Forced savings: Autodeposit into funds

[Jocomama]

Although cash strapped, I started with some basic mutual funds in 1993. I opened with $100 and had an autodebit of $100 per month sent directly to a fund.
Have others considered this?
Would like to hear how other residents and practicing medical professionals are doing for forced savings (outside of retirement).

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[etf]

i'm a premed and have $250 a month automatically invested into the fidelity contrafund. hoping it will grow at 12%.

 

[JohnUC33]

I'm MS1 and have $50 going to two different mutual funds via Edward D. Jones. Although its not much money, my investment advisors says it the early money that counts the most when considering a long term plan. The wasy I see it is that the more I put in now, the more compound interest will be my friend over the next 30+years.

 

[etf]

I'm MS1 and have $50 going to two different mutual funds via Edward D. Jones. Although its not much money, my investment advisors says it the early money that counts the most when considering a long term plan. The wasy I see it is that the more I put in now, the more compound interest will be my friend over the next 30+years.

i'm curious - what funds did your edward jones guy or gal put you in? brokers often sell funds that have loads/high management fees, and your more often then not better off going with a lower priced fund from vanguard or fidelity...

 

[Buckeye(OH)]

Ive been putting money in since I was 16. Unfortunately, now, I will be using that money rather than taking out additional loans over the Stafford Max.

 

[HTD]

Although cash strapped, I started with some basic mutual funds in 1993. I opened with $100 and had an autodebit of $100 per month sent directly to a fund.
Have others considered this?
Would like to hear how other residents and practicing medical professionals are doing for forced savings (outside of retirement).

"Outside of retirement" is my next goal. Since 1993 for my wife and 1997 for I we have been putting away pre tax retirement dollars (in modest amounts) in to mutuals. We left training and entered practice in 2003 and 2005. Since then, we have had the ability to to put 60K pre tax per year and we have only been able to do that for 2 years. We are soon approaching the (outside of retirement) category.

We have some very real delimas. We have large debt that we are paying down at about a 10 year pace. That debt includes school loans for us both and mortgage. We also have three children. We are very reasonable with our lifestyle but we do have some luxuries. Bottom line, we live below our means. Our debt, howver, takes up a godd bit of would be (outside of retirement) investing. I am open to suggestions.

At this point, My outside of retirement investing is limited to two items. I consider these my "no skills" non-essential investments. In other words, I dont use money I cant afford to lose here.
1. $250/month to a Scottrade account that I occasionally buy stocks with.
2. $1500-2000/year to an investment club. Also stock investments.

 

[etf]

send that $250 a month to fidelity, and have them pick the stocks for you. i mean, those fund managers wouldn't do their own appendectomies, right? $1500-2000 a year doesn't seem like a big deal, especially to a surgeon, so i guess it's alright to send it to the club - if only for the mental satisfaction of knowing you didn't miss out...

 

[Jocomama]

If you are young - do NOT pay down mortgage - keep it out and interest-only, or minimum payment. PM me on this and I'll give you the reasons.

Invest in what you know
Invest in a combination of items - funds can be diversified into equities (dividend paying, foreign, tech, etc) or Bonds (munis, junk, government, mortgage-backed, etc) and REITs, which many include under equity.

Then you have your home -already done. There are state tax-deferred higher education funds, then direct investment into other state and government securities.

If you have the $$ then get a long-time friend in business, and ask him/her for a financial advisor referral. We cannot do this on SDN - nor should you ask us.
I only invest in other arenas where I have a 5-10yr or family relationship. I stay away from other MDs on this. We don't know jack

"Outside of retirement" is my next goal. Since 1993 for my wife and 1997 for I we have been putting away pre tax retirement dollars (in modest amounts) in to mutuals. We left training and entered practice in 2003 and 2005. Since then, we have had the ability to to put 60K pre tax per year and we have only been able to do that for 2 years. We are soon approaching the (outside of retirement) category.

We have some very real delimas. We have large debt that we are paying down at about a 10 year pace. That debt includes school loans for us both and mortgage. We also have three children. We are very reasonable with our lifestyle but we do have some luxuries. Bottom line, we live below our means. Our debt, howver, takes up a godd bit of would be (outside of retirement) investing. I am open to suggestions.

