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Out of high cost funds into ...???
Old 03-31-2006, 04:20 PM   #1
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Out of high cost funds into ...???

Two weeks ago I cahsed out all invesments I had in taxable mutual fund accounts.* This was a planned thing.* The trigger was the fact that the market seemed at a pretty decent high and I was already sick of the ultra-high fees associated with my invesments (think almost 2% on a an SP500 equity fund type deal!). Because I have held the 10 different funds I had for over 3 years, the pullout fees where very minimal (yeah, I got the big shaft on the front end though* )

So, I have about 650k sitting in a MM account doing about 3.2% but I certainly would like to move this money into a position of bigger returns.* What I'm looking at is Vanguard/Fidelity type low cust index funds (my risk tolerance is medium) but I figured I would post here and see if anyone has any other suggestions.

To complete the picture: I also have about 250k in a 401k on some large cap fund, no mortgage or any other debt - but I* 2 kids very young kids and a stay at home mom.* I just turned 41 and if you happen to look at one of my few posts here you will know that I am not looking to retiring any time soon but 50 looks like a good number.

So the question again: Where would other ER'ees put $650k?
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Re: Out of high cost funds into ...???
Old 03-31-2006, 04:27 PM   #2
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Re: Out of high cost funds into ...???

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Re: Out of high cost funds into ...???
Old 03-31-2006, 05:08 PM   #3
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Re: Out of high cost funds into ...???

Quote:
Originally Posted by jaimee
Two weeks ago I cahsed out all invesments I had in taxable mutual fund accounts.* This was a planned thing.* The trigger was the fact that the market seemed at a pretty decent high and I was already sick of the ultra-high fees associated with my invesments (think almost 2% on a an SP500 equity fund type deal!). Because I have held the 10 different funds I had for over 3 years, the pullout fees where very minimal (yeah, I got the big shaft on the front end though* )
So, I have about 650k sitting in a MM account doing about 3.2% but I certainly would like to move this money into a position of bigger returns.* What I'm looking at is Vanguard/Fidelity type low cust index funds (my risk tolerance is medium) but I figured I would post here and see if anyone has any other suggestions.
To complete the picture: I also have about 250k in a 401k on some large cap fund, no mortgage or any other debt - but I* 2 kids very young kids and a stay at home mom.* I just turned 41 and if you happen to look at one of my few posts here you will know that I am not looking to retiring any time soon but 50 looks like a good number.
So the question again: Where would other ER'ees put $650k?
Well, if you're going to invest lump sums of money, you seem to have two choices. You could go with a big house like Vanguard or Fidelity where you can consolidate your funds and get a price break or free billpaying or whatever service they offer their over-$500K customers.

Or you could buy ETFs from your brokerage and accomplish the same thing. Fidelity & Vanguard have index funds with cheaper ERs than some ETFs but it depends where you decide to put your money.

And you desperately need to decide where to put your money. It's probably best to pick an asset allocation and just implement it. I don't know what a "medium" risk tolerance looks like-- to me that might mean volatility that could cause a 25-30% drop in your funds, but you might have a different picture of "medium". Bernstein's "Four Pillars" has several sample portfolios in the back or you could try to duplicate one of the lifestyle/target funds.

I wouldn't wait to time the market or otherwise mess around with "when" because you're going to leave it there for at least nine years...
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Re: Out of high cost funds into ...???
Old 03-31-2006, 06:19 PM   #4
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Re: Out of high cost funds into ...???

First question:

Who are you?? Do you lean more toward keep it simple or more toward slice and dice. One fund ala an appropriate lifecyle type or a very diversified slice and dice across all asset classes with hands on the throttle rebalancing.

Second question - what function do these taxable funds play in your overall ER plan. Do you need to damp SD cause you plan to hit these early and let tax deferred build for later in ER or run parallel.

I.e what's your current thinking.

P.S. - me - a Boglehead mostly - with mad money on the side for some individual stocks.

Lead sled dog(ala Fleckenstein) is Target Retirement 2015.

Lay out your overall plan and some choices will jump out at you.
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Re: Out of high cost funds into ...???
Old 03-31-2006, 06:47 PM   #5
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Re: Out of high cost funds into ...???

I am partial towards Vanguard, that is where I rolled over to ira.* With that amount, you would qualify for voyager status which means you could have a ( complimentary )financial planner from vanguard work with you.* Also, with 100k in certain funds, fees are quite low.* I parked in money market for the time being, paying aout 4.4.* I have gone from daring and bold to tightfisted, trying to decide between Wellington and Wellesley.
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Re: Out of high cost funds into ...???
Old 04-02-2006, 06:04 PM   #6
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Re: Out of high cost funds into ...???

Thanks to all the suggestions. To address a couple of the postings here, I am not too fond of keeping track of too many investments. I had 10 funds before and I thought it was too much of a pain to keep track of divident reinvestments. I have read other posts where people just get paid cash for dividends but I think by doing that you are missing some of the benefits of fund investing. I will look at the list of vanguard and fidelity low cost funds above and see what fits my "medium" risk tolerance .
One other thing I should mention is that I have also thought about investing more in real estate. Once I do something I will re-post here and let everyone know what I did. Thanks for all the helpful comments!
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