Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
The 3 action steps you would.....
Old 07-21-2004, 03:45 PM   #1
Recycles dryer sheets
 
Join Date: Jul 2004
Posts: 170
The 3 action steps you would.....

...advise a relative to take in opening a index fund brokerage account...

:
__________________

__________________
Tommy_Dolitte is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: The 3 action steps you would.....
Old 07-21-2004, 04:05 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,409
Re: The 3 action steps you would.....

1. Read Bogle
2. Buy Vanguard Target Retirement Series appropriate for your age and set up an auto deduct.from your checking.
3. Go fishing or whatever.

__________________

__________________
unclemick is offline   Reply With Quote
Re: The 3 action steps you would.....
Old 07-21-2004, 05:52 PM   #3
Full time employment: Posting here.
 
Join Date: Oct 2003
Posts: 961
Re: The 3 action steps you would.....

1. Explain risks of stocks/make sure stocks are appropriate for person. Assuming this is a taxable account, determine relative tax efficiency of index funds choices. TSM & S&P 500 funds are very tax efficient. Note also the tax managed Int'l and Small Cap funds.

2. But directly from Vanguard (or at least very low cost brokerage account with no purchase fees). Explain any purchase and/or redemption fees, and how they can affect return and such. Ask about extra fees associated with any investment - "account maintenance fees", "admin fees", etc.

3. Explain how index funds work, and also Dunn's Law.

- Alec
__________________
ats5g is offline   Reply With Quote
Re: The 3 action steps you would.....
Old 07-21-2004, 06:14 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: The 3 action steps you would.....

I have some family members helping me fix my wifes house and two cousins in their 20's broached it with me.

I started with the "risks" talk.

Then moved to "pay off your debt" as they both have 10-12k in consumer debt.

Then "stop spending money on dumb stuff" as one just bought his third dirt bike and one has been drooling over a hummer.

Moved on to compounding rates, current cost of an item against invested value (did you know that the $2 you spent on the egg mcmuffin you're eating would be worth $50 by the time you retire if you invested it?).

Then we had a brief talk about cheap index funds and asset allocation.

It's going to take them some time to get control over the debt and spending first. That might be more beneficial to them than starting an IRA right now.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: The 3 action steps you would.....
Old 07-21-2004, 06:34 PM   #5
Recycles dryer sheets
 
Join Date: Jul 2004
Posts: 170
Re: The 3 action steps you would.....

ats5g --

Interesting read. Has the law held up the past 5 years?

I and a cousin have few thousand dollars to spare and want to get into Index Funds.
__________________
Tommy_Dolitte is offline   Reply With Quote
Re: The 3 action steps you would.....
Old 07-21-2004, 09:36 PM   #6
Dryer sheet aficionado
 
Join Date: Jul 2004
Posts: 29
Re: The 3 action steps you would.....

1. Call Vanguard and ask for some literature on asset allocation.
2. Decide on asset allocation.
3. Insure they have appropriate level of cash available as a "rainy-day fund". The worst thing they could do is withdraw this money at the wrong time.
4. Put your stock allocation in the Total Stock Market Fund.
5. Put your bond allocation in the Total Bond Market Fun.
6. Make regular investments into their (a) cash account, (b) total stock fund and (c) total bond fund.
7. Sit back, don't read the financial papers for six month.
8. Reallocate in six months if they allocation is off by 5% or more.

Mike
__________________
MikeK is offline   Reply With Quote
Re: The 3 action steps you would.....
Old 07-22-2004, 05:54 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,409
Re: The 3 action steps you would.....

Ten years ago - I gave my nephew(career Navy) - Bogle's 1994 book - "read this like a flight training manual". It worked - they are house hunting in greater San Diego right now (leaving Whidbey in Aug). TSP in Index 500 pushing 1/4 mil - wife is now civy with a good job.

My sister on the other hand - well some listen and some refuse to hear.
__________________
unclemick is offline   Reply With Quote
Re: The 3 action steps you would.....
Old 07-22-2004, 08:00 AM   #8
Full time employment: Posting here.
 
Join Date: Oct 2003
Posts: 961
Re: The 3 action steps you would.....

Quote:
Has the law held up the past 5 years?
That's a good question. I don't have the mutual fund data that Bernstein has (have to pay Morningstar for this). But a quick perousal of M*'s website does indicate that DFA's Small Cap Value fund has destroyed most of the small cap value funds out there. It's much smaller and more valuey than most small value indexes and Vanguard's SCV fund.

I also wonder how many mutual funds have disappeared over the last five years. If I recall correctly, around 464 were liquidated and 870 funds were merged into other funds in 2003. I think around 100 have been liquidated thus far this year (2004), and around 130 have been merged into other funds. Talk about survivorship bias[see Problems with Manager Universe Data], which is extremely bad in small cap stock funds.

- Alec
__________________

__________________
ats5g is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Pedometers and 10,000 steps Martha Other topics 33 10-20-2006 03:00 PM
Conversion of Traditional IRA to Roth Steps. riskadverse FIRE and Money 6 10-08-2006 09:44 AM
"10 easy steps to FSBO your house" Nords FIRE and Money 4 06-01-2006 01:36 PM
Steps for Young Dreamers to ER (Part 2) cons Young Dreamers 0 07-06-2005 05:31 PM
Martha, I'm in my first lawsuit!! Class Action no less!!! laurence Other topics 3 05-20-2005 10:06 AM

 

 
All times are GMT -6. The time now is 04:31 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.