Favorite Dow Index Fund (and why)?

[cchoukal]

Go!

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[sethco]

Dow? Or did you just mean which index fund do you like the best?

If so, VTSAX is where I hold about 55-60% of my investments. Very low expenses, no loads, very low turnover/tax efficient (when held in taxable account), low dividends (and thus more tax efficient), cap weighted, and simple.

 

[BLADEMDA]

Every portfolio should consist of a large blend fund. Rather than the DOW may I suggest a Russell 1000 Index Fund, S and P 500 fund or a total stock market fund?

S&P 500 vs. Russell 1000: What's the Difference?

Learn about the similarities and differences between the S&P 500 and the Russell 1000 indices and why investors may choose one over the other.

www.investopedia.com

 

[BLADEMDA]

VOO vs. VTI: Which Should You Invest in?
I personally prefer to invest in VTI since it offers slightly more diversification with mid-cap and small-cap stocks. However, if you’re even debating whether you should invest in VOO or VTI, that’s a good indication that you have your financial life in order and either investment should perform fine over the long haul.

One last thing to mention is that sometimes you don’t have the option to invest in a total stock market index fund with an account like a 401(k), which means you will be forced to choose a S&P 500 index fund. This was the case in one of my 401(k) accounts with my old employer, so I simply invested in a S&P 500 index fund.

In most cases, you’ll find that a S&P 500 index fund and a total stock market index fund have similar expense ratios and that these two types of funds have the lowest expense ratios of any fund you can invest in. This proves to be a win-win situation. You get maximum diversification for minimum cost.

VOO vs. VTI: Which Index Fund is Better? - Four Pillar Freedom

A comparison between VOO (Vanguard S&P 500 ETF) and VTI (Vanguard Vanguard Total Stock Market ETF) as investment vehicles.

fourpillarfreedom.com

 

[BLADEMDA]

Dow? Or did you just mean which index fund do you like the best?

If so, VTSAX is where I hold about 55-60% of my investments. Very low expenses, no loads, very low turnover/tax efficient (when held in taxable account), low dividends (and thus more tax efficient), cap weighted, and simple.

That's the backbone of an investment portfolio. Vanguard, Schwab, Fidelity or iShares offer excellent choices. These days everyone should be analyzing his/her portfolio using software at least once per year. I do mine once per quarter using free software online.

 

[BLADEMDA]

Go!

VTI has an A+ rating. Vanguard offers a MegaCap ETF as well (MGC). These are all highly correlated to each other.

The Best ETFs To Buy In 2021

There has never been a better time to be a cost-conscious investor, given the wealth of choices among funds holding stocks or bonds or foreign securities or any number of specialized portfolios. This directory lists 401 Best Buy funds whose expense ratios are lowest in class.

www.forbes.com

 

[cchoukal]

I'm a Fidelity guy and basically have about 1/2 of my taxable account in a Nasdaq index fund, and the other half in a horizon fund. I have some new money to add to the taxable account and instead of adding to these two other categories, I thought I'd put it into a Dow or total market fund. What I'm finding is that a lot of funds have the same exposures (at least their top 10 assets have a LOT of overlap).

 

[BLADEMDA]

I'm a Fidelity guy and basically have about 1/2 of my taxable account in a Nasdaq index fund, and the other half in a horizon fund. I have some new money to add to the taxable account and instead of adding to these two other categories, I thought I'd put it into a Dow or total market fund. What I'm finding is that a lot of funds have the same exposures (at least their top 10 assets have a LOT of overlap).

These days VTI is sold through Fidelity at zero commission. Fidelity has their own version as well.


Fidelity also offers a newer Fidelity ZERO Total Market Index Fund (FZROX) with 0% expense ratio. Outside retirement accounts, an ETF is slightly more tax efficient. You can buy Vanguard Total Stock Market ETF (VTI, expense ratio 0.03%) or iShares Core S&P Total U.S. Stock Market ETF (ITOT, expense ratio 0.03%).Jun 30, 2019
Best Index Funds and ETFs at Fidelity - The Finance Buff

https://thefinancebuff.com › best-index-funds-and-etfs-at-fidelity

 

[BLADEMDA]

I'm a Fidelity guy and basically have about 1/2 of my taxable account in a Nasdaq index fund, and the other half in a horizon fund. I have some new money to add to the taxable account and instead of adding to these two other categories, I thought I'd put it into a Dow or total market fund. What I'm finding is that a lot of funds have the same exposures (at least their top 10 assets have a LOT of overlap).

How about an international fund or an emerging markets fund? The world's economy is growing and there are other places to invest besides the USA.

