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Index Investing
Old 09-27-2005, 08:12 PM   #1
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Index Investing

It seems like Vanguard index fund is THE fund to make sure you have a diversified portfolio while enjoying low fees for your ER.

I just wonder why Vanguard is such a darling here? why not invest in iunits, spiders or any other index investments vehicules? Certainly more liquid...

Dan
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Re: Index Investing
Old 09-27-2005, 08:20 PM   #2
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Re: Index Investing

For me it was a dollar cost averaging and diversification thing with a small starting portfolio. Brokerage commissions on ETFs didn't make much sense when I was buying in small lots. Now that the portfolio is bigger it might be cheaper to go with the ETFs. But I'd have to pay some pretty big tax bills to make the switch. Besides, Vanguard fees on S&P 500 Admiral shares are only 0.09% - or about $90 / year for each $100K balance.
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Re: Index Investing
Old 09-28-2005, 09:18 AM   #3
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Re: Index Investing

In all areas other than large cap core and my 401(k) I use DFA which IMHO is better than Vanguard. Now, I only do that because the company I work for is allowed to invest with DFA which means I don't have to pay an advisory fee. If I did I would be a much more diehard Vanguard fan.

I think the reason they are so popular here besides the cost issue is that in general Vanguard is on the same side as individual investors which wins them a lot of points in my book.

I don't think you will find too many people knocking iShares here
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Re: Index Investing
Old 09-28-2005, 09:31 AM   #4
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Re: Index Investing

You should investigate other choices.*
I may be the only poster here who uses Fidelity select funds for sector plays.* The record for the bulk of this fund group is very positive.
Vanguard Funds are fine and I have some of their index funds in my autopilot accounts and the EM index in my aggressive.
Lots of choices in the investment world and it is probably safe to say the majority are bad ideas for most of us, but the world is certainly bigger than just Vanguard.
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Re: Index Investing
Old 09-28-2005, 12:15 PM   #5
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Re: Index Investing

Quote:
Originally Posted by oisif

I just wonder why Vanguard is such a darling here?
Dan
I think there are two reasons to go with Vanguard. One is that they have very good risk based returns in major part because of low fees. On this you need to compare them with other alternatives as there are some other funds with good returns. But the second reason for going with Vanguard is the basis of the company. With the possible exception of TIAA-CREF mutual funds have an inheirent conflict of interest in their business structure.
And because of the business approach of Vanguard a lot of other fund companies have been forced to be "more" honest. Still you would want to seek out a fund most appropriate for your individual investment objective and that may not end up being Vanguard. But they have caused a lot of good in the investing world and for this they deserve appreciation and support.
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Re: Index Investing
Old 09-28-2005, 01:45 PM   #6
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Re: Index Investing

Quote:
Originally Posted by oisif
I just wonder why Vanguard is such a darling here? why not invest in iunits, spiders or any other index investments vehicules? Certainly more liquid...
As a young dreamer I haven't yet figured out the appeal of spiders unless you really want to short the S&P. I'm DCAing into mutual funds with no transaction costs, and my dividends and capital gains are automatically reinvested back into my chosen mix. At my transaction levels the broker fees for ETFs would be prohibitive.

How is an open-ended mutual fund--especially a large Vanguard one--not liquid? There's something I'm definitely not getting.

I'm not familiar with iunits and can't think of other index vehicles that would seem to make sense to me. (Whole life or annuities as index vehicles? Don't think so.)

Anyway, I do sometimes feel like part of a Vanguard fan club and wonder if that's really a good thing.
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Re: Index Investing
Old 09-28-2005, 01:52 PM   #7
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Re: Index Investing

Quote:
How is an open-ended mutual fund--especially a large Vanguard one--not liquid? There's something I'm definitely not getting.
It is liquid. You may have to wait until the close of business (when daily NAVs are determined) before your transaction goes through but it is plenty liquid.
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Re: Index Investing
Old 09-28-2005, 01:57 PM   #8
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Re: Index Investing

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Originally Posted by wildcat
It is liquid. You may have to wait until the close of business (when daily NAVs are determined) before your transaction goes through but it is plenty liquid.
Ah, I see. And in retrospect I should've said "less liquid" instead of "not liquid" as the OP indicated. I guess there is at least a couple of hours you have to worry about dramatic market movements after ordering a transaction with an open-ended fund.
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Re: Index Investing
Old 09-28-2005, 02:26 PM   #9
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Re: Index Investing

Thanks for your feedbacks. I was just wondering really why Vanguard was so often mentionned here. I also find them to be pretty straight forward in an industry that is full of crooks and lies.

The liquidity is not a big deal even if some financial institutions will give you the next day closing price for a mutual fund if you instruct them to sell (or BUY) after noon and will require a day or two to make your money available for you to reinvest or cash the money. Even if they are long term investments and makes the liquidity issue marginal, it seems like everytime I sell part of one they fall 1% the next day lol
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Re: Index Investing
Old 09-28-2005, 10:21 PM   #10
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Re: Index Investing

Hello, for those of us who are into a successful early retirement and treat investing like a computer ( I don't have to understand everything about the guts of the computer to make it work extremely well!) Vanguard is a simple no brainer of lower fees over a 20 to 40 year period. The math is easy. S & P index fund at 0.19 costs less than S & P index at .29 or .75 or god forbid 1.25 with some funds.

There are people on this board who know so much more about the complex world of investing than I do, so I just chug along with the basics of Stock Index funds, 60%...bond index funds, 40% and enough cash in CD's and good old ING savings at 3.4% that I can transfer to checking in two days to last for 4 years. So I take nothing from stocks that will not have a 4-5 cushion to adjust to fluctuation in the market....I LEARNED THAT RIGHT HERE ON THE BOARDS A FEW YEARS AGO!

So Vanguard and CREF both are good choices for low fees. I am so cheap I will be rolling over CREF to Vanguard to save .08 in long toerm fees.

Peace...Ted
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Re: Index Investing
Old 09-29-2005, 04:51 PM   #11
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Re: Index Investing

Quote:
Originally Posted by JPatrick
Quote:
Originally Posted by oisif why not invest in iunits, spiders or any other index investments vehicules? Certainly more liquid...

Dan
[quote
You should investigate other choices.
I may be the only poster here who uses Fidelity select funds for sector plays. The record for the bulk of this fund group is very positive.
Vanguard Funds are fine and I have some of their index funds in my autopilot accounts and the EM index in my aggressive.
Lots of choices in the investment world and it is probably safe to say the majority are bad ideas for most of us, but the world is certainly bigger than just Vanguard.
I also use Fidelity select funds for sector investing. I've been very happy with them since they got rid of the 3% load (at least you only paid it once, and then could switch at will but I still didn't like it).
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