More dumb questions from another newbie that can't spell worth $***!

[VaCollector]

Hello from a newbie in Virginia!

I have been reading from the sidelines for a few weeks now....enjoying....all of
the information about early retirement....the movie reviews.....the variety of
particpants and their extensive knowledge base.....the jokes....the importance
of dryer sheets ....all good except for something about a "Piglet Sodomizer"
....not sure I even WANT to know about that one....

...and now thru the miracle of something you guys call "FireCalc" I have
discovered (REALLY!) that I am FI too! ....now on to RE.....

About me.....52 years young; MWC (married with child), my SI (significant other)
is 16 years my junior and my "baby" (14 y/o) still has 3 more years of high school.
I am a SE accountant who no longer enjoys the rigors of the job and the 100 hour work
weeks at "tax time"...although the $$$'s are good!....

I have notified my staff that I am retiring (effective June 30) and (rather than sell the
business) have presented an attractive opportunity for one of them to "transition" into
ownership with very little risk on their part....allowing for diminishing part time work
for myself over (no more than) the next three tax seasons.....so I am ALMOST RE'd

Enough about me.....I ain't all that special.

Question time!

#1 - I have noticed a board bias towards investing with Vanguard that seems to stem from
minimized investment fees.....are there any other reasons? I am currently with Wachovia
Securities and Ameriprise....comments please!?

#2 - I am a true novice at investing and do not understand the more complicated
aspects and/or terminology (although I am learning here).....My hands off investment policy
has been to stash it and leave it alone and let it grow!

A large portion of my nest egg is in "one basket" with a dividend producing bank stock
(Bank of America - currently 4+% div'ds) that has grown nicely over the last several years....
but I have garnered from reading here that I should diversify, right?....OK....I tend to
agree....but it's hard to look success in the face and send it down the road! Advice please....
maybe an educational book or two?

OK.....that's enough rambling for now.....thank in advance for any and all commentary!

 

[Mwsinron]

1. Vanguard is used because of the low fee's and quite a few folks here believe in index funds. You can get the same thing at Fidelity or TRowe Price.


2. 4 Pillars of Investing is a good book to start off with. Reading the book will answer your diversification questions. What happens to you if Bank of America has some huge scandal and destroys the price of the stock? Yes, it probably wont happen however...

 

[brewer12345]

A large portion of my nest egg is in "one basket" with a dividend producing bank stock
(Bank of America - currently 4+% div'ds) that has grown nicely over the last several years....
but I have garnered from reading here that I should diversify, right?....OK....I tend to
agree....but it's hard to look success in the face and send it down the road! Advice please....
maybe an educational book or two?

Val, you'll have some reading to do to show you why you should do this, but before you get to that there is an old saw about investing: if you want to get rich you should concentrate your portfolio in hated sectors trading on the cheap; if you want to stay rich you shoudl diversify as widely as possible. You are transitioning into the part of your life where you are trying to stay wealthy, so you should invest accordingly.

 

[Poundkey]

Agree that "Four Pillars" is a great book. Another good basic investing/money managment book is called "Making The Most of Your Money" by Jane Bryant Quinn. You will read the word "Vanguard" often in that book also. Any of the good books can be checked out from your library.

 

[aenlighten]

Stocks for the Long Run by Jeremy Siegel is invaluable.

 

[VaCollector]

"quite a few folks here believe in index funds.'

I suppose it will be in one of the reference books suggested, but what are
index funds (plain English please)??

 

[REWahoo]

Read all about index funds and actively managed funds here:

https://flagship.vanguard.com/VGApp...education/PEdIEMFBasicsActMgmtIndxContent.jsp

 

[FinanceDude]

Read all about index funds and actively managed funds here:

https://flagship.vanguard.com/VGApp...education/PEdIEMFBasicsActMgmtIndxContent.jsp

How about fundalarm.com or Morningstar.com?

 

[VaCollector]

"I see" said the blind man....

Thank you REWahoo!

Any body else have more suggested reading before I head off to Barnes & Noble??

 

[REWahoo]

How about fundalarm.com or Morningstar.com?

Sure. Go ahead and give VaCollector a link to the pages that discuss index funds from those two sources as well. I gave the Vanguard link simply because I'm more familiar with that site than others. Anything wrong with Vanguard's explanation?

 

[SteveR]

One more good one for you to read:

"How to Live Well and Retire Early" Bob Clyatt (a member of this forum).
Use the link at the bottom of the page.