 

[aneftp]

I own a lot of mgk. Vanguard mega cap growth. Vanguard etf. If you look at their holdings. It’s the a who’s who of large cap companies. All the blue chip companies.

 

[BLADEMDA]

I'm a Fidelity guy and basically have about 1/2 of my taxable account in a Nasdaq index fund, and the other half in a horizon fund. I have some new money to add to the taxable account and instead of adding to these two other categories, I thought I'd put it into a Dow or total market fund. What I'm finding is that a lot of funds have the same exposures (at least their top 10 assets have a LOT of overlap).

Your portfolio is heavily weighted to technology and large cap growth. I would recommend you run your current portfolio through an analysis using software readily available online at Personal Capital. This way you can see what your portfolio weighting is relative to the recommendations of their experts as well as the S and P 500.

At this point my best guess is that a Total Stock Market Index Fund or ETF would be a good choice but maybe you need a Large Cap Value Index Fund/ETF to offset that large cap growth exposure.

Other areas for possible exposure:

Real estate
Commodities ETF
Small position in Gold
Bitcoin ( instead of a trip to Vegas)

I still think some extra exposure to Foreign small cap stocks or Emerging Markets would be quite rewarding over 2 decades.

 

[deleted131481]

Agree with Blade's recommendations for international. I own all Fidelity funds for simplicity and low ER (retirement accounts with work): FXAIX (S&P500), then mid/small market, international developed, emerging markets, and smaller amount in REIT and bonds.

 

[pgg]

I'm a Fidelity guy and basically have about 1/2 of my taxable account in a Nasdaq index fund, and the other half in a horizon fund.

Rather than deciding what funds to invest in each time you have a new sum to invest, I would simply decide on an asset allocation that meets your goals and is within your risk tolerance, and make deposits accordingly to keep everything in balance.

(For people who have trouble making lofty goals and timid risk tolerance mesh, the answer is to save more and spend less, not tweak the portfolio.)

I don't think there's a lot of juice to be squeezed out of comparing the different low-ER broad market index funds that Vanguard, Schwab, and Fidelity offer. Pick some, set your asset allocation, and leave it.

Keep it simple. Total US equity, total international equity, total US bond. If you feel like it, maybe add international bond (I don't).

Aside from keeping things simple, without a rational and written AA ... when corrections or uglier events occur, and one investment drops more than another, a person is more likely to make bad decisions. The beauty of picking a handful of funds and deciding on an AA, is that there's no need to think or react, you just follow the plan and rebalance/contribute according to it.

 

[GassYous]

So I just opened a fidelity account and I noticed that it costs nothing to invest in fidelity's funds. However, if you buy vanguard funds like vtsax (vanguard total market admiral shares) they charge 75 dollars per trade. On face value, it seems advantageous to invest in fidelity's zero fees fund, but it has 1000 fewer stocks (3500 vs 2500) and is newer so it is relatively untested.

Vanguard's funds have multiple billions and are tax efficient. My understanding is that if you invest 15,000 then it's worth it to buy vanguard funds as the difference between how much you lose from the 75 dollar charge is overcome by the relatively lower tax efficiency of fidelity funds (0.98 vs 0.5). I like how vanguard operates and I've been with them for several years. I think it is advantageous to still invest in vanguard funds through fidelity but maybe I'm missing something?

 

[Zekchar]

Work: 457, 403b, 401A = 50% S&P 500 index + 50% Mid/Small Cap Blend (Goal to artificially create a Total index Fund)
Individual: 401K, Roth IRA = 100% VTI

I am 5 years in. I have a 30 year career ahead of me before my husband and I retire in Miami.

=FV(0.06,30,75000,500000) = 8.8M at 3% withdrawl rate = $265,000/yr . More than enough for my husband and twin daughters.

 

[anonperson]

So I just opened a fidelity account and I noticed that it costs nothing to invest in fidelity's funds. However, if you buy vanguard funds like vtsax (vanguard total market admiral shares) they charge 75 dollars per trade. On face value, it seems advantageous to invest in fidelity's zero fees fund, but it has 1000 fewer stocks (3500 vs 2500) and is newer so it is relatively untested.

Vanguard's funds have multiple billions and are tax efficient. My understanding is that if you invest 15,000 then it's worth it to buy vanguard funds as the difference between how much you lose from the 75 dollar charge is overcome by the relatively lower tax efficiency of fidelity funds (0.98 vs 0.5). I like how vanguard operates and I've been with them for several years. I think it is advantageous to still invest in vanguard funds through fidelity but maybe I'm missing something?

Invest in VTI instead.

It is the ETF equivalent of Vtsax.

You can generally buy ETFs with zero commissions.

