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Old 12-20-2015, 09:58 PM   #41
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Originally Posted by target2019 View Post
Blaine,
FUSVX is a good choice. I agree with the idea that you are young and would do well to focus on large cap US in your 401k. Do you have a small cap fund there?

I can check on a small cap fund. I believe that we do, I know for sure that we have some small cap funds that I looked at as well. I have not read on what they are comprised of yet. I will get back to you on this.
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Old 12-20-2015, 10:06 PM   #42
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Originally Posted by Hermit View Post
On building your home:

Sounds like you have it pretty well in hand. If you are working with a general contractor, the price may go up in your area because he has to pay more for skilled and unskilled labor.

If I were in your shoes, I would have everything nailed down including the kitchen sink, appliances, fixtures, etc. Then don't change a thing during construction. I would also make sure the contract had start and complete dates during the time you are in the area. Six months should be plenty of time to complete a small home especially if there will be no changes.
I agree, I do not want anything extravagant. Everything will be off the shelf items that can be bought here locally without any "custom" details. When I had the architect design the home, I discussed making it as efficient as possible with plumbing and wire runs so we could keep materials to a minimum and not have a plumber and electrician having to make crazy runs. I wanted it all to be simple and compact.

The idea for the labor would make sense if the same builders weren't building just 10 to 15 minutes north of where I am for much cheaper. It seems that they are charging for the location. I think it is assumed that since it is a fairly "affluent" area, that we are all wealthy and willing to pay more or have the ability. I am not sure, just seems this way to me. I guess you pay for your thrills or views.

I absolutely want to have everything picked out and priced out before construction begins. I have also been considering purchasing some things before hand to minimize the amount financed. I was looking into pre purchasing things like sinks, cabinets, faucets, flooring, etc. I am not sure if it would save me anything though over the long run due to the builders getting a discount when they do the bulk order for construction, or so I hear.
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Old 12-20-2015, 10:24 PM   #43
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I can check on a small cap fund. I believe that we do, I know for sure that we have some small cap funds that I looked at as well. I have not read on what they are comprised of yet. I will get back to you on this.
Your Vanguard 2050 Target Date fund already contains small cap stocks. The US equities in that fund represent the total US stock market and are capitalization weighted. So, it has just the same weighting of small caps as the US market has (unlike the Fidelity Spartan S&P 500 fund, which is just very
large companies and has no small cap stocks). You may decide later that you want to be overweight in small companies, and then you'd need to find a small cap fund. But until then, the Vanguard 2050 Target date fund will probably do fine.
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Old 12-20-2015, 10:28 PM   #44
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Just a couple quick things, Blaine. First, congrats on your income, and kudos for your attention at your age on building wealth for the future. I am not going to make any specific suggestions, as you have gotten a lot of very good advice above. I mainly wanted to give an additional vote that this advice is good, and you will do well to absorb and apply the information to your situation. Also, part of learning is doing. You will get better at investing as you get out there and gain experience with it. I say that as someone who has made mistakes but still got to FI. Good Luck, and don't think you have to be 100% right with every decision to succeed.
I appreciate the kind words and thoughts on the advice given. It is good to be a member of a group with so many contributing members who concur on an idea, especially when many of them have found success in the mentioned topics!

I'm sure on my journey there will be stumbles and hurdles even after I am knowledgeable on the topics, you can not be right all the time.
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Old 12-20-2015, 10:34 PM   #45
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Your Vanguard 2050 Target Date fund already contains small cap stocks. The US equities in that fund represent the total US stock market and are capitalization weighted. So, it has just the same weighting of small caps as the US market has (unlike the Fidelity Spartan S&P 500 fund, which is just very
large companies and has no small cap stocks). You may decide later that you want to be overweight in small companies, and then you'd need to find a small cap fund. But until then, the Vanguard 2050 Target date fund will probably do fine.
The small cap companies have more volatility and risk but the chance for them to blow up is greater than with the slow, steady growth of the larger companies, correct?

With this being true, I should use a fund like this while I am younger and can recover from a downfall. Maybe only do a percentage of my portfolio in the small cap fund and decrease it over time, reducing the risk involved?

I will do more research and reading on the topic. I wasnt able to read much today and probably wont be able to do much tomorrow. I have a spearfishing charter that I have to run and then go visit some family. Should be able to get back to it soon. When I get back to work I will be loaded with free reading time!
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Old 12-20-2015, 10:48 PM   #46
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Originally Posted by Blaineatk View Post
The small cap companies have more volatility and risk but the chance for them to blow up is greater than with the slow, steady growth of the larger companies, correct?

With this being true, I should use a fund like this while I am younger and can recover from a downfall. Maybe only do a percentage of my portfolio in the small cap fund and decrease it over time, reducing the risk involved?
Yes, the small companies are a bit more volatile, and they do offer (on average) higher growth rates than larger companies. But small caps, large caps, value stocks, growth stocks, foreign stocks, US stocks, bonds-- they all have their turn in the spotlight. That's why you want a diversified portfolio, and why you'll rebalance it, selling off higher priced assets and buying those which have
lagged.

