Opinions on these Mutual Funds

[Michael Rankin]

Any one have any thoughts on the vanguard Growth Index Fund VIGAX, Or Vangaurd Total Stock Market Fund VTSAX for a 42 year old guy. This would be long term investment for retirement. Seems like they both do very well long term with low fees.

Also considering the Vangaurd VFORX Target 2040 retirement fund. The fees are higher on this.

I thought of just investing half each month in each of the first two, put it all in the target 2040 retirement fund, or a 1/3 in each of the three every month.

I’m leaning towards just splitting between the three.

Seems like there’s a lot of experienced investors on here, and I always like hearing a large variety of perspectives on a topic to consider.

 

[PNWGATOR]

Might jump on boggleheads and get some feedback there too.

 

[SDHNTR]

Pros: low cost (but fees aren’t everything). Decent diversification (although not complete, you’re still missing important portfolio components). Good past performance (not to be confused with future performance!). Good for small investors who want a brainless, set and forget option. Definitely better than doing nothing.

Cons: You are blindly throwing money at assets without regard for valuation. This could have huge negative repercussions in the future that have not been experienced in the recent past.

Consider this: Do our armed forces go into battle without a battle plan? Does an NFL team step foot on the field on Sunday without a playbook? Does a contractor even break ground to build a house without a set of plans? Do you start training for a triathlon without a training plan? Why are you even considering investing your hard earned money without a financial plan first? This money needs to last you 40-50 years, you’re going to just shoot from the hip and plunk some money down and hope for the best? No, you need a formalized, written financial plan to guide you properly along the way. Then you can invest confidently, without guessing or asking a bunch of mostly broke hunters on the internet.

Plan first, then invest. The horse goes in front of the cart. Good luck!

 

[kirk.ringey]

I use Vanguard, and although I do my own investments I know they have advisors that can help. I would recommend this as well.

To answer your question though the Total Stock Market is a safe fund that will follow the market, VIGAX looks to be large cap. I wouldn't do the target retirement account as it won't produce the returns and go more conservative as years go on. I'd throw in small/mid cap growth as you're a ways away from retirement.

 

[Michael Rankin]

SDHTR,

This is definitely just a new portion of an overall plan.

Definitely not planning on putting any info offered by random people into action.

I know there’s lots of people here that have probably invested in some of these funds.

I have seen you post here and on Bowsite , and pretty you are a financial planner that others have commented on being very happy with your services. There’s lots of people with valid experiences such as your self that may have a nugget of info that would lead me to do some further research. I’ve read a lot of these forums for a lot of years, and know there is definitely some people that if they offered advice, it would be something that I would consider as suggestion to investigate further.

I did speak with a financial adviser recently. After going over all my personal information she said she could do a full financial plan for me. She really didn’t think I would get much benifit from spending $3000 dollars to do that. She did say she could manage this portion of investments if I didn’t want to find the funds my self, and wanted professional management for a few.

This money would not be in Roth or 401k type retirement accounts.

Thanks for the input, and definitely sound overall advice

 

[SDHNTR]

I wouldn't do the target retirement account as it won't produce the returns and go more conservative as years go on.

Getting more conservative as years go on is exactly the point of Target Date funds. They are supposed to do that, and therein lies their value. You absolutely cannot say the fund won't generate returns! A healthy understanding of risk-adjusted returns is relevant here.

 

[WDE91]

I'm a big fan of VTSAX.
It's a major holding in my Roth IRA.

Over the long term, returns are as close to guaranteed as you can get.

 

[WDE91]

On the target date funds, if you're interested in being a bit more aggressive, you can pick a date beyond what your actual retirement date is.
IE if you're planning on retiring in 2040 but want aggressive, consider 2055 etc.
That would expose you to more equities and fewer bonds by default.

The biggest thing to remember is that retirement is/can be a number and not strictly an age.

 

[timmymac24]

I would also suggest reading some basic personal finance books if you haven't done so. They seem to follow the same mantra but they help people get rolling. Hats off to you for getting investments going that's more sadly than most of our population does today. I have money in all the funds you have listed and have been happy with the past performance.

 

[roadrunner]

hen you can invest confidently, without guessing or asking a bunch of mostly broke hunters on the internet.

Mostly broke hunters don't post on internet forums...

 

[KHNC]

Any one have any thoughts on the vanguard Growth Index Fund VIGAX, Or Vangaurd Total Stock Market Fund VTSAX for a 42 year old guy. This would be long term investment for retirement. Seems like they both do very well long term with low fees.

Also considering the Vangaurd VFORX Target 2040 retirement fund. The fees are higher on this.

I thought of just investing half each month in each of the first two, put it all in the target 2040 retirement fund, or a 1/3 in each of the three every month.

I’m leaning towards just splitting between the three.

Seems like there’s a lot of experienced investors on here, and I always like hearing a large variety of perspectives on a topic to consider.

I am looking at FDGRX from Fidelity. The return history is much higher in every category than the ones you mentioned , and is a 5 star fund. Any thoughts on it vs others?

 

[WDE91]

I am looking at FDGRX from Fidelity. The return history is much higher in every category than the ones you mentioned , and is a 5 start fund. Any thoughts on it vs others?

I have no first-hand experience with that fund, but an expense ratio of 0.83% for what generally appeared to be a US large cap/S&P500 with 5-10% International type fund doesn't seem worthwhile.

