Where to put 300k?

[oldnews]

Hi, new to the site. Rolled over 300k to my Schwab IRA. No debt. Thinking about index funds?...anyone.

 

[NW-Bound]

I just made a replying post in the other thread, but will copy it here.

Schwab is one of 4 brokerages that I have accounts with.

Schwab has several ETF funds with very low expense ratios, such as 0.04% or 0.07%. You can buy domestic total market, or large cap, small cap, international, or emerging market ETFs, etc... As to selecting the right composition for yourself, you may need to do some reading.

PS. As you have an account with them, trading of their ETFs is commission-free.

 

[photoguy]

what was it in before you rolled it over?

 

[joebloe]

saved.

 

[pb4uski]

It really depends on what your personal target AA is and how your existing AA relates to your target AA. There are loads of good, no-load, low-cost equity and bond index funds available as well as good balanced and target date funds, but a lot depends on what your target AA is (and your target AA depends on your time horizon and risk tolerance).

While I own equity and bond index funds, if I were to own a balanced fund I would look at Vanguard Star (which I have owned in the past), Vanguard Wellington and Vanguard Wellesley.

 

[oldnews]

Decided on Disney...(DIS)...bought 5500 shares for 280,000. Pays a dividend, incredibly good revenue stream, just bought LucasArts.

 

[kumquat]

From index funds to DIS. Sounds like a movie. Best wishes.

 

[Animorph]

I just made a replying post in the other thread, but will copy it here.

Schwab is one of 4 brokerages that I have accounts with.

Schwab has several ETF funds with very low expense ratios, such as 0.04% or 0.07%. You can buy domestic total market, or large cap, small cap, international, or emerging market ETFs, etc... As to selecting the right composition for yourself, you may need to do some reading.

PS. As you have an account with them, trading of their ETFs is commission-free.

+1

 

[oldnews]

something wrong with DIS?

 

[73ss454]

I think the Bogleheads would say you are now in Disney Land.

 

[ShortInSeattle]

something wrong with DIS?

I think a lot of people here would say buying that much of a single stock is quite risky. "Putting all your eggs in one basket."

SIS

 

[pb4uski]

I think a lot of people here would say buying that much of a single stock is quite risky. "Putting all your eggs in one basket."

SIS

Nothing wrong with Disney. Great company.

But having such a large amount in a single ticker is foolish IMO. I hope you get lucky and it works out for you. Good luck.

 

[NW-Bound]

I have not owned DIS, and do not follow it. So, this made me curious to take a quick look.

Compared to SPY, a surrogate for the S&P500, DIS's dividend is 1.2%, vs. SPY at 1.98%. P/E ratio of DIS is 16.6 vs SPY at 14. The growth prospect of DIS looks better than SPY according to analysts, so I guess the market gives DIS a price premium.

It is not a bad company, but it's the lack of diversification that most people would worry about. I myself never put more than 5% in any company. But it may just work out for you, who knows?

By the way, the market has been closed due to Hurricane Sandy, so how did you buy it?

PS. Out of curiosity, $280K/5500 = $50.91/share. The quoted price at Friday 10/26/02 close was $50.08.

 

[Gill]

Decided on Disney...(DIS)...bought 5500 shares for 280,000. Pays a dividend, incredibly good revenue stream, just bought LucasArts.

I hope you're pulling our leg. The only way you should even consider this much in one stock is if the $280,000 is about 5% of your $5.6 million portfolio. Somehow I feel someone jerking our chain.

Also, OP, are you really from the Smoky Mountains? I wonder, because you don't spell it correctly.
Bruce

 

[Midpack]

something wrong with DIS?

Not at all, but a little less diversification than an index fund no? You mentioned an index fund in your first post...

Like others have said, I'd never put more than 5% of my portfolio in an individual equity, no matter how wonderful and bulletproof I thought the company was/is. You never know who the next WaMu, Circuit City, Enron, Borders, Nortel, Wachovia, Lehman Bros., etc. may be. The list is a mile long. Best of luck...

 

[obgyn65]

I would invest in CDs, laddered, for 10 years. If you are in your 70s or 80s, I would buy SPIAs. My view only, I know others will disagree.

Hi, new to the site. Rolled over 300k to my Schwab IRA. No debt. Thinking about index funds?...anyone.

 

[pb4uski]

I would invest in CDs, laddered, for 10 years. If you are in your 70s or 80s, I would buy SPIAs. My view only, I know others will disagree.

Why not plunk the whole amount into Disney?

 

[73ss454]

I don't know about laddering CD's, I think you would get eaten up by inflation.

 

[Animorph]

something wrong with DIS?

I was happy with 5% of my portfolio in any one individual stock. I had one or two of them that actually went to zero. You never know. I'd be happy with 100% of my portfolio in one broad based mutual fund. It's invested in lots of companies. It's not going to go to zero. As good as Disney may be, it's just one company. One big accounting glitch and your portfolio could be toast. Permanently.

 

[obgyn65]

I have nothing against Disney. I am just more conservative with my investments than most participants here. It is ok to disagree.

Why not plunk the whole amount into Disney?

 

[timwalsh300]

While I own equity and bond index funds, if I were to own a balanced fund I would look at Vanguard Star (which I have owned in the past), Vanguard Wellington and Vanguard Wellesley.

Interesting. I like balanced funds. Of those three, I prefer the one not mentioned: the Balanced Index Fund. With Admiral Shares (VBIAX), its expense ratio of 10 basis points is about 1/3 the cost of the others.

Tim

 

[Bestwifeever]

Decided on Disney...(DIS)...bought 5500 shares for 280,000. Pays a dividend, incredibly good revenue stream, just bought LucasArts.

That's almost like the natural resources mutual funds your profile says you are interested in.

 

[Animorph]

Interesting. I like balanced funds. Of those three, I prefer the one not mentioned: the Balanced Index Fund. With Admiral Shares (VBIAX), its expense ratio of 10 basis points is about 1/3 the cost of the others.

Tim

Yeah, but the others have performed better over the last 10+ years. Was it skill or luck?

 

[timwalsh300]

Yeah, but the others have performed better over the last 10+ years. Was it skill or luck?

Luck. Over the last 10 years a long-term bond index fund, without any stocks at all, did better than all of them.

The bond side of the Balanced Index is mostly intermediate-term government debt. Wellington and Wellesley hold long-term corporate debt, so they benefited far more from falling interest rates. It's hard to expect the bond side of their portfolio to outperform so dramatically going forward.

Tim

 

[Animorph]

Luck. Over the last 10 years a long-term bond index fund, without any stocks at all, did better than all of them.

The bond side of the Balanced Index is mostly intermediate-term government debt. Wellington and Wellesley hold long-term corporate debt, so they benefited far more from falling interest rates. It's hard to expect the bond side of their portfolio to outperform so dramatically going forward.

Tim

But they have the opportunity to move to shorter term debt or even less bonds. The index will stay (relatively) static. While they may or may not be great stock pickers, they could be good at rotating among different asset types. That's tougher to benchmark.