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Mutual Funds?
Old 08-04-2016, 03:25 PM   #1
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Mutual Funds?

Hello:

I am 32 years old and recently received a large bonus from work and am looking for advice on investment strategy. I already have a 529 for both of my kids, I max out my Roth IRA and max out my 401k annually. I have $100k I want to add to a mutual fund and am debating between the VTSAX and VTSMX. They are both the Vanguard Total Stock Market Index Fund but one is the Admiral Shares and the other is the Investor Shares. Any insight on which one is better? I am leaning towards VTSAX because the expense ratio is 0.05% and the VTSMX is 0.16%. Any advice is appreciated. Also, is this the right time to buy? It is the highest cost the fund has ever been and I am concerned about buying too high and losing in the end.

Thank you in advance!
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Old 08-04-2016, 03:47 PM   #2
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They are the same thing, the only difference is the expenses are lower with the Admiral shares. If you invest at least $10,000 in this fund, you qualify for the Admiral shares and the lower expenses. Under $10,000 and you have to pay the higher expenses on the Investor shares.
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Old 08-04-2016, 03:51 PM   #3
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If you are set on buying TSMI, go with the lower cost VTSAX. Right time to buy? Nobody out there can answer this question. If you are concerned, just deposit some per month over the next 6 months or so.
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Old 08-04-2016, 04:02 PM   #4
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When I was your age I did value averaging, but was making regular contributions from our cash flow.

So for example, let's say you want to invest the $100k over 10 months... that would be $10,000/month... but do it this way... start with $10,000, at the end of the first month invest whatever is necessary to increase the value to $20,000 (so if the value at the end of the first month is $10,500, invest $9,500, it the value is $9,500, then invest $10,500). At the end of the second month invest whatever is necessary to increase the value to $30,000. Continue that process every month until the $100k is fully invested.

You'll be investing more when prices are relatively lower and less when prices are relatively higher.
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Old 08-05-2016, 03:09 AM   #5
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Quote:
If you are set on buying TSMI, go with the lower cost VTSAX. Right time to buy? Nobody out there can answer this question. If you are concerned, just deposit some per month over the next 6 months or so.
+1 This is exactly what I was going to say.
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Old 08-05-2016, 07:18 AM   #6
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I would dollar cost average into VTSAX. My thinking would be:
- If I invest all at once, and the market corrects 20%, I will feel poorly.
- If I invest 5% or some other percentage each month, I can always change my strategy to take more advantage of lower prices.

There are other scenarios that may happen. These are two that I am focused on.
We do use VTSAX.

It might be a good idea to consider how this 100K in VTSAX would change your asset allocation. If it fits your plan, then fine.
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