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Indexed technology investments?
01-19-2017, 09:50 AM
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#1
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Location: Boise
Posts: 7,863
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Indexed technology investments?
Hi,
My son wants to invest his Roth IRA contribution this year in "technology". I'm encouraging him to get a diversified investment such as a mutual fund or ETF. I also like index/passive investing.
I looked around and found VGT (Vanguard IT Index Fund ETF). Any other suggestions for him to consider?
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01-19-2017, 10:04 AM
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#2
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Recycles dryer sheets
Join Date: Jan 2014
Posts: 87
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Comparable technology EFT at Fidelity is FTEC.
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01-19-2017, 10:32 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Jul 2009
Location: North Scottsdale
Posts: 1,545
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xlk!
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FIRE'D in July 2009 at 51...Never look back!
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01-19-2017, 10:49 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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What investments do all his friends use?
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01-19-2017, 11:31 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Location: Boise
Posts: 7,863
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Quote:
Originally Posted by LOL!
What investments do all his friends use?
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He's 16. All of his friends, as far as I know, don't invest in Roth IRAs.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
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01-19-2017, 11:58 AM
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#6
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Thinks s/he gets paid by the post
Join Date: Sep 2016
Location: Acworth
Posts: 1,214
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Knowing nothing else about his finances, I'd say this is a good time to explain to him the downsides of investing in only slivers of the economy and how damaging that can be to one's portfolio; for instance, show him how a "technology portfolio" would have fared from 2001-2003 and then show him the relative performance of a more balanced portfolio.
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01-19-2017, 12:04 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Aug 2013
Location: North
Posts: 4,023
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AAPL. Although I would set the limit to around $99... that'll teach him two things...
1. Buy low
2. Patience
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01-19-2017, 12:07 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Feb 2012
Location: Northern Ohio
Posts: 3,181
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I'd advise him to invest *most* of his assets in something like the total market index, but to put some into individual stocks or targeted funds.
Honestly, there is no better way to learn about the need for diversification than losing some* money on individual stocks. Loosing a few dollars now is a much better way to learn about the market than book learning or stories from parents.
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01-19-2017, 01:15 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Dec 2015
Location: Michigan
Posts: 4,942
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Quote:
I'd advise him to invest *most* of his assets in something like the total market index, but to put some into individual stocks or targeted funds.
Honestly, there is no better way to learn about the need for diversification than losing some* money on individual stocks. Loosing a few dollars now is a much better way to learn about the market than book learning or stories from parents.
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+1 How about 80% in a total market ETF, and then any of the above tech ETF's will do for the rest.
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01-19-2017, 01:37 PM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Location: Boise
Posts: 7,863
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Thanks all.
He is now 20% NKE, 31% FTEC, and 49% SWTSX.
We do talk about diversification, costs, starting early, not churning, and all of that stuff. I know tech crashed in 2001-2003, but my belief is that long term it will do about as well as the broader market, so I'm not concerned about his investment from that point of view.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
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01-19-2017, 01:38 PM
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#11
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Moderator
Join Date: Feb 2010
Location: Flyover country
Posts: 25,155
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Quote:
Originally Posted by kgtest
AAPL. Although I would set the limit to around $99... that'll teach him two things...
1. Buy low
2. Patience
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I tend to agree. At least a few shares of AAPL, the rest in an ETF. Although I would set the bar for AAPL at $110. With a P/E right now of less than 15 compared to the S&P 500's 25, I don't think he could go too far wrong long term even at today's price.
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01-19-2017, 02:33 PM
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#12
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Thinks s/he gets paid by the post
Join Date: May 2014
Location: Utrecht
Posts: 2,650
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Given that, as far as I know, all profits from Apple come from one single product, namely the Iphone, I would be very wary.
Remember Nokia? Blackberry?
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01-19-2017, 02:55 PM
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#13
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Moderator
Join Date: Feb 2010
Location: Flyover country
Posts: 25,155
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Quote:
Originally Posted by Totoro
as far as I know, all profits from Apple come from one single product, namely the Iphone
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About 60%, actually. But that's a legitimate concern. I still believe they are going to come out with new products that will be as game-changing as the iPhone. We'll see.
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