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Med Student Question
Old 02-04-2008, 04:23 PM   #1
Confused about dryer sheets
 
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Med Student Question

Hey all,
Wondering what your opinion is on my situation. I have some money saved up, lets say 10K, and I was looking to invest in either VFINX or VGTSX, and keep it there for a WHILE (upwards of 10 years- maybe not necessarily retirement, but who knows- maybe house, kids' college, etc.). I'm new to this, and I still have a while till I'm out of school, so opinions count. Yes, I'm conservative. But more so, I don't have the time these days to stay current on trends, and I have a feeling my moneys being wasted in CDs.

Thanks! Anything is appreciated!
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Old 02-04-2008, 06:22 PM   #2
Recycles dryer sheets
 
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Without knowing very much information about you, it's tough. But here are a couple you may want to research. If you're talking about 10k, I'd look into Vanguard LifeStrategy Growth or the Vanguard Retirement Fund for whatever year you plan to start withdrawing it; ten years would be the 2020 Retirement Fund in your case.

If you're just using 10k as a figure for the sake of easy numbers, more or less as an example, and you're actually looking to invest 100k (or 50k or whatever), you may want to consider other options.
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Old 02-04-2008, 10:30 PM   #3
Confused about dryer sheets
 
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No, the 10K was more or less the number. As for more info, I'm 22 and not married, so I can put this away. I might want to add to the sum monthly or twice yearly or something.
I'm also looking for some low level of liquidity on this, so would the retirement fund allow me to take the money out in, say, another 5 or 8 years?
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Old 02-05-2008, 09:18 AM   #4
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Yeah, you can take the money out whenever you want and/or add to it whenever and however much you want. If you think the 2020 is too conservative, then go for the 2040. Either way, at the very least, you might want to use some of the free Vanguard tools in the following link to get other ideas, i.e. do some due diligence. Link: https://personal.vanguard.com/us/pla...PlnContent.jsp
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Old 02-05-2008, 09:26 AM   #5
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How important is that 10 year timeline and how much volatility would you be willing to accept? If you invested today and the market dropped 40% tomorrow, history says that you'll be fine over the long term, but could you stand seeing the balance at $6k when it was $10K of your hard-earned money?

Gator's recommendation on a Vanguard target retirement or lifestyle fund would be a great starting point, in my opinion.
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Old 02-06-2008, 10:37 PM   #6
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Yeah, I'd definitely be fine with it. But wouldn't the Total Stock Index have a better guarantee?
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Old 02-06-2008, 11:15 PM   #7
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Yeah, I'd definitely be fine with it. But wouldn't the Total Stock Index have a better guarantee?
Guarantee? You'll learn ...
It depends upon what you are trying to accomplish.
If you are building a base to grow upon and don't really need the 10K for any particular purpose at the end of 10 years, then I could see putting it into Total Stock Index. Actually I would put half in a Total Stock Index and half in Int'l Stock fund (with maybe 10% of that in Emerging Markets Stock fund, ... if you're going for it, then go for it!).
If however, you want a relatively higher confidence that you will have some semblence of your 10K in 10 years then I would put it into a 2018 (or somewhere close) fund.
Being that you have a fairly bright earnings outlook (one would hope), you are in a great position to gamble invest aggressively.
Best of luck to you.
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Old 02-06-2008, 11:25 PM   #8
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ooops. edit: The below commentary is just some random guy on the internet spouting his opinion and should not be taken as fact. I have it on good authority that I'm still learning a heck of a lot and likely screwed up some key concepts. someone will be along shortly to clean up the mess. thank you.

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Originally Posted by solly85 View Post
Yeah, I'd definitely be fine with it. But wouldn't the Total Stock Index have a better guarantee?
Well, it would be a better guarantee of having a beta of 1. Other than that, there are no guarantees... your goal is to find a risk / reward profile that best meets your personality and objectives.

If you buy, say, the Vanguard total stock market index, then you can expect returns equal to the total us market (technically, equal to the market minus 0.21% in fees). If the market does really well, then great. If the market does poorly, then you suffer right along with it. Basically, standard deviation (spread between highs and lows) can be a real mother.

An alternative to that is to pick a diverse set of investments that work together to reduce your overall risk (or increase overall reward). For example, adding bonds to the mix may lower your overall return but it may also dampen your portfolio's overall standard deviation. Or, you may want to weight your portfolio more towards emerging markets, small value stocks and commodities in the belief that the potentially higher return is worth the higher risk.

A good place to start is Wikipedia's article on modern portfolio theory: Modern portfolio theory - Wikipedia, the free encyclopedia

And Diehards (Guide to the Vanguard Diehards Forums)

An easy way to just get things started is to just pick a lifestyle fund (not saying it's necessary, but maybe at least look at their make-up for ideas).

For example, the Vanguard LifeStrategy Growth Fund (VASGX) is 87% / 10% bond / 3% cash. Their stock holdings are Vanguard Total Stock Market, Vanguard Asset Allocation, Vanguard International, and Vanguard Total Bond. (https://personal.vanguard.com/us/fun...FundIntExt=INT)
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Old 02-07-2008, 12:35 PM   #9
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Haha, yea I'm sure I'll "learn," and, umm thanks about the future earnings outlook comment.
So I've researched the LifeStrategy growth fund (VASGX), seems like a great fit, but looking at its history, it also seems tamer than, say, their total stock index. Yet I wonder how much more risky the total stock index would be- and it seems like it does better, given that it's not weighted down by bonds (which is only 10%). On the other hand, it would serve to stabilize the thing, wouldn't it?
In medicine, we have a saying. Oy vey.
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Old 02-07-2008, 12:46 PM   #10
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First of all, jump for joy at being a med student with money to invest
You are going to have many things to spend money on soon, so be sure you actually can let this money sit for 10 years.
I would invest 50% in a total stock market fund and 50 % in a good international fund. Then the next couple thousand would go to emerging markets.
Given your age and the current state of the markets I'd do it today in one chunk.
I don't like the target funds, especially at your age.
And when you start practicing watch out for those FP's who want to be your money's best friend. You can easily do it yourself, at least until you start talking in the millions.
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Old 02-08-2008, 08:18 AM   #11
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Originally Posted by solly85 View Post
So I've researched the LifeStrategy growth fund (VASGX), seems like a great fit, but looking at its history, it also seems tamer than, say, their total stock index. Yet I wonder how much more risky the total stock index would be- and it seems like it does better, given that it's not weighted down by bonds (which is only 10%). On the other hand, it would serve to stabilize the thing, wouldn't it?
In medicine, we have a saying. Oy vey.
Ok, I'm sensing that you are torn between better performance and safety (great taste - less filling ... you may be too young to remember that commercial, ...ask your father ). I also sense that you may not really need the funds for anything special in 10 years.

So if my 'sensings' are correct, IF I WERE IN YOUR POSITION, I would go with the 50% Total Stock Index, 40% Int'l Stock Fund, 10% Emerging Markets. That gives you a base to start your investing. You can then learn about large caps and small caps, value and growth, reits, commodities, ...etc.

Remember the mantra of this forum is 'Asset Allocation' and 'buy and hold'. Although some of us are more religious about it than others. And as always, your mileage may vary ...

Best of luck to you solly
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Old 02-11-2008, 06:43 PM   #12
Confused about dryer sheets
 
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Aright, thanks for all the votes of support.. Now, I've been doing some research... and it seems that the safest AAAAND highest rate of return, (historically, I know) would definitely be the S&P 500... which outperforms the total int'l and total stock domestic in the long run. So I'm thinking all down on Vanguard 500... crazy? I'm feeling the torrent of "diversify!"'s coming....
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