Total Stock Market

[geeman]

Well, I'm taking the plunge into taxable investing. I have $8,000 that I would like to invest in the Vanguard TSM. I was wondering if this is a good time to buy...I know I am breaking a fundamental law of investing...trying to time the market. But with all this talk about feds raising rates and the market dropping, I was wondering what the Diehards though?

[Nords]

Quote:

Originally Posted by geeman Well, I'm taking the plunge into taxable investing. I have $8,000 that I would like to invest in the Vanguard TSM. I was wondering if this is a good time to buy...I know I am breaking a fundamental law of investing...trying to time the market. But with all this talk about feds raising rates and the market dropping, I was wondering what the Diehards though?

Well, if you're spoiling for a fight, and for lectures from Taylor & Mel, just try posting that at the Vanguard Diehards board...

[justin]

I'm not a market timer. I recently sold a condo and put most of the proceeds into the market on one day. One option to consider is putting the $3000 minimum in the TSM fund, then dollar cost averaging in $500/month for the next 10 months. That way, if the market crashes the day after you put in your $3000, you can continue to buy low going forward.

In the long run, that $8000 will be a small part of your total net worth. However in the short run, losing a big chunk of the $8000 due to volatility may sour you on future risk-taking.

[geeman]

I was hoping the market was going to go down due to gas prices and the hurricane...no luck

[justin]

Just wait. The market will go down. The unknowns are when it'll go down, how much it'll go down and how long it'll go up before it'll go down. I don't have any answers for those, which is why I'm not a market timer.

[geeman]

I really want it down to 10300 when I buy.

[justin]

I assume you know 10300 is DJIA and TSM is the whole market - large, mid and small caps. I think if you had to pick just one index fund, TSM is a good one though.

[geeman]

It's just that it took me a long time to save that $8000 and I dont want to watch it disappear. How about if I DCA $3000 (minimum) and than DCA the rest.

[JPatrick]

If you are investing for the long term I'd do it today.
BTW, I know nothing about your other holdings, but if I were going to buy only one index for the long run, I'd buy an extended market index (total market less the 500).* At some later time I'd add a S&P 500 maintaining a ratio of 2 to 1 with the extendedl index being the larger.
Check out the performance records of the Total, 500, and extended.

[azanon]

Quote:

It's just that it took me a long time to save that $8000 and I dont want to watch it disappear.

If stability of principle is a high concern for you, i do not recommend the stock market. The stock market is for long-term growth of capital and really just isnt that appropriate for investment time horizons less than 5 years, unless you consider yourself really risk tolerant.

[geeman]

I plan to keep the Total Stock Market fund for atleast 35 years, DCA $50 a week after the initial $8000. Within the year I want my portfolio to look like this:

Roth IRA:
15% Target Retirement 2045

Taxable:
45% Total Stock Market
20% Tax-Managed International
20% I Bond

[wildcat]

You are young, a long-term investor & I imagine you are going to DCA over time.........who cares about timing? *If you can't stomach the risk then don't play the game but it is absurd for someone in their 20's to worry about a drop in value. *Actually you should welcome it. *My account regularly loses/gains $1000 in a week.

[JPatrick]

Quote:

Originally Posted by geeman I plan to keep the Total Stock Market fund for atleast 35 years, DCA $50 a week after the initial $8000.* Within the year I want my portfolio to look like this: Roth IRA: 15% Target Retirement 2045 Taxable: 45% Total Stock Market 20% Tax-Managed International 20% I Bond

Just my two cents of course, but I'd say that portfolio is far, far to conservative for a 35 year horizon. *However, it is you that must sleep at night.

[geeman]

I could also increse the TSM to make it less conservative.

[wildcat]

Also Geeman if you want I bonds you may as well them in you tax def account.

[Cal]

Quote:

Originally Posted by wildcat Also Geeman if you want I bonds you may as well them in you tax def account.*

I'm not following. Why would you want I-bonds in a tax deferred account? Interests accrues tax deferred until you cash the I-bond. What added benefit is there to keeping them in a tax deferred account?

[wildcat]

My mistake..didn't realize they were deferal based

[JPatrick]

Quote:

Originally Posted by geeman I plan to keep the Total Stock Market fund for atleast 35 years, DCA $50 a week after the initial $8000.* Within the year I want my portfolio to look like this: Roth IRA: 15% Target Retirement 2045 Taxable: 45% Total Stock Market 20% Tax-Managed International 20% I Bond

Besides my earlier comment about TSM, I'd add the following:
I-Bonds are fine, but not 20%. How about 10% I-Bonds and 10% REITS or something like FNMIX. Check out the long term record on FNMIX.
20% International is fine if the fund you are using is decent and the fees are low. Having some emerging markets is vital.
Ref your retirement 2045- - I've always felt the average person who wanted to work at it a little could beat this type of fund.

I also think that a person your age needs to swing for the fences with 20 % of your stash.* By that I mean buying some ETF's and/or sector funds so you are riding the current wave.* Look at the $$made in energy the past 3 years.* It takes some extra work, but the right sectors will put your portfolio on steroid.

[geeman]

So where is a good starting point. I already have $4000 in a Roth with Vanguard (retirement 2045) and A 401k with about $300 in it (S&P and Salyes and Loomis bond). I just transfered $3000 out of my Money Market today to invest. I was going to buy $3000 Total Stock Market tomorrow. Is this a good idea?

geeman,

Why don't you just put the whole sum in the Vanguard Target 2045 and forget about it. That's 40 years from now. And then resist the urge to putz.