badly in down years. Midcap and Value Strategies are what I would call more "aggressive" funds, they typically swing more than the market. I am not happy about the expense ratios for Contra and Value, but the net performance has been good on all three. These funds shift their strategies slightly to improve their returns. I might be inclined to go with Contra... run by William Danoff, a Harvard and Wharton graduate. SUMMARY: If you decide on Fidelity, all 6 choices I have listed are likely to do just fine over a long period of time. I would expect them to do better for you than 2040 because they do not have the bond component that "stabilizes" the annual returns. At your age, if you understand short term stock market flucuations, I would put all of your funds into one of these equity funds. (again, remember the $2,500 initial requirement) Next message on Vanguard.
John G Posted December 31, 2004 Posted December 31, 2004 Round 2 : Vanguard Vanguard has been around for a long time and is a well respected mutual fund family. They are most noted for index funds (more about them later) and have generally focused on low cost mail or internet connections to customers rather than having branch offices like Fidelity. I am going to narrowly look at just two options: the S&P500 index fund and their Target Return 2045. The 500 index fund has been around for a long time and done a great job for it shareholders (you own shares of a mutual fund) and annoyed almost the entire mutual fund industry because they have ultra low annual expenses and given a great long term net of 12.29% return since 1976. What do you get with this fund? Probably a desktop PC making simple mathematical decisions about how many shares to own of the 500 largest companies in the US. Turnover is just 2%. Holding include names you will recognize: GE, Microsoft, Johnson & Johnson, Pfizer, Citigroup, Walmart, etc. These are all call big cap companies. Since everything is done based upon a list, costs are very low.... annual expenses are 0.18%. What you don't get is Harvard and Wharton graduates in great numbers reading company filings, visiting corporate offices, reading analyst reports, etc. A short digression: When John Bogle first came up with the concept of index funds, the "actively managed" fund families said it would not work. Surely, smart people picking great companies is better than a stupid PC making small adjustments based upon a list. Well, that debate continues because the performance of the S&P500 fund has given a great net return to investors. When this fund was created, many managed funds were charging LOADS (commissions) and annual expenses were often much higher than today. Even the early NO LOAD funds often had annual expenses in the 1.5 to 2.5%. A dumb list with very little taken out for expenses embarassed a lot of actively managed funds with high expenses. Bogle's invention changed the industry. Target Retirement 2045 is a very different beast. First, this fund is very new (Oct 2003) ... probably a marketing reaction to folks like Fidelity a few years earlier. The 2045 does not directly hold any stocks, rather it invests in four Vanguard funds, three stock and one bond. About 11% of the portfolio is in bonds. Somewhere in the 17% range of this fund is in Asian or European funds. The annual expense ratio is 0.21%. No reliable return data, this fund would have the composite return of the four underlying funds. In Vanguards case, you are getting a blended "life cycle" fund at a very low annual expense that has not significant track record. The annual rate of return over the long haul will be suppressed to the extent of the bond holdings. The bond component adds a steadier income flow at the expense of growth. I don't see why you want this at the age of 20.... but that is my bias. I am not a big fan of letting others make your investment decisions and putting everything on auto pilot. You might be well served by this choice, but it does nothing to encourage you to learn about investing and making choices. Simpler, yes. Better, not so sure. The S&P500 fund might be a better choice from the perspective that 100% of your funds would be in equities (aka stocks). While you have good diversity in numbers and industries, you get nothing from small and mid size companies that are often the growth engine of the economy. SUMMARY: I would give a slight edge to either of these two products from Vanguard over Fidelity, and favor a 100% stock over a blend strategy for some your age. Actively managed vs. passive indexing. They both work. You are looking at a subset of choices from Fidelity and Vanguard that are significantly better than many other investment options. All would likely meet your investment goals. My purpose in these two write-ups was to give you some ideas about how someone with more investmetn experience might think about the choices. I could have added more info on Beta and manager tenure.... but I think I may have already given you too much. Think Nike. Just do it. Don't use perfection as a standard - it can't be done.
