Around the World in Eighty Days

**disneysteve** · 12-22-2006, 05:26 AM

Re: Around the World in Eighty Days

Originally posted by Duchesse

I've been considering ETFs to help diversify my portfolio and get international and emerging market exposure.

these I am considering adding to my IRA, that is buying at dollar cost averaging.

Is there such a thing as "too diversified"?

I think mutual funds are better if you are dollar cost averaging since there are no transaction fees. With stocks or ETFs, you pay a commission every time you buy shares which eats into your investment.

Can you be "too diversified"? Kind of. What often happens is people buy so many funds that many of them overlap. Probably the simplest portfolio would be a total US stock market index, a total bond market index and a total international stock index.

Morningstar.com has a portfolio "x-ray" feature where you can enter your funds and get a breakdown of the allocation you've got. You might want to plug things in to that and see what you've got.

**kv968** · 12-22-2006, 02:18 PM

Re: Around the World in Eighty Days

Just to reiterate what Steve said, if you're dollar cost averaging, ETF's aren't the way to go due to the commissions incurred when buying. Find a good index fund that tracks the same market your ETF's do and invest in them instead.

**Duchesse** · 12-23-2006, 03:03 PM

Re: Around the World in Eighty Days

Originally posted by kv968

Just to reiterate what Steve said, if you're dollar cost averaging, ETF's aren't the way to go due to the commissions incurred when buying. Find a good index fund that tracks the same market your ETF's do and invest in them instead.

My IRA is at Sharebuilders, the max. allowed is 4K which I invest in equal amounts monthly. The program fee is $12.00/month or $2.00/trade.

If I invested in an index fund through Sharebuilders my commission would be the same. Or are you suggesting that I buy the index in another way? If so then I would have a separate IRA at another broker.

I could leave my IRA as is and invest in the index funds in taxable accounts as well.mmmmmmmmmmm

I haven't bought anything as yet. I'm going to take a closer look, thanks for the advice.

Anymore?

**kv968** · 12-23-2006, 03:33 PM

Re: Around the World in Eighty Days

You may want to look into rolling your IRA over to a mutual fund company like Vanguard and do all of your indexing with them. They charge a $10 yearly fee for each fund account in an IRA below $5000 and, if I'm reading their prospectus correctly, another $10 fee for index funds with a balance below $10,000. You can check out the fees for their 500 Index Fund here:

https://flagship.vanguard.com/VGApp/hnw/FundsFeesMinimums?FundId=0040&FundIntExt=INT

You may have enough money invested so the minimum fees may not even apply. If you did invest in the 6 funds you were mentioning, and were below the minimums, that would be $120/yr as opposed to the $144/yr you're currently paying. And the fees with the Vanguard account would go away once you reach the minimums whereas the broker fees will always be there.

**disneysteve** · 12-23-2006, 05:35 PM

Re: Around the World in Eighty Days

I wholeheartedly agree with kv968. There is no reason to be paying a commission to invest in index funds (or any mutual funds, for that matter). Open an account with Vanguard or Fidelity and work with them. As stated, there are some minimal fees until your accout hits a certain balance. I passed those minimums quite some time ago, so other than the fund expenses (which you would pay no matter what), there are no other account fees.

**Ima saver** · 12-24-2006, 01:06 PM

Re: Around the World in Eighty Days

I agree with steve too. I haven't paid vanguard's fees in years.

**Duchesse** · 01-03-2007, 07:23 AM

Re: Around the World in Eighty Days

Originally posted by kv968

You may want to look into rolling your IRA over to a mutual fund company like Vanguard and do all of your indexing with them. They charge a $10 yearly fee for each fund account in an IRA below $5000 and, if I'm reading their prospectus correctly, another $10 fee for index funds with a balance below $10,000. You can check out the fees for their 500 Index Fund here:

https://flagship.vanguard.com/VGApp/hnw/FundsFeesMinimums?FundId=0040&FundIntExt=INT

You may have enough money invested so the minimum fees may not even apply. If you did invest in the 6 funds you were mentioning, and were below the minimums, that would be $120/yr as opposed to the $144/yr you're currently paying. And the fees with the Vanguard account would go away once you reach the minimums whereas the broker fees will always be there.

If I wanted to sell my ETFs/index funds it would take longer with Vanguard or Fidelity. With sharebuilder I can move my money with a click of a button. Although I would save more money, I willingly pay for the flexibility, and ease of liquidity. I don't have a regular job. I have time to actively manage my portfolio. .