I believe the fidelity zero fund fees are unique to them and you cannot transfer them out if you decided to change brokerages. You would have to sell and deal with the tax consequences

 

[GassYous]

Invest in VTI instead.

It is the ETF equivalent of Vtsax.

You can generally buy ETFs with zero commissions.

I believe the fidelity zero fund fees are unique to them and you cannot transfer them out if you decided to change brokerages. You would have to sell and deal with the tax consequences

What you said about the fidelity funds matches what I've read and that's the other thing I didn't like about them. Thanks for the advice.

 

[sethco]

So I just opened a fidelity account and I noticed that it costs nothing to invest in fidelity's funds. However, if you buy vanguard funds like vtsax (vanguard total market admiral shares) they charge 75 dollars per trade. On face value, it seems advantageous to invest in fidelity's zero fees fund, but it has 1000 fewer stocks (3500 vs 2500) and is newer so it is relatively untested.

Vanguard's funds have multiple billions and are tax efficient. My understanding is that if you invest 15,000 then it's worth it to buy vanguard funds as the difference between how much you lose from the 75 dollar charge is overcome by the relatively lower tax efficiency of fidelity funds (0.98 vs 0.5). I like how vanguard operates and I've been with them for several years. I think it is advantageous to still invest in vanguard funds through fidelity but maybe I'm missing something?

I'm confused. I've never encountered this fee with Vanguard. Are you trying to trade multiple times within a 30 day window? I've heard Vanguard discourages this. I buy shares of VTSAX monthly on an Auto debit from my checking account. Don't know if it's the frequency or the auto debit, but I have never been charged anything other than the miniscule expense ratio of the fund.

On the other hand, there is nothing wrong with the Fidelity zero fee funds. Haven't looked to closely at them, so just make sure they track their respective index well. The 0.04% difference doesn't move the needle enough for me to make the switch

 

[anonperson]

I'm confused. I've never encountered this fee with Vanguard. Are you trying to trade multiple times within a 30 day window? I've heard Vanguard discourages this. I buy shares of VTSAX monthly on an Auto debit from my checking account. Don't know if it's the frequency or the auto debit, but I have never been charged anything other than the miniscule expense ratio of the fund.

On the other hand, there is nothing wrong with the Fidelity zero fee funds. Haven't looked to closely at them, so just make sure they track their respective index well. The 0.04% difference doesn't move the needle enough for me to make the switch

Since Vtsax is a mutual fund, most non Vanguard brokerages will charge a fee to purchase.

If you use Vanguard, it's not a big deal. But why pay the fee when you can use the ETF alternatives if you use Fidelity or another brokerage?

The Fidelity zero fee funds are technically fine but you can't transfer them out of Fidelity. You would have to sell. If this is a taxable account, then you would get hit by the tax man.

 

[vector2]

For those that have a greater than 10-15 yr horizon you’ve gotta have either total market exposure (VTI) or your own blend of large and small cap funds. Past performance is obviously no guarantee of future return, but based on historical data you will significantly underperform over the life of your portfolio if you only have VOO or SPY and no small (and mid cap) exposure.

(note the logarithmic scale on the y-axis)

 

[sethco]

Since Vtsax is a mutual fund, most non Vanguard brokerages will charge a fee to purchase.

If you use Vanguard, it's not a big deal. But why pay the fee when you can use the ETF alternatives if you use Fidelity or another brokerage?

The Fidelity zero fee funds are technically fine but you can't transfer them out of Fidelity. You would have to sell. If this is a taxable account, then you would get hit by the tax man.

Oh, I see. That makes sense that he has a Fidelity account and was trying to purchase Vanguard funds. I went through the same thing 2 years ago with TDAmeritrade (Where my HSA is located via HSA Bank). They started charging fees for Vanguard funds because Vanguard refused to pay a fee to the other platforms to carry their funds. Was pissed off at first, but then I found a back door around the fees by using the systematic transaction form (basically automatically buying shares every month through an automatic transfer from HSA Bank). The only time I will have a fee is when I eventually cash in my positions, which will be many years down the road. By using this, I can purchase the Vanguard REIT for free even though it is through TDAmeritrade.

https://www.tdameritrade.com/retail-en_us/resources/pdf/SDPS1141.pdf

Not sure if Fidelity does the same thing as TDA, but you might consider looking into it

 

[DoctwoB]

Between my wife and I we have 4 retirement accounts and one taxable. I’m on a 30 year horizon so I’m 70 VTSAX 10 small value 20 international.

 

[dhb]

For those that have a greater than 10-15 yr horizon you’ve gotta have either total market exposure (VTI) or your own blend of large and small cap funds.