 

[REWahoo]

...Bob Clyatt (a member of this forum).

AKA "ESR Bob"

 

[FinanceDude]

Sure. Go ahead and give VaCollector a link to the pages that discuss index funds from those two sources as well. I gave the Vanguard link simply because I'm more familiar with that site than others. Anything wrong with Vanguard's explanation?

I think he needs to understand things from various sources, not just the main source of index funds,just for perspective sake..........

Hopefully, he'll read them all............

 

[Bikerdude]

maybe an educational book or two?

"The Intelligent Asset Allocator" by William Bernstein. Proper asset allocation is the most important part of investing and RE IMHO.

 

[cute fuzzy bunny]

Perhaps the readers digest version of "The Four Pillars" will be of some assistance in lining up further reading and thought provocation?

http://early-retirement.org/forums/index.php?topic=661.0

 

[ats5g]

"quite a few folks here believe in index funds.'

I suppose it will be in one of the reference books suggested, but what are
index funds (plain English please)??

For a whole lot of info about index funds, see Rick Ferri's All About Index Funds

Also, since your going to B&N, check out "Mutual funds for Dummies" and "Investing for Dummies" by Eric Tyson.

- Alec

 

[ats5g]

See also from Vanguard:

The Case for Indexing

- Alec

 

[cute fuzzy bunny]

I think i've hit on a possible gold mine.

A whole series of "how-to" books titled "xyz for people who arent idiots, dummies or morons".

 

[bosco]

#1 - I have noticed a board bias towards investing with Vanguard that seems to stem from
minimized investment fees.....are there any other reasons? I am currently with Wachovia
Securities and Ameriprise....comments please!?

Vanguard is somewhat religion but it pays to think through things on your own rather than just following the party line.

Vanguard is cheapest IF and ONLF IF you buy Vanguard funds. If you buy other companies' funds, ETFs, individual stocks, there are cheaper alternatives. Not only that, but FIDO has cheaper index funds than Vanguard, just not as many of them.

IF you want the widest selection of index funds and IF you plan only to buy Vanguard products, then use Vanguard. Otherwise, check around. Also, be sure to notice that many of the popular Vanguard funds that you might want to buy (i.e. healthcare, precious metals) are closed to new investments.

If you use Wells Fargo's Wellstrade, for example, you can still use Vanguard for free AND buy other things as well.

 

[unclemick]

After investing 1966-2007 for a while.

Vanguard is God. All others are lesser deities.

Not that I'm not a dirty old man and mess around a little on the side once in a while.

heh heh heh heh heh heh heh heh heh heh heh - a little confession is good for the soul. And hormones!

 

[VaCollector]

For a whole lot of info about index funds, see Rick Ferri's All About Index Funds

Also, since your going to B&N, check out "Mutual funds for Dummies" and "Investing for Dummies" by Eric Tyson.

- Alec

thanks ats5g - I should have known that the Dummy series would have a book that would fit my needs.... 8)

Also thanks to all for your input and suggestions!!

 

[ats5g]

thanks ats5g - I should have known that the Dummy series would have a book that would fit my needs.... 8)

Also thanks to all for your input and suggestions!!

I would definitely recommend reading those two Dummies books to anyone before tackling either of William Bernstein's or Bogle's books.

 

[Olav23]

Vanguard is cheapest IF and ONLF IF you buy Vanguard funds. If you buy other companies' funds, ETFs, individual stocks, there are cheaper alternatives. Not only that, but FIDO has cheaper index funds than Vanguard, just not as many of them.

Completely agree, but one thing to note, Vanguard seems to be better at tax-managing their funds. It always seems to beat Fido at after-tax returns by a few hairs even with the cheaper expense ratio.

If you use Wells Fargo's Wellstrade, for example, you can still use Vanguard for free AND buy other things as well.

Keep in mind, this is for balances over $25k. If you are starting out and don't have this amount available, you will pay $20 per trade. If you really need to buy some stocks and forgo all the good advice, look into a discount broker like TD Ameritrade.

 

[ats5g]

I was pointed to another link about indexing:

As The Index Fund Moves from Heresy to Dogma. . . What More Do We Need To Know?

- Alec

 

[unclemick]

Love that poster pictured in the link.

They(Diehard's forum) tell me there is a copy at Vanguard.

heh heh heh - I repeat myself - all others are lesser gods - not that I don't ever sin a little once in a while and buy a few individual stocks but only - a little. Pssst - Target Retirement, my new found religion.