At this point, My outside of retirement investing is limited to two items. I consider these my "no skills" non-essential investments. In other words, I dont use money I cant afford to lose here.
1. $250/month to a Scottrade account that I occasionally buy stocks with.
2. $1500-2000/year to an investment club. Also stock investments.

 

[whopper]

If you're a premed or resident I'd advise not investing money for the future if you're in a situation where that extra money will make a serious difference in your quality of life.

Think about it. The money you'll make now is miniscule compared to how much you'll make as an attending. Why fret over investing a few hundred dollars-which can be a major difference in your quality of life now when just one extra night on duty will land you possibly over $1000?

I'm doing investing now--and I'm a resident, but those investments are not going to affect my quality of life right now. I'm doing well financially (for a resident), with little debt and a side ebay business. I'm pushing myself now to invest here and there so when I'm an attending, I'll have half a clue about investing my money.

 

[Bobblehead]

Quality of life should be balanced carefully with the realization that as medical professionals you're entering the compounding game quite late in life. There are a ton of links on the web that clearly demonstrate the ability of $5000 invested early in life to grow to much greater amounts than $50,000 invested much later in life.

http://mutualfunds.about.com/cs/mutualfunds101/a/compounding.htm

 

[etf]

Quality of life should be balanced carefully with the realization that as medical professionals you're entering the compounding game quite late in life. There are a ton of links on the web that clearly demonstrate the ability of $5000 invested early in life to grow to much greater amounts than $50,000 invested much later in life.

http://mutualfunds.about.com/cs/mutualfunds101/a/compounding.htm

actually, it can be a lot more than that. a $1000 investment in hansen's natural in the 1995 would be worth a little over $133,000. the power of compounding is simply amazing, and is basically the secret to wealth.

 

[UserNameNeeded]

I'm MS1 and have $50 going to two different mutual funds via Edward D. Jones. Although its not much money, my investment advisors says it the early money that counts the most when considering a long term plan. The wasy I see it is that the more I put in now, the more compound interest will be my friend over the next 30+years.

Why are you giving up over 5% of your investment dollars to this Edward Jones' agent? This 5% is in addition to transaction fees and other expenses for the actual mutual fund(s). Other discount brokerages don't charge this big fee.

Is your annual rate of return like over 20% (after expenses) with this agent?

 

[Buckeye(OH)]

Why are you giving up over 5% of your investment dollars to this Edward Jones' agent? This 5% is in addition to transaction fees and other expenses for the actual mutual fund(s). Other discount brokerages don't charge this big fee.

Is your annual rate of return like over 20% (after expenses) with this agent?

Im with Ed Jones and besides the deferred load (fund dependent) I don't pay any ridiculous 5% fee.

 

[UserNameNeeded]

The EJ guy I talked to said there was a ~5% fee/load that he/EJ essentially get out of every dollar you invest with him (true for all EJ clients). The EJ representatives are independent agents-- they must make their money off of you somehow. Are you sure you're not being skimmed?

 

[etf]

Im with Ed Jones and besides the deferred load (fund dependent) I don't pay any ridiculous 5% fee.

you shouldn't be paying any load - front-end or deferred. there are just too many great no-load funds out there for you to have to pay a sales charge. plus i bet the annual management fees are higher than average. i think that unless you have a lot of money, you really don't need a broker (that is a human being).

 

[Buckeye(OH)]

The EJ guy I talked to said there was a ~5% fee/load that he/EJ essentially get out of every dollar you invest with him (true for all EJ clients). The EJ representatives are independent agents-- they must make their money off of you somehow. Are you sure you're not being skimmed?

Yes, because I almost switched to Ameriprise. They wanted to know why. I said because I have less than 10k with you guys and I feel like Im getting rammed from somewhere.

After I told the Ameriprise guy about the fees I was paying at EJ he said, and I quote, "you are better off staying with them, sounds like you have a good thing going"

 

[Buckeye(OH)]

you shouldn't be paying any load - front-end or deferred. there are just too many great no-load funds out there for you to have to pay a sales charge. plus i bet the annual management fees are higher than average. i think that unless you have a lot of money, you really don't need a broker (that is a human being).

I have all B shares. Those B shares will convert to A shares and I will not have to face a load.

