Looking for No-brainer tickers for long term investing

[Love This Community]

Hello ER guru’s

I’m thinking of building my after tax brokerage account with E*TRADE and want to keep a simple approach of monthly transfers from my bank account to brokerage account. Goal is to DCA around 50K over 6 months or 1 year that is currently in cash (not needed for at least 7 years)

I would like to have 100% invested in stocks. Any recommendations for a good ticker with low expense ratio? I was thinking about VTSAX 60% and similar admiral shares for total international stocks 40%.

I am also open to any other recommendations. Please let me know if I can provide any additional information.

Additional info: I have about 20% of my current after tax brokerage account investment in VOO(15%) and SPY (5%)

Already maxing our 401K accounts

As always, thank you for your help and insights!

 

[OldShooter]

... I was thinking about VTSAX 60% and similar admiral shares for total international stocks 40%. ...

That works. For even simpler you could look at VTWAX, which is total world and is presently about 55% US and 45% non-US. That's what we use. A small side benefit is we don't have to rebalance between US and International; it's automatic with everything in one market-cap fund.

VTSAX pretty much duplicates VOO, which in turn exactly duplicates SPY. So you could simplify there too by picking just one of the three. I would go with VTSAX because it picks up the small- and mid-cap stocks that are about 20% of the US market. Admittedly they are highly correlated to the S&P, though, so it's more of a theoretical difference than a practical one.

 

[RunningBum]

+1 to OldShooter's post. However, I was happy that I kept separate domestic and international funds (VTSAX and VTIAX) rather than VTWAX. For a few reasons I won't get into I decided to get out of international funds, so I could just sell off VTIAX and keep VTSAX, reducing cap gains on the sale. With VTWAX I would've had to have sold all holdings to get out of international. You may be more committed to international than I was, in which case VTWAX is fine.

 

[Love This Community]

Thank you OldShooter and RunningBum. I like the idea of keeping US and Intl separate. Also, might consolidate VOO and SPY. It makes sense to simplify as much as possible.

 

[mrfeh]

Thank you OldShooter and RunningBum. I like the idea of keeping US and Intl separate. Also, might consolidate VOO and SPY. It makes sense to simplify as much as possible.

If you're sure you want to stay at Etrade: https://www.bogleheads.org/wiki/E*TRADE

 

[VanWinkle]

Thank you OldShooter and RunningBum. I like the idea of keeping US and Intl separate. Also, might consolidate VOO and SPY. It makes sense to simplify as much as possible.

Separate is better for tax loss harvesting in a taxable account. I harvested foreign VFWAX back in March when it was down more than US. I also harvested some US stock fund at the same time. In a tax deferred account, going with VTWAX would be fine assuming you want 45% in international equities.

 

[NgineER]

I like ETFs rather than mutual funds personally

 

[VanWinkle]

I like ETFs rather than mutual funds personally

What makes you prefer ETFs over funds? I'm just curious.

VW

 

[NgineER]

The ability to trade throughout the day is an advantage (but can also be dangerous).
ETFs can minimize capital gains by doing like-kind exchanges of stock, whereas mutual funds typically have capital gain payouts at year-end due to redemptions throughout the year.

 

[Ncc1701]

If E Trade is waiving transaction fees for Vanguard Funds then I could understand why you're holding the account there. Otherwise I would choose a provider without a Vanguard purchase fee.

And since you're aiming for 100% stocks and are interested in total market and International, why not use Fidelity's Zero Expense funds?

 

[OldShooter]

... going with VTWAX would be fine assuming you want 45% in international equities.

Just to be clear, VTWAX is worldwide stocks, cap weighted. Currently the US, cap weighted, is about 55% of the world. That percentage is not fixed; it will change as the sectors wax and wane. Example from 2018: https://howmuch.net/articles/all-stocks-capitalization-around-the-world

Not a big deal, but it is unlike blended funds where the percentages are fixed.

 

[VanWinkle]

The ability to trade throughout the day is an advantage (but can also be dangerous).
ETFs can minimize capital gains by doing like-kind exchanges of stock, whereas mutual funds typically have capital gain payouts at year-end due to redemptions throughout the year.

