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My stock advice for any rookie has always been the same: - Buy S&P ETFs, most preferably by Vanguard, because they are a non-profit and thus have very low fees
by shoto_io 5y ago
My stock advice for any rookie has always been the same:
- Buy S&P ETFs, most preferably by Vanguard, because they are a non-profit and thus have very low fees
- If you have a large sum of cash, go all-in immediately, don't wait for the perfect time
- Now, just wait, ideally 10+ years, before looking into your account again
- fmx 5y agoWhy S&P 500 specifically? Is it just because they have the lowest fees you've found? There are many index funds all over the world to choose from. What if I could find a fund with with even lower fees than VTSAX somewhere? I often hear "don't pick stocks, just buy 'the index'" - but you're still picking an index, aren't you?
- lr1970 5y ago> Buy S&P ETFs, most preferably by Vanguard, because they are a non-profit and thus have very low fees Vanguard is certainly a for-profit organization [0]. What, I think you wanted to say, that many of the Vanguard funds are index funds that do not have exuberant management fees. [0] https://en.wikipedia.org/wiki/The_Vanguard_Group https://en.wikipedia.org/wiki/The_Vanguard_Group
- tjader 5y agoHe probably meant to say that Vanguard is owned by the funds themselves, not by some external private entity. That makes their incentives be more aligned with making the funds cheap and efficient.
- abeppu 5y agoBut they did spend a long time saying that they were providing services "at cost", which was eventually removed. https://www.inquirer.com/columnists/john-bogle-vanguard-scraps-plain-talk-no-profit-at-cost-20190207.html https://www.inquirer.com/columnists/john-bogle-vanguard-scra...
- shoto_io 5y agoYes, you're right, I was not precise. That's what they used to say about themselves: “The Vanguard Group is truly a mutual mutual fund company. It is owned jointly by the funds it oversees and thus indirectly by the shareholders in those funds. Most other mutual funds are operated by management companies that may be owned by one person, by a private group of individuals, or by public investors. ... The management fees charged by these companies include a profit component over and above the companies’ cost of providing services. By contrast, Vanguard provides services to its member funds on an at-cost basis, with no profit component, which helps to keep the funds’ expenses low.”
- lelandfe 5y agoThis is great advice for a young rookie, Bogle would be proud. Folks later on in life may not have the timeline to stomach that risk, however.
- shoto_io 5y agoYeah, right. Older rookies should follow this advice only if they want to invest that money for later generations.
- SketchySeaBeast 5y agoBut if those who are older need even less risk, the good option still isn't picking individual stock.
- choward 5y ago> Now, just wait, ideally 10+ years, before looking into your account again That might not be the best idea because of escheat. Here's a story about someone who didn't check on their stocks for years and the state claimed them. https://www.npr.org/transcripts/799345159 https://www.npr.org/transcripts/799345159
- lisper 5y agoIt is also wise to look at your accounts at least once a year because some of your investments might pay dividends that you have to report on your tax returns.
- cehrlich 5y agoFor most major ETFs there are accumulating versions that automatically re-invest any dividends into the ETF. A good choice for the lazy investor IMO.
- lisper 5y agoYou still have to pay taxes on those dividends in the year they are paid.
- klipt 5y agoIn America, yes. The person you're replying to seems to live in Europe. I believe in many European countries there's no tax on accumulating ETFs that reinvest dividends, until you sell them and realize the capital gain. In a way this erases the tax efficiency difference between dividends and buybacks.
- melenaboija 5y agoThe poster says buy S&P ETF and walk away not stocks.
- thebean11 5y ago
- cehrlich 5y agoAgree in almost all ways: - ETFs, Vanguard is a good choice for most. If you're older and might need a large percentage of the money fairly soon, consider getting some bonds as well. - Don't try to time the market - Don't think you're smart The only personal difference is I prefer FTSE All World as it is diversified into over 4000 global stocks, while the S&P 500 is (obviously) 500 American stocks. That being said the S&P 500 has been outperforming the FTSE All World for a long time, and I certainly don't want to give anyone specific investment advice.
- jandrewrogers 5y agoMany companies in the S&P500 source much of their revenue globally. They are registered as US companies but their business exposure covers the world, so you achieve much of the same diversification but in a US legal framework for business and securities.
- lvl100 5y agoThis is such a bad advice. Buying an index is what they want you to do. They want you to buy and hold until you retire. Do you not see the problem with that logic?
- asimpletune 5y agoI don’t see the logic, can you explain this more?
- bestcoder69 5y agoAnd the sickest part of their whole plan is the part when you get to withdraw more money than you put in. Luckily, crypto solves this problem.
- shoto_io 5y agoWho is “they”?
- 5y ago
- logicalmonster 5y agoHistorically speaking, I think this has been one of the best things an average person could do within the context of a stable, safe, free, and productive society, but I don't think this kind of generic advice is really persuasive in the different and more turbulent world that exists right now. Additionally, because of many societal conditions, right now many people think they need to hit on a moonshot to have a good life. And given the direction that inflation and many other things seem to be headed, it's harder to argue that they're wrong. Slightly increasing your financial floor matters little if the floor is still dirt.
- shoto_io 5y agoThat's the story for many decades now. It turned out wrong every time. See for example: https://ritholtz.com/2019/08/death-of-equities-40th-anniversary/ https://ritholtz.com/2019/08/death-of-equities-40th-annivers...
- SantalBlush 5y agoVery true. On the other hand, it was previously believed that the real estate market could never go down, which led to highly leveraged positions in that market from homeowners to banks.
- epistasis 5y agoOwning equities (through index funds) is one of the best ways to always beat inflation. They are the part of the economy that appreciates because of future returns, in future money, not past dollar amounts. That said, most of current CPI "inflation" is not economy wide price increases, but comes from 1) car prices, because car manufacturers massively messed up and production is way down for the past two years, and 2) energy, which is from several global market issues. There's also housing, which is not in CPI, but that's also easily attributable to underproduction of housing since 2008 (and probably even for decades before that, honesty). We are actually in incredibly good economic times, especially considering the massive destruction that the pandemic has wrought, and in the US, the lowered number of workers due to years of reducing immigration. I am glad people are not overly exuberant, but I with they were focused on the things that mattered more.
- hartator 5y ago> Buy S&P ETFs Nitpicking but S&P has multiple indexes. And you probably mean just a total stock market indexes; not necessary S&P.
- shoto_io 5y agoYes absolutely… my fault, should have been more specific. I was referring to the S&P500 index.