**disneysteve** · 01-03-2007, 08:22 AM

Re: Around the World in Eighty Days

Originally posted by Duchesse

If I wanted to sell my ETFs/index funds it would take longer with Vanguard or Fidelity.

Why? I managed my Vanguard account online and can trade in and out of the funds I own without a problem. I don't own any ETFs so I don't know if that is different. Other than the inherent difference that the index fund would trade at the end of the day and the ETF could be traded anytime during market hours. But for a retirement account, you really shouldn't be doing much active trading anyway.

**scfr** · 01-03-2007, 08:48 AM

Re: Around the World in Eighty Days

I've got to concur with the others who say there's no reason to use a brokerage account for index funds. And I agree that ETF's are not the way to go when you are dollar-cost-averaging.

Since you're interested in getting some well-diversified international exposure, what about the Vanguard Total International Stock Index?

Vanguard customers can link their Vanguard accounts to a bank account so that if you sell your Vanguard shares the proceeds would go directly to your bank account.

**safari** · 01-03-2007, 10:51 AM

Re: Around the World in Eighty Days

ETFs are just like stocks, you can buy and sell them whenever you want. I don't understand why it would take longer to sell them with Vanguard or Fidelity, as opposed to Sharebuilder.

**PRICEPLUS** · 01-03-2007, 01:13 PM

Re: Around the World in Eighty Days

The ETF has no tax implications until you sell. Not always so with a mutual fund. I too have an account with Sharebuilder using the 12 dollar program and I am very satisfied with the results so far.

I have VTI, EFA,IYR, AGG, IYM, and VB. (VB is my gambling money so to speak. Small Caps). I have the bases covered I think in terms of ETF diversity.

I also have some other stocks of companies that I very familiar with. I have done well so far! I have a gain of 18.33% on my investments. Granted it goes up and down but hey that is investing.

I have mutual funds and a ROTH with T Rowe and they are doing okay.(They beat their Lipper averages). This was my call on investing and I feel comfortable with it. I am thinking of going Vanguard though.

**kv968** · 01-03-2007, 05:25 PM

Re: Around the World in Eighty Days

Originally posted by Duchesse

If I wanted to sell my ETFs/index funds it would take longer with Vanguard or Fidelity. With sharebuilder I can move my money with a click of a button. Although I would save more money, I willingly pay for the flexibility, and ease of liquidity. I don't have a regular job. I have time to actively manage my portfolio. .

If you're using the automatic investment system ($12/month) with Sharebuilder you're not really moving your money in and out with a click of the button. You're moving it out with a click of the button but the only times they invest in another fund with that program is on Tuesdays. If you're doing real-time trade orders you're paying $14.95/trade.

**kv968** · 01-03-2007, 05:38 PM

Re: Around the World in Eighty Days

Originally posted by PRICEPLUS

The ETF has no tax implications until you sell. Not always so with a mutual fund. I too have an account with Sharebuilder using the 12 dollar program and I am very satisfied with the results so far.

I have VTI, EFA,IYR, AGG, IYM, and VB. (VB is my gambling money so to speak. Small Caps). I have the bases covered I think in terms of ETF diversity.

I also have some other stocks of companies that I very familiar with. I have done well so far! I have a gain of 18.33% on my investments. Granted it goes up and down but hey that is investing.

I have mutual funds and a ROTH with T Rowe and they are doing okay.(They beat their Lipper averages). This was my call on investing and I feel comfortable with it. I am thinking of going Vanguard though.

You're right, you do have tax implications with mutual funds. This can become a problem with actively managed funds, but with passively managed index funds it's not really an issue. You more than likely pay more money a year for trading ETF's than you would in paying taxes on the dividends of an index fund.

However, if you're using Sharebuilder to buy individual stocks with the $12 dollar program that may be a good deal. Just remember, you're not trading in real time.

**Duchesse** · 01-04-2007, 06:36 AM

Re: Around the World in Eighty Days

Originally posted by safari

ETFs are just like stocks, you can buy and sell them whenever you want. I don't understand why it would take longer to sell them with Vanguard or Fidelity, as opposed to Sharebuilder.

Maybe I'm mistaken.

When I buy ETFs at sharebuilder, whether in my IRA or in my individual account, if I decide to sell them I can, as long as the market is open. Although I rarely trade I like to know that I can sell and put in in my MM in a click.

Can someone here from Vanguard tell me how it works there?

Around the World in Eighty Days