dh003i Posted December 31, 2004 Posted December 31, 2004 Regarding the large number of references I provided, I think it is important to become as educated on the topic as quickly as one can. This is based on my simple observation that the investor who does not have thorough understanding will be prone to be panicky and shift around. It is not my intention, however, to suggest that one should not invest until one has read through every text on the subject. Rather, I suggest that while one is reading and learning, one invest in what one is most comfortable with, whatever that may be, based on what one knows at the time of placing one's money. If you're looking at a fund with a good 10-year track-record, find out that fund's worst quarterly and yearly performance. If you'd experienced that kind of loss in a quarter and year, would you still hold onto the fund? If not, you shouldn't buy it now. I previously posted an overview of Fidelity vs. Vanguard for the new investor here. My conclusion is that Fidelity is slightly better, for the reasons I listed in that post: 1. Fidelity does not charge a yearly fee for the maintenance of the Roth IRA. Vanguard does charge a maintenance fee ($10), if the balance of your Roth is less than $5,000. That fee is waived for people who have $50,000 or more in assets at Vanguard. Maybe I'm being too much of a miser on this, but it is an expense. 2. Vanguard requires a minimum initial investment of $1,000 to open up a Roth IRA. Fidelity allows you to build up your Roth IRA in $200 dollar increments, via Fidelity SimpleStart IRA: The Fidelity SimpleStart IRA is an easy, one-step approach to retirement investing. All it takes is an application and $200 a month to start saving for your future. And by choosing regular, automatic investments, you avoid the $2,500 minimum to open an account and benefit from dollar cost averaging. 3. Fidelity now has lower expense ratios than Vanguard on its Spartan Index Funds, $10,000 or more See Expenses as Low as 10 Basis Points on Fidelity Index Funds. The expense ratios for these Fidelity Spartan Index Funds is 0.10%, vs. 0.18% for Vanguard 500. On $10,000, that would be a difference of $9. For Spartan Index Funds Fidelity's non-Spartan index funds do not have lower expense ratios than Vanguard, though they are close and competitive. Fidelity's 500 Index Fund has an expense ratio of 0.19%, Vanguard's of 0.18%. On $10,000 of funds, that would be an $1 difference. 4. Though both companies offer considerable choice, Fidelity is choice-deluxe. There are some important considerations to remember for opening a Roth IRA to make contributions for 2004. See Important Deadlines for Your 2004 IRA Contribution. Summarily, make sure you've completed your online application and contributions before April 15, or make sure your mail is postmarked before April 15. Search Fidelity for more specific information. See How to Contribute to a Traditional/Roth IRA. Via Moneyline, you can make your 2004 contributions in 2005. Make sure to make them 3 days before the April 15th deadline, as it takes 3 days to process. See Electronic Funds Transfer. Meanwhile, you can automatically be building up your 2005 Roth IRA to $4,000 by Fidelity Automatic Account Builder. Regarding investment choices, my favorite Fidelity fund (Fidelity Low-Priced Stock) is closed to new investors. Another fund I like, Fidelity New Markets Income, is not however closed to new investors. It is an aggressive international new markets bond fund. This provides you with diversification from stocks and from the US. However, I would recommend this fund later on. The funds John highlighted are all reasonable choices, though I particularly like the Contrarian and Value funds. Look at manager tenure and volatility.
John G Posted December 31, 2004 Posted December 31, 2004 DH, it looks like you have fallen in love with Fidelity. Yes, they are a great outfit and they have some of my money, but they don't need a billboard advertisement on this message board. They are one of many choices and there are not huge differences between brokerages and mutual funds. Spartan funds do not apply to someone who thinks they have only $2,000 to start an IRA. Please focus posts on what is relevent to the original question. We want to encourage people to read info here and bulk posts that stray off the question can be detrimental. (done that a few times myself, a tight focus on the question can be elusive) Your point about monthly contributions is a good one. Many mutual funds and brokerages want to sign folks up for monthly contributions and often give a break on initial contribution or annual fees. It is always worth asking about this with each custodian. I hope everyone had a prosperous and enjoyable 2004. Book another positive year for the major markets. No reason at this point to think we can not "three-peat".
Guest angie8179 Posted January 1, 2005 Posted January 1, 2005 Thanks John for taking the time to explain some of the differences between fidelity and vanguard. It was VERY informative and helpful. It definitely clears up a lot of things that I should look for and be concerned about. You've been a tremedous help throughout this thread for me. I really do appreciate all of your insight. I also find it very fascinating to learn about. I am a business major and have taken finance, just the basic foundation this previous quarter, and it's amazing how applicable some of the materialsl are, almost able to see the big picture. (i.e. beta, we learned how to calculate it or truly understand why the U.S. stock market is only a semi-strong efficeny.) Anyways, I have been looking over the equity funds you've talked about, and it makes sense why these would be a better option rather than the 2040 freedom fund. Thanks for your response on that, otherwise, I wouldn't have known the downfalls towards investing in it, such as the "zero direct holding" and basically investing in another layer of fidelity. Which may be obvious to someone like you, but definitely not me! I also do know about the 2500 initial contribution for fidelity, I found that out the day I was talking to the sales rep, which shouldn't be a big deal. Thanks for mentioning it though. Thanks again to everyone for all the replies and concerns i should be wary. Thanks again john for responding so quick and having to explain all these beginner stuff to people like me! I truly am grateful!
John G Posted January 2, 2005 Posted January 2, 2005 Glad we got you off to a good start in 2005. Remember, we are mostly talking about very subtle shades of gray, rather than black and white terms, and that no one can tell you with any reliability which approach will work best over any particular timeframe. Often a simple approach can be very successful. DH, TY, and Gburns all gave you useful feedback. Post again if you have other issues.... and good luck with the business courses.
GBurns Posted January 2, 2005 Posted January 2, 2005 Over the last few days I have had the ooportunity to counsel a few youngsters about finances and life. It struck me that probably the best advice is that give by John G when he said: "Just do it. Don't use perfection as a standard - it can't be done" All the reading, researching and selection is meaningless if nothing is done. While we will make mistakes, we will have the opportunity to learn from those mistakes and make corrections. But to make a mistake we must first "Just do it". If we are to be successful we also have to first "Just do it". For a financial plan to be successful, time is usually needed, and so the earlier the start the better. The earlier the start, the earlier you can make corrections. The earlier the start usually the greater the reward. The greater the reward, the more and earlier you can enjoy the fruits. So do not wait on finding perfection - it can't be done, "Just do it" . Thanks John G for reminding me what is really important. Happy New Year to all! George D. Burns Cost Reduction Strategies Burns and Associates, Inc www.costreductionstrategies.com(under construction) www.employeebenefitsstrategies.com(under construction)
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