To build a portfolio you need to start with the furst fund.

[mrpaseo]

My question is, to start a portfolio (Non retirement) where you may need the money in approximately 10 years (But not before) which fund would you chose?

I'm thinking Vanguard S&P500 fund.


Edited to fix typo in title.

[dunnrobert700]

Funds not fund.

10 years? Read the book "A Random Walk Down Wall Street" or Google Couch Potato investing. These passive strategies are by far the best way to go unless you intend to become extremely sophisticated...and probably even then.

So to answer your question? I'd probably go...

30% SP500
25% Small cap (extended market or russel)
10% Global Equities
20% bond fund duration in the 10 year range
10% Inflation protected securities fund
5% REIT

Find the reputable options with the absolute lowest expenses in each instance.

You may change the options or mix but the idea is to craft a diversified portfolio with the right level of volatility for you - a personal choice. Any talk of timing the market ranging from prognistication about interest rates to where the stock market is going should be assiduously ignored and for god's sake if the market craters in the next few years (it almost certainly will at some point) do not get demoralized and sell.

Rebalance each year to your target mix and as the date you will need the money approaches slowly move from stocks to more short duration bonds and cash...

[Petunia 100]

My question is, to start a portfolio (Non retirement) where you may need the money in approximately 10 years (But not before) which fund would you chose?

I'm thinking Vanguard S&P500 fund.

That's a good choice. I prefer Total Stock Market, myself.

[mrpaseo]

Funds not fund.

10 years? Read the book "A Random Walk Down Wall Street" or Google Couch Potato investing. These passive strategies are by far the best way to go unless you intend to become extremely sophisticated...and probably even then.

So to answer your question? I'd probably go...

30% SP500
25% Small cap (extended market or russel)
10% Global Equities
20% bond fund duration in the 10 year range
10% Inflation protected securities fund
5% REIT

Find the reputable options with the absolute lowest expenses in each instance.

You may change the options or mix but the idea is to craft a diversified portfolio with the right level of volatility for you - a personal choice. Any talk of timing the market ranging from prognistication about interest rates to where the stock market is going should be assiduously ignored and for god's sake if the market craters in the next few years (it almost certainly will at some point) do not get demoralized and sell.

Rebalance each year to your target mix and as the date you will need the money approaches slowly move from stocks to more short duration bonds and cash...

Thank you, I agree that there must be "Funds" in a portfolio, but with $500 dollars how do I put it in:

30% SP500
25% Small cap (extended market or russel)
10% Global Equities
20% bond fund duration in the 10 year range
10% Inflation protected securities fund
5% REIT

?

My question is, which ONE fund should I start with and as I save more, I will add others.

[disneysteve]

My question is, to start a portfolio (Non retirement) where you may need the money in approximately 10 years (But not before) which fund would you chose?

Even though it is a non-retirement account, you could still go with a target retirement fund if you want the instant diversification. If you are okay with going 100% stock, a total stock market index gives you the broadest diversification.

[feh]

30% SP500
25% Small cap (extended market or russel)
10% Global Equities
20% bond fund duration in the 10 year range
10% Inflation protected securities fund
5% REIT

70/30 AA sounds too aggressive to me, for money that's needed in 10 years.

One other thought - given the current (unusual) bond market, you may want to forego them altogether. A CD ladder might give you slightly less income, but would be much less risky.

[disneysteve]

70/30 AA sounds too aggressive to me, for money that's needed in 10 years.

That's a good point. Maybe a balanced fund like Vanguard Star might be a safer choice (although that has a $1,000 minimum. Another company might have something similar that you could get into for $500). Either that or just park the money in savings until you have the $1,000 minimum to open the Vanguard account.

[mrpaseo]

That's a good point. Maybe a balanced fund like Vanguard Star might be a safer choice (although that has a $1,000 minimum. Another company might have something similar that you could get into for $500). Either that or just park the money in savings until you have the $1,000 minimum to open the Vanguard account.

40% in bonds seems excessive, especially US Bonds.

I think if I word my question differently I may get the results that I want.

Let's first assume I have $20,000 to invest to produce a portfolio. What funds would I want to be in for the next 10 years. Of course I'm not looking for the magic fund, no one really knows the future. I am looking for a diversified portfolio with an educated guess as to where the market is going.

Once we determine which type of funds/or which funds, then which of those funds should I purchase first. As I save currency, I will purchase more funds to fulfill the portfolio.

I don't mind a little risk but I am not putting all my fiat currency into Bitcoins (Another Fiat currency). I would like to hold a position in physical Precious Metals as well.

I'm not going to pretend I understand what all those types of funds are that have been mentioned, I will have to look them all up before I invest which is why I am asking on a forum for your suggestions. I intend to do my research and make the final decisions on my own.

Thank you all.

