Hi guys - I have recently consolidated my brokerage taxable stock account (not retirement) to just a few stocks.
I'm looking to focus my long term investing on 1 or 2 funds going forward. I have a sizable chunk of SPY (about 50% of my portfolio) and some VTI (about 10%) of my portfolio (the rest is AAPL, and another I'm too ashamed to admit to lol). I know there is a lot of redundancy between the 2 (SPY/VTI). The expense ratio for SPY is .09 and for VTI it's .03.
Should I pick one to just invest in at regular intervals or do a little of both? Is SPY better because it captures more tech?Is that expense ratio a huge difference or is .09 still considered relatively low?
Thanks fellas
This will give you more rounded exposure, but by eliminating individual stocks it will reduce the risk.
Ashamed to admit I bought into Coinbase when it was really really high. I'm down on it but I won't sell in case it ever does rebound.
AAPL is the largest single stock held in SPY, it's probably big in VTI too. That's a large chunk of your overall portfolio.....not that AAPL is going to go belly-up anytime soon.
Do you have a 'sector' that you like to follow ?? Anything particular in your Work Experience ? Health Care ? Energy ?
A play on AI like BOTZ has been blowing up lately.
?Look at some of the Spider ETF's.
You're still young, plenty of time.
Ashamed to admit I bought into Coinbase when it was really really high. I'm down on it but I won't sell in case it ever does rebound.
For future reference. The number one priority when investing is preserving your capital. Use stop losses whenever you are speculating on a stock. Don’t fall in love or marry a stock to the point you continue to ride downwards. If it no longer has the same valid reasons for initially buying it be willing to cut your losses and get out.
We’ve all been there but if you can learn to be disciplined with losers you will make much more over a lifetime of investing.
As a fiduciary, I encourage my clients to diversify. I do not use ETFs or mutual. Especially for a taxable account, these pooled investments are very tax inefficient. And if pooled investments are used for fixed income exposure, that is dangerous, as 2022 has showed us.
Once in retirement, it is about distributions, and the ability of your portfolio to generate the income you need to maintain your lifestyle. ETFs and mutual funds limit your ability to generate the necessary income.
Just my two cents, It is how I work with clients and difficult to steer clients away from stocks that have treated them very well.
Quote:
I wish i had started feeding into SPY in 2015 when i first started "investing"...heavy emphasis on the quotations.
You're still young, plenty of time.
I know i get it. Live and learn. I've fed it pretty well the past few years....but I just look back at some of the...lets say ill-advised investments made and what that money would be today if it were in SPY. Again, lessons learned!
Also, as a CFP, if you don’t recommend ETFS/mutual funds, what do you offer your clients?
Also, as a CFP, if you don’t recommend ETFS/mutual funds, what do you offer your clients?
I am not a cfp but use one
You cannot sell individual stocks and harvest tax losses
I use a variety as actively managed accounts so you can see the stocks within. Basically looking under the hood and can weight positions accordingly.
Also if you have say 100 shares of apple you can then do covered calls with them vs selling outright
Also, as a CFP, if you don’t recommend ETFS/mutual funds, what do you offer your clients?
You get those “ phantom capital gains” yr end in taxable accts
My clients get pissed when they pay taxes on something they haven’t sold
Always a pleasant discussion
As a fiduciary, I encourage my clients to diversify. I do not use ETFs or mutual. Especially for a taxable account, these pooled investments are very tax inefficient. And if pooled investments are used for fixed income exposure, that is dangerous, as 2022 has showed us.
Once in retirement, it is about distributions, and the ability of your portfolio to generate the income you need to maintain your lifestyle. ETFs and mutual funds limit your ability to generate the necessary income.
Just my two cents, It is how I work with clients and difficult to steer clients away from stocks that have treated them very well.
I am not a CFP
But in the camp of keeping it simple for the first 1/2 million of retirement funds
SPY is definitely top heavy but a solid start. Is still own vanguard Wellington too
Classic balanced fund. But that in my 401k so don’t have to worry about tax efficiency
Isn’t the QQQ still mostly tech?
Or not anymore?
Johnny can give a solid asset allocation
Small cap and foreign should probably be included too
Also, as a CFP, if you don’t recommend ETFS/mutual funds, what do you offer your clients?
So, RSmith you are telling me I am wrong? Really? Are you in th financial services business?
ETFs are NOT tax efficient. They exist to allow small individual investors the opportunity to hold a basket of stocks for a low cost. As mentioned, tax loss harvesting cannot be done when investing with ETFs. You also do not know what you own at any point in time, so transparency is non- existent.
I build portfolios with individual stocks and corporate or muni bonds. My portfolios reflect my cliens' goals and risk tolerance, so I am able to cuatomize the portfolio to reflect these goals and risk tolerance. Every client is different. ETFs and mutual funds do not offer transparenct and customization. I believe in knowing what you own, and, more importantly, why you own it. ETFs and other pooled investments try to fit a square peg ina round hole.