Thanks for the info, the trade throughout the day part is what keeps me away from them. I'm glad it works well for you. My index only funds keep me from cap gain payouts.

VW

 

[RunningBum]

I like ETFs rather than mutual funds personally

My issue with ETFs is that, to my knowledge, you can't buy a set dollar amount. If I have $10,000, I can buy $10,000 of a mutual fund, and at the end of the day they will buy the number of shares and fractions to buy $10,000. I can't do that with an ETF. I have to buy a certain # of shares. So I have to do the math to get the right number of shares, and either accept the market price, or set a target price and hope I hit it.

This is especially limiting in an IRA where I can't just add a little bit of money if the shares are a little more expensive than I have planned for.

Or am I wrong about this?

 

[Ncc1701]

Thanks for the info, the trade throughout the day part is what keeps me away from them. I'm glad it works well for you. My index only funds keep me from cap gain payouts.

VW

Don't automatically assume that because you have an index only mutual fund that there won't be capital gains distributions. If many shareholders are selling at the same time (e.g. novice investors during a bear market) and the index fund has to create cash, there will be cap gain distributions from a Mutual fund. This differs from an ETF due to its structure.

 

[OldShooter]

I firmly believe that ETFs were invented for two reasons related to brokerage firms' bottom lines.

1) To reduce the amount of money that customers were pulling from brokerage houses and sending to VG, et al to buy conventional mutual funds.

2) To generate trading revenue. I think it's hilarious that SPY is always on the highest trading volume lists. Somehow I don't think that is due to passive investors' activity.
​

Both situations have changed since ETFs were invented, but certainly the action in SPY says something about the success of the concept.

I tend to avoid ETFs because I don't like the idea of "authorized participants" -- a third party at the table who does not have a fiduciary duty to investors. I think this was a factor in the temporary disconnect between ETF prices and NAV value during the recent excitement. It should not be a big deal to buy & hold investors like ourselves but it still bugs me.

 

[Love This Community]

If E Trade is waiving transaction fees for Vanguard Funds then I could understand why you're holding the account there. Otherwise I would choose a provider without a Vanguard purchase fee.

And since you're aiming for 100% stocks and are interested in total market and International, why not use Fidelity's Zero Expense funds?

Thank you all for your inputs. E*TRADE recently removed transaction fees. I was not aware of Fidelity’s zero expense funds. Will look that up.

 

[pb4uski]

I'm a fan of SWAN. Basically, they rebalance semi-annually to 90% mid-term Treasuries and 10% SPY 6-month and 12-month call options. In general it provides a return in the ballpark of the SPY but with less volatility and good risk-adjusted returns.

Blue line is SPY, red line is SWAN. Downside... it has only been available since late 2018 so limited real world history, but what there is is pretty good. Index data goes back to 2005 for the curious. 0.49% ER. YMMV.

https://amplifyetfs.com/Data/Sites/6/media/docs/Amplify_SWAN_FactSheet.pdf

 

[OldShooter]

I'm a fan of SWAN. ...

You seem to be a pretty conservative guy. How big a % of your total portfolio do you have in this fund with (IMO) almost no history?

Also, have you tried to estimate the duration of the bond portion? That would be an interesting number but I am not a bond guy and have no feel for estimating it.

 

[Koolau]

Hello ER guru’s

I’m thinking of building my after tax brokerage account with E*TRADE and want to keep a simple approach of monthly transfers from my bank account to brokerage account. Goal is to DCA around 50K over 6 months or 1 year that is currently in cash (not needed for at least 7 years)

I would like to have 100% invested in stocks. Any recommendations for a good ticker with low expense ratio? I was thinking about VTSAX 60% and similar admiral shares for total international stocks 40%.

I am also open to any other recommendations. Please let me know if I can provide any additional information.

Additional info: I have about 20% of my current after tax brokerage account investment in VOO(15%) and SPY (5%)

Already maxing our 401K accounts

As always, thank you for your help and insights!

Not sure I read your post correctly. Is your goal to invest all your cash 100% in equities or is goal to invest your portfolio 100% in stock? If 100% stock portfolio, I guess I would at least consider more like 80/20. Heh, heh, mine in FIRE is more like 30/70 so take what I say w/grain of salt. Just wondering what your approach is. As always, I won't offer advice because YMMV.