[mrpaseo]

That's a good point. Maybe a balanced fund like Vanguard Star might be a safer choice (although that has a $1,000 minimum. Another company might have something similar that you could get into for $500). Either that or just park the money in savings until you have the $1,000 minimum to open the Vanguard account.

Looking at that fund again it has a pretty good 10+ year record and has weather well over the past few years while the economy dipped. Would this be a solid fund to put all my investment money in? (Like a one fund catch all, all eggs in one basket type) since it is diversified?

I would also hold a small percentage in cash (2-3%)/Precious metals (7-8%).

[feh]

Looking at that fund again it has a pretty good 10+ year record and has weather well over the past few years while the economy dipped. Would this be a solid fund to put all my investment money in? (Like a one fund catch all, all eggs in one basket type) since it is diversified?

Yes, a target date fund may be a good choice. You could probably reduce your expense ratio by picking individual index funds, but that would require you change your asset allocation on a regular basis.

[disneysteve]

with $500 dollars how do I put it in:

I think if I word my question differently I may get the results that I want.

Let's first assume I have $20,000 to invest

Yes, I'd say asking how to invest 20K is a lot different than asking how to invest $500.

Looking at that fund again it has a pretty good 10+ year record and has weather well over the past few years while the economy dipped. Would this be a solid fund to put all my investment money in? (Like a one fund catch all, all eggs in one basket type) since it is diversified?

I would also hold a small percentage in cash (2-3%)/Precious metals (7-8%).

Yes, if you are looking for a single-fund solution, I think a "fund of funds" like Vanguard Star is a good solid choice. It actually is made up of 11 different funds with no more than 14% of assets in any one of them. With a 10-year annual return of 8% you could certainly do far worse.

[mrpaseo]

That's a good point. Maybe a balanced fund like Vanguard Star might be a safer choice (although that has a $1,000 minimum. Another company might have something similar that you could get into for $500). Either that or just park the money in savings until you have the $1,000 minimum to open the Vanguard account.

A few notes about this fund:

As you already identified, $1,000 to open which is below the normal $3,000 average to open a fund. This will allow for a quicker start up (Maybe 2-3 months to get the initial).

Morningstar rates it 4 of 5 stars and Silver.

NAV $22.51 This is a good starting point, any higher and it's hard to build the share base, any lower and the fund seems to be more volatile.

16.2 Bil in assets with a 12% annual turn over.

This fund is a Large Blend.

Morningstar rates a Stewardship Grade of A and the role in the portfolio is Core which is what I am looking for.

Asset Allocation:
Cash: 4.02%
US Stocks: 38.61%
Non US Stocks: 21.79%
(Total stock exposure is 60.4%)
Bond: 35.07%
Other: .52%

The fund had no manager from 1985 - 2009. One manager took over in 2009 and in FEB of this year they added three more managers. New managers is not always a good sign.

Looking at the sectors:
Equity: Tech, Financial, Healthcare, Industrial and Consumer cyclical.
Bond: Majority in Agency Mortgage-Backed (Not sure what that is) but only about 5% in Government bonds (Which is good in my eyes).

Dividends / Capital Gains are distributed every six months (Looks like the last Friday in JUN and DEC).

This may actually be a good start to a portfolio. If I never make it to the next fund, a 10% return over the past 10 years looks good. (Compounded annually they average about 8%)

[Petunia 100]

STAR throws off a lot of taxable income, and so will a TR fund in a taxable account.

Since there is not a specific goal for the money, and the exact time frame is uncertain, I would approach it this way:

Do not look at your taxable account as a stand-alone portfolio. Instead, look at your tax-advantaged and taxable accounts as a single portfolio. What is your most tax-efficient holding? Buy that in your taxable account, and sell an equal amount in your tax-advantaged. Do any re-balancing necessary inside your tax-advantaged accounts.

If you do sell some or all of taxable in 10 +/- years, you simply re-balance.

A total market index fund is a good one to hold in taxable, a total international index fund (if it isn't a "fund of funds") is even better because of the foreign tax credit.

As for getting started with $500, take a look at Schwab. If I am not mistaken, you can open a brokerage account with $100. You can buy Schwab etfs with no commission. They offer several low-cost index etfs, so there is no need to venture beyond the no-commission etfs.

[snafu]

MrP, Is it your plan to add $ 500. each pay or each month? Will this continue to be a savings vehicle for 10 years? I believe that interest rates will soon creep up which will make Bond Funds value decrease. Where do you think interest rates will go? I really like Dollar Cost Averaging [DCA] programs which buys more or less units depending market vagaries. You can always increase the monthly sum over time as income increases. When there is sufficient value, you can sell some units to fund opening an International MF and re-direct monthly sums to the addition or even Bond Funds should that be more appropriate.