Quote:
ETFs are not tax efficient? I thought that’s exactly what they are used for and one of the main reasons they are chose over mutual funds.
Also, as a CFP, if you don’t recommend ETFS/mutual funds, what do you offer your clients?
I am not a cfp but use one
You cannot sell individual stocks and harvest tax losses
I use a variety as actively managed accounts so you can see the stocks within. Basically looking under the hood and can weight positions accordingly.
Also if you have say 100 shares of apple you can then do covered calls with them vs selling outright
Well said. Thank you.
Other inefficiencies are diversification, or lack there of, as already mentioned. Ability to manage risk is another- ypou have to control over what is in the portfolio. And owning more than one pooled investment may indicate you are diversified, but most of these funds own the same seven names, so you are just doubling down.
I work with a lot of clients who are retired and depend on their portfolio for income. I can target a yield, say 4%, 4% 5% or more, and also directly control the allocation between stocks and bonds.
In fixed income ETFs, you never hold your bond to maturity. In an environment like 2022, where interest rates are rising (and bond values falling), fund managers were forced to sell securities to satisfy redemptions, selling at a loss. As a fund holder, the value of your investment is determined by other investors. I like to think of it as swimming in a public pool vs. a pool in your own backyard. Owning individual bonds allows you to hold the bond to maturity, thus recouping the money you lent.
Also, what do you think about I-bonds from Treasury Direct? I have most of my fixed income stuff there.
I bought SPY in March 2020 when the market tanked, i dont have any qqq right now but how is one better than the other?
I bought SPY in March 2020 when the market tanked, i dont have any qqq right now but how is one better than the other?
Caveat. I may be mentally challenged. BUT
I bought some Tesla and nvidia pretty low ( over the last yr). :)
Will be volatile as hell, probably way over valued But both can also triple by 2030
Apple is my core. Does it beat market over next 5-7 yrs?
Will see how VR/AR takes off ( it will take a few yrs. But that product has crazy potential as they bring price down etc. also interested on how they get into autonomous cars, if at all)
90% of my funds are in etfs/ funds in retirement accts. Only speculate/ individual stocks last 10%
I'm older, so I wanted to see my investments. I am no fan of Vanguard, Fidelity, or Blackrock. I want to know where my money is going!
Good luck with your plans.
Yup. You're speaking my language.
Good job. This is the way.
I'm older, so I wanted to see my investments. I am no fan of Vanguard, Fidelity, or Blackrock. I want to know where my money is going!
Good luck with your plans.
Agree 100%. I am the same way and stay away from investments made of paper.
All of the true wealth I have been able to build has come from real estate investments. No matter what the market is doing, real estate is always profitable.
With interest rates up, this is a great time to buy. If you are not comfortable diving in on your own, you can always invest with others who are developers and who know what they are doing.
Boom! This. I can guarantee you almost all the money managers out there can't touch the S&P 500. You're just wasting money outside the 'cheaper' index funds.
Also, what do you think about I-bonds from Treasury Direct? I have most of my fixed income stuff there.
This is NOT a professional opinion. As far as Ibonds, you can now do better with investing in CDs getting 5% and above. However, if you have money already in IBonds, I wouldn't put new money into them. I would consider buying Ibonds that have a 0.9 fixed rate ABOVE inflation. That rate will last until through end of October. If you already invested your $10,000 per person this year, you can gift $10,000 to your spouse (and vice versa), locking in the rates at that time, and get them delivered in January 2024. Consider cashing $10K of your existing Ibonds that have a 0% fixed rate.
Pay attention to when the best time to cash those Ibonds. Follow the linked article below as to when the best month to exit your Ibonds.By the way, this website has many interesting and informative articles about IBonds. They will figure out what the variable rates will be two weeks before they are published by the Government. (Fixed rates won't be known until the Government announces them)
Personally. I am waiting until Mid October to hedge my bets as to what to do with my next purchase and sale. If i was to decide today, I will sell existing IBonds (0 percent fixed) I bought in January 2022, and use those funds to gift myself 2024 bonds, locking in the 0.9 fixed rate forever.
I hope this helps you about IBonds.
When to exit your IBonds - ( New Window )
I’ve been teaching my son this very thing, he is working while in college and already is off to a nice start. Compounding is such a powerful tool in investing and by far time us the most powerful factor in that equation
Good job!
I am with Penkap here. My head starts swimming when I read through Barron's and try to get a grasp on the nuances high finance. By and large, I own the same bluechip stocks and mutual funds I bought a long time ago that I rarely--if ever--dip into. If the world implodes and the whole thing goes belly up then I'm sure I will turn to the experts who are admittedly much brighter than I am, but thus far the "keep it simple, stupid" strategy has served me well.
Good for you! I like hearing things like this. I'm 64 and retired. When I was younger all I heard was you have to diversify and stick with the 60/40 rule. I didn't listen and did my own thing which involved heavy tech. My portfolio didn't get to $3 mil, but it was good enough with my pension to reire comfortably at 59 1/2.