 

[copyright1997reloaded]

2) To generate trading revenue. I think it's hilarious that SPY is always on the highest trading volume lists. Somehow I don't think that is due to passive investors' activity.
[/INDENT]Both situations have changed since ETFs were invented, but certainly the action in SPY says something about the success of the concept.

A major difference between ETF's and mutual funds is the ability to short ETF's. I have on occasion taken a short position on SPY in an attempt to hedge (some of) my portfolio. [I'm not claiming that is a good strategy, only that it exists.]

 

[Love This Community]

Not sure I read your post correctly. Is your goal to invest all your cash 100% in equities or is goal to invest your portfolio 100% in stock? If 100% stock portfolio, I guess I would at least consider more like 80/20. Heh, heh, mine in FIRE is more like 30/70 so take what I say w/grain of salt. Just wondering what your approach is. As always, I won't offer advice because YMMV.

My goal is to invest $50K currently in cash into equities. I will still have cash buffer for ~8 months emergency. Just want to deploy more into the market with DCA and spread the risk by buying the market vs. individual stocks.

 

[VanWinkle]

I'm a fan of SWAN. Basically, they rebalance semi-annually to 90% mid-term Treasuries and 10% SPY 6-month and 12-month call options. In general it provides a return in the ballpark of the SPY but with less volatility and good risk-adjusted returns.

Blue line is SPY, red line is SWAN. Downside... it has only been available since late 2018 so limited real world history, but what there is is pretty good. Index data goes back to 2005 for the curious. 0.49% ER. YMMV.

https://amplifyetfs.com/Data/Sites/6/media/docs/Amplify_SWAN_FactSheet.pdf

I agree it looks good for it's short history with interest rates dropping, but then the long term treasury funds look good since then also. If/When interest rates go up, this one may be in trouble. Hard to know for sure.

 

[Ed_The_Gypsy]

These days, I am gambling (repeat: GAMBLING) on VIG in taxable-land (because of qualified dividends) and NOBL in Roth-land (because I could not find dividend details). The common theme is reliable (so far) dividends, associated with decent LTCG.

SS is my 'bond' fund.

As always, I may be wrong.

 

[Ed_The_Gypsy]

If we did not have Max SS, I would go back to Wellington.

 

[pb4uski]

You seem to be a pretty conservative guy. How big a % of your total portfolio do you have in this fund with (IMO) almost no history?

Also, have you tried to estimate the duration of the bond portion? That would be an interesting number but I am not a bond guy and have no feel for estimating it.

Right now it is pretty low... only about 5% currently, but I was totally out of equities when I first started adding SWAN to some of our accounts. I'm pretty familiar with the general strategy of combining bonds and call options from my involvement in financial management of equity indexed annuities in the 1990s so the short history of the fund isn't a big concern to me.

On your question on duration:

The U.S. Treasury securities portfolio is composed of U.S. 2-, 3-, 5-, 7-, 10- and 30-Year Treasury securities that cumulatively provide a portfolio duration that matches the initial duration of the U.S. 10-Year Treasury Note. This duration was selected as the Index’s target duration based upon the principle that the return on intermediate-term U.S. Treasury securities tends not to correlate with those of the U.S. equities markets.

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I agree it looks good for it's short history with interest rates dropping, but then the long term treasury funds look good since then also. If/When interest rates go up, this one may be in trouble. Hard to know for sure.

You can say the same of a 60/40 AA portfolio....when interest rates rise that the 40% bond component will "be in trouble"... but it is offset by gains on the stock side because the Fed will increase interest rates only if the economy is doing well.

Same thing for SWAN. If rates go up it will be because the economy is doing well, which bodes well for stocks... so the SPY calls will do well. Keep in mind that by their very nature the calls are leveraged... for example at April 30 the fund held $23m in calls that cost $25m but the notional amount was $174m... so the calls will give the fund the price appreciation of owning $174m of SPY.

While the fund has only been around for a couple years, the index goes back to ~2005 and broadly tracks the S&P 500 total return with less volatility.