I would invest in the whole US market now, and keep doing that. As you near retirement you may want to reduce volatility by reducing the total percentage of equities, but I would not recommend skewing to large caps and away from small caps.
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Old 12-20-2015, 11:08 PM   #47
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Yes, the small companies are a bit more volatile, and they do offer (on average) higher growth rates than larger companies. But small caps, large caps, value stocks, growth stocks, foreign stocks, US stocks, bonds-- they all have their turn in the spotlight. That's why you want a diversified portfolio, and why you'll rebalance it, selling off higher priced assets and buying those which have
lagged.

I would invest in the whole US market now, and keep doing that. As you near retirement you may want to reduce volatility by reducing the total percentage of equities, but I would not recommend skewing to large caps and away from small caps.
Thanks for the advice, noted!
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Old 12-21-2015, 09:22 AM   #48
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Blain,
An assumption I was making on your portfolio is that you wanted to move away from target fun and save on expenses a bit. Also ditch the bond allocation while young. If I've misinterpreted your thoughts please let me know.

I myself would go with FUSVX as a major piece, and add in small!midcap, aka completion index. All of your thoughts above on small cap are correct. I still work, and am just now throttling back on my overall small!midcap allocation.
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Old 12-21-2015, 10:14 AM   #49
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One nice thing about Vanguard's target date funds is that they add no fees or expenses above the ERs of the included funds (which are already among the lowest in the industry). So, whether you are watching your holdings, or out ona boat at work, or on vacation in Bermuda, they are rebalancing your assets to sell high/buy low every day-at no cost to the investor. The 2050 Target Date fund has an ER of just .18%, and it covers a lot of assets that would normally require higer ERs in a standalone fund (things like small stocks, foreign stocks, etc). It is a super standalone holding, or can serve as a good "core" fund to be augmented by other funds if an investor sees some reason to tilt holdings a bit. But, given actual investor behavior, a portfolio of just the Vanguard Target Date fund would produce better results than about 90% of investors get.
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Old 12-21-2015, 01:42 PM   #50
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One nice thing about Vanguard's target date funds is that they add no fees or expenses above the ERs of the included funds (which are already among the lowest in the industry). So, whether you are watching your holdings, or out ona boat at work, or on vacation in Bermuda, they are rebalancing your assets to sell high/buy low every day-at no cost to the investor. The 2050 Target Date fund has an ER of just .18%, and it covers a lot of assets that would normally require higer ERs in a standalone fund (things like small stocks, foreign stocks, etc). It is a super standalone holding, or can serve as a good "core" fund to be augmented by other funds if an investor sees some reason to tilt holdings a bit. But, given actual investor behavior, a portfolio of just the Vanguard Target Date fund would produce better results than about 90% of investors get.
Good to know!

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Old 12-22-2015, 06:27 AM   #51
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Blaineatk,
Here is a link to the Andex Chart for 2015 (meaning it covers up to and including 2014 results). It is very useful for explaining the past, of course, and has no predictive powers. Ignore the small ads on the chart, this is a small price to pay for an expensive M* chart. These are the items which pop out for me, looking at the top graph, for historical returns:

- My personal period is from the 50's until now. In the first 20 years I was of course just growing up. Say my own investing life started in 1980. And trust me, I was far behind where you are today. There are distinct periods for results, but small outperforms large, and that is my first takeaway. Some may advise you to overweight small/mid while you are young.
- As you work your way down through the other asset classes and portfolios, the ride is smoother, but you give up some performance.

Additionally, keep in mind that expenses (not shown) are paid out of the results.

Wish I could share with you the right side of the graph that extends beyond the printed page...


https://public.dreyfus.com/documents...s/skyandex.pdf
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Old 12-22-2015, 06:33 AM   #52
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Such a ridiculous concept. I always have my cars assembled in my driveway.
me too, and it helps to have the parts sitting in the rain for weeks and weeks while they wait to be assembled.
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Old 12-23-2015, 11:52 AM   #53
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Hahaha
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Old 12-23-2015, 12:11 PM   #54
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I referred a friend of mine to this forum and was telling her how helpful this has been to me in my short time here. She is in a similar situation as I am in and when I looked over some of the stuff that she had going on I found that she was in funds that had fees that were much higher than mine along with the frontload. I let her read this thread and was showing her some of the other links that have been posted on here. I showed her how much a lot of the funds were costing her and told her to do some research and reading to decide if that was truly the route that she wanted to take.

I feel like I have learned so much in the short time here and have been able to help one of my good friends into looking and learning. I would once again like to thank you guys for the start that you have given me on the path to learning this new venture!
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Old 12-24-2015, 12:37 PM   #55
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Good advice on the posts here. Would also recommend reading a couple blogs.

Jim Collins - The Simple Path to Wealth - jlcollinsnh | The Simple Path to Wealth - Overall, a good viewpoint on wealth accumulation, including income, expenses and his own life experiences. Has a good stock investment series reader that will get you thinking.

Mr. Money Mustache - Mr. Money Mustache — Early Retirement through Badassity - This guy is a hardcore saver that retired in his 30's. Some find him to be a little extreme but think we can all learn at a little from is viewpoint on spending.

I am mid-40's and have learned that income is great, but expense management is just as important. For example, I am driving a 2002 Honda Accord, with a bunch of miles on it, that has been super reliable and allowed me to plow money into investments.

Good luck on your quest.
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