You can likely easily accomplish the same/similar results with the Fidelity ZERO funds which I'm a big fan of.
FZROX(Total US)
FNILX(S&P500) they call it Large Cap but it's a S&P500 fund.
FZILX(Total World)

Returns aren't guaranteed, but expenses are. Call me a cheaparse but I much prefer 0.00% over 0.83%.
Signed broke huntar of da interwebz

 

[Doc Holliday]

Lol, good old internet......you can't just ask a question to be taken at face value. People always have to make assumptions or try to make you look stupid for asking the question. For all they know you have $2M already invested across real estate and several other types of hard and liquid assets.

I think with this thought, you were thinking 1/3 into growth, 1/3 into the market index, and 1/3 with a fixed income component....I get it.

The top 7 holdings of VTSAX and VIGAX are the exact same (below). The difference is the top 10 comprise 50% of VIGAX, but only 25% of VTSAX. VTSAX is basically a watered down version...it is different, but not different enough where I would invest in both.

1	Apple Inc.
2	Microsoft Corp.
3	Alphabet Inc.
4	Amazon.com Inc.
5	Tesla Inc.
6	NVIDIA Corp.
7	Meta Platforms Inc.

VIGAX: https://investor.vanguard.com/mutual-funds/profile/VIGAX
VTSAX: https://investor.vanguard.com/mutual-funds/profile/vtsax

If you want to invest 1/3 in a target fund, 1/3 in a total equity market fund like VTSAX, I would recommend your 1/3 growth fund (instead of VIGAX) be something a little more aggressive, yet still diversified within itself, like QQQ.

 

[Michael Rankin]

I was way to vague in my initial post on what I was trying to do, and filled in the details on the second post. It did sound like I was maybe trying to start a retirement account, and have no previous investments. I was just looking at some different funds to put money in a regular taxable brokerage account.

If a guy was just starting out trying to figure out his entire financial planning, talking to a pro would probably be about the best advice he could get. It still could be great advice for me as well. Yo can never have too much info.

Thanks for the responses and ideas.

 

[Phaseolus]

I am looking at FDGRX from Fidelity. The return history is much higher in every category than the ones you mentioned , and is a 5 star fund. Any thoughts on it vs others?

FDGRX is closed to new investors, it’s been a workhorse in my portfolio for 35 years.

 

[kirk.ringey]

I think when you mentioned the target retirement fund folks assumed it was in regards to retirement.

Good for you for doing some research before dumping money into something. I own both of those Vanguard funds (growth and total market). Not overly exciting but very low risk as well if you're holding them for awhile.

 

[SDHNTR]

The top 7 holdings of VTSAX and VIGAX are the exact same (below). The difference is the top 10 comprise 50% of VIGAX, but only 25% of VTSAX. VTSAX is basically a watered down version...it is different, but not different enough where I would invest in both.

1	Apple Inc.
2	Microsoft Corp.
3	Alphabet Inc.
4	Amazon.com Inc.
5	Tesla Inc.
6	NVIDIA Corp.
7	Meta Platforms Inc.

This concentration is a very important concept to grasp. It is partially what I’m referring to when I said improper or unaware indexing can lead to throwing money at assets without regard for valuation. Unknowingly, I’d be willing to bet that the vast majority of index investors are unaware they are doing this or why/how it creates additional risk. I’m not at all saying index investing is bad, I do it too, but you need to understand what you are getting into. Especially now! Many of these indices are cap weighted, most certainly the S&P 500 index is! So what ends up happening is the largest companies by market cap end up being the largest holdings in your portfolio. And most index funds will end up with many of the the same top positions by nature of this cap weighting too. Right now, most of the largest holdings are tech, as illustrated above, so when one thinks they are getting a broadly diversified portfolio, they are not. Their portfolio is heavily weighted in one sector. One sector that is known for over valuation and bubbles. With investor concentration and a simultaneous cyclical rotation in this sector, the downside could be extreme, all the while the investor thought they were doing the right thing by buying low cost, “diversified” funds. Again, I’m not shading index funds, just saying do your research and don’t just indiscriminately sink money into them because they’ve had good performance for the last 10+ years and they are cheap. And certainly don’t go into them thinking they are “low risk” as some have claimed. Buyer beware.

 

[WDE91]

This concentration is a very important concept to grasp. It is partially what I’m referring to when I said improper or unaware indexing can lead to throwing money at assets without regard for valuation. Unknowingly, I’d be willing to bet that the vast majority of index investors are unaware they are doing this or why/how it creates additional risk. I’m not at all saying index investing is bad, I do it too, but you need to understand what you are getting into. Especially now! Many of these indices are cap weighted, most certainly the S&P 500 index is! So what ends up happening is the largest companies by market cap end up being the largest holdings in your portfolio. And most index funds will end up with many of the the same top positions by nature of this cap weighting too. Right now, most of the largest holdings are tech, as illustrated above, so when one thinks they are getting a broadly diversified portfolio, they are not. Their portfolio is heavily weighted in one sector. One sector that is known for over valuation and bubbles. With investor concentration and a simultaneous cyclical rotation in this sector, the downside could be extreme, all the while the investor thought they were doing the right thing by buying low cost, “diversified” funds. Again, I’m not shading index funds, just saying do your research and don’t just indiscriminately sink money into them because they’ve had good performance for the last 10+ years and they are cheap. And certainly don’t go into them thinking they are “low risk” as some have claimed. Buyer beware.

SDHNTR, mind if I shoot you a message to pick your brain some?

 

[SDHNTR]

SDHNTR, mind if I shoot you a message to pick your brain some?

Sure thing

 

[BwanaKubwa]

I agree with the thought that tech stocks are overvalued, but right now what isn't? Also being cap weighted would make me more confident in its performance during a crash. Those large companies are the first to get govt support, have products in most households, and make more money than some small countries.