Which funds are you thinking of?

 

[vector2]

Which funds are you thinking of?

If you don't have VTI then you could theoretically buy some ratio of VOO, VB, and VO to approximate it. VTI is by far my largest position but I also like dividends so I have smaller positions in VYM, VIG, IDV, NOBL, TDIV, and DES, plus about 30-40 individual stocks from following the dividendgrowthinvestor.com newsletter. As far as non stock funds I hold PCI (a PIMCO CEF), HYD, ANGL.

It's a boring strategy but it should be pretty satisfying when I get to the point that I'm generating 6 figures entirely in income regardless of capital appreciation.

 

[GassYous]

Thanks for the tip guys, vti worked well with no charge.

 

[sevoflurane]

VTI is my go to for index funds.

If you haven’t looked at VGT it is worth a look.

 

[sevoflurane]

 

[d-dimer]

VTI or VTSAX for a Roth IRA? 31, married, no kids yet, second year resident. Thanks in advance.

 

[GassYous]

My roth is 100% vtsax but it's pretty tax efficient with the heartbeat strategy they use to recycle the gains so it's probably smarter to put one of your less tax efficient investments in there.

 

[anonperson]

VTI or VTSAX for a Roth IRA? 31, married, no kids yet, second year resident. Thanks in advance.

Which brokerage are you using?

If vanguard, easier to use VTSAX in my opinion. You can use the entire $6000 without any leftover.

One of my Roths is in Merrill which doesn't allow fractional shares on initial purchases so when I purchased VTI , I had some dollars leftover. A little annoying but not a major issue.

 

[sethco]

VTI or VTSAX for a Roth IRA? 31, married, no kids yet, second year resident. Thanks in advance.

In short....

First, I would determine your risk tolerance (I.e. How much bonds vs stocks). At your age, it is perfectly acceptable to be 100% stock if you are investing for the long term. However, this percentage should also allow you to sleep at night during a market downturn without panicking and selling. As an example, a 80/20 split allowed me psychological well being during the last crash and also allowed me to rebalance (buy more stock). So now, I'm closer to 85/15 as a result of determining I have a good risk tolerance and that I would rather buy than panic sell during a market crash

Then, I would determine which particular asset classes you want to own. I love VTSAX/VTI and similar total market funds. They make up roughly 50% of my overall portfolio. However, it doesn't cover Real Estate, International, Emerging Markets, Small Value (at least not enough), and Bonds. So, I tilt a portion of my portfolio with these classes. It's important to realize that Large Cap growth (This is what VTSAX is mostly considered), won't always be the best performing class. Just Google "Callan Periodic Table" for different charts showing year by year historic returns of the different asset classes

Next, I determine asset location. Within IRAs, HSAs, and 401k/403b taxes are not charged for buying, selling, or trading/exchanging funds. As an example, let's say you wanted to buy VTSAX now, but 5 years from now it becomes overweighted in your portfolio and you want to buy more bonds. There would be no tax consequences for the trade within your IRA. This is in contrast to a Taxable/Brokerage account that you might want to open later with extra funds after you have maxed out your tax protected accounts. In this account, any gains above the initial investment will be taxed upon selling or trading to another fund. During your peak earning years, you want to minimize these transactions in a taxable account

TL;Dr VTSAX is a great initial investment as your first asset class and within your Roth IRA that you can always change later depending on your investment needs

 

[sethco]

If you don't have VTI then you could theoretically buy some ratio of VOO, VB, and VO to approximate it. VTI is by far my largest position but I also like dividends so I have smaller positions in VYM, VIG, IDV, NOBL, TDIV, and DES, plus about 30-40 individual stocks from following the dividendgrowthinvestor.com newsletter. As far as non stock funds I hold PCI (a PIMCO CEF), HYD, ANGL.

It's a boring strategy but it should be pretty satisfying when I get to the point that I'm generating 6 figures entirely in income regardless of capital appreciation.

Do you hold these dividend producing stocks/Funds in a tax protected account? If not, how much of the dividends are not qualified?

 

[pjl]

ITOT at fidelity covers my needs well. 0.03 expense ratio, and 3,600 US based companies at market cap weight. I am 100% in this i

I don’t like the zero funds because IF I ever choose to leave I don’t want to have to realize profits.

I do strongly prefer fidelity to vanguard and have moved everything there. The website is way better, and for my non index stuff they have active trader pro, which is nice for me.

I do all risky and different investing in my retirement accounts. That is also where I have international funds.

My single stock picks are all in my Roth IRA.

I don’t feel much need bonds because I have one of the most recession proof jobs in the world. I also have plenty of cash flowing investments outside of the stock market.