 

[etf]

i bet those B shares have higher annual operating expenses/ 12b-1 fees, and also have a contingent deferred sales charge. so, if you do need to sell them for some reason, you'll be hit with the load and have paid higher fees throughout your ownership period.

 

[Buckeye(OH)]

i bet those B shares have higher annual operating expenses/ 12b-1 fees, and also have a contingent deferred sales charge. so, if you do need to sell them for some reason, you'll be hit with the load and have paid higher fees throughout your ownership period.

what difference does it make now? None. Since I already have them, Im not going to cry over spilled milk. Furthermore they convert w/in the next two years.


I doubt Ill need the money.

 

[etf]

what difference does it make now? None. Since I already have them, Im not going to cry over spilled milk. Furthermore they convert w/in the next two years.


I doubt Ill need the money.

hehe yeah i guess it doesn't matter now...at least you'll be ready for next time!

 

[Jocomama]

Not always true - you have to check with each fund. This is public information and is part of the quarterly.
Always look at the long term plan -

But why is everyone in mutual funds through a broker?
Why not go directly to Vanguard.

PS - not advice; but sharing what I am doing.
I am ready to drop some $ into PIMCO treasury funds. Not sure which one, but check it out.

i bet those B shares have higher annual operating expenses/ 12b-1 fees, and also have a contingent deferred sales charge. so, if you do need to sell them for some reason, you'll be hit with the load and have paid higher fees throughout your ownership period.

 

[UserNameNeeded]

But why is everyone in mutual funds through a broker?
Why not go directly to Vanguard.

Isn't Vanguard a broker?

 

[etf]

Isn't Vanguard a broker?

and one of the most expensive ones, i might add...

 

[CameronFrye]

and one of the most expensive ones, i might add...

You need to recheck your facts. Vanguard is separate from Vanguard Brokerage Services (which can be expensive if you have a low balance). All Vanguard funds are no-load and basically have the lowest expense ratios of any fund company. Vanguard is owned by it's mutual fund shareholders, so there is no motivation to jack up ER's. I've heard people criticize Vanguard before, but to criticize it's costs is certainly a first.

 

[etf]

You need to recheck your facts. Vanguard is separate from Vanguard Brokerage Services (which can be expensive if you have a low balance). All Vanguard funds are no-load and basically have the lowest expense ratios of any fund company. Vanguard is owned by it's mutual fund shareholders, so there is no motivation to jack up ER's. I've heard people criticize Vanguard before, but to criticize it's costs is certainly a first.

i am a vanguard fan, and my largest portfolio investment is the vanguard primecap fund. i was assuming that we were talking about vanguard brokerage services, which is indeed very expensive: a $30 maintenance fee for accounts less than $250k; $25 commission for online equity trades (the only other guys to charge this much for online trades is citigroup); $30 for options, etc etc. while their funds are amazing, i can't see why anyone would want to have a standard brokerage account with them, unless you qualify for flagship ($1M).

 

[Bobblehead]

i am a vanguard fan, and my largest portfolio investment is the vanguard primecap fund. i was assuming that we were talking about vanguard brokerage services, which is indeed very expensive: a $30 maintenance fee for accounts less than $250k; $25 commission for online equity trades (the only other guys to charge this much for online trades is citigroup); $30 for options, etc etc. while their funds are amazing, i can't see why anyone would want to have a standard brokerage account with them, unless you qualify for flagship ($1M).

For flagship clients there's no annual fee and you get 12 trades free with $8 per online trade after that. Clearly they're more interested in high balance accounts which is fine. After all, there's likely more money to be made in that market.

There's no need to have a brokerage account to own any Vanguard funds and if you wanted to hold other investments you'd be better served with a low-cost broker elsewhere.

 

[CameronFrye]

i am a vanguard fan, and my largest portfolio investment is the vanguard primecap fund. i was assuming that we were talking about vanguard brokerage services, which is indeed very expensive: a $30 maintenance fee for accounts less than $250k; $25 commission for online equity trades (the only other guys to charge this much for online trades is citigroup); $30 for options, etc etc. while their funds are amazing, i can't see why anyone would want to have a standard brokerage account with them, unless you qualify for flagship ($1M).

Sorry for the misunderstanding. I think we were all talking about different things. Carry on