Investing Question

[crystal1588]

So DH and I (24 and 23) have about $11,000 in an investment account with a broker. This was part of an inheritance from my grandma. In the last few years, it has become increasingly difficult to do business with this company. Most of it is because we are used to doing investing online and this company requires phone calls and in person visits, which don't always work with our work schedules. We are fairly proactive investors, so we like to be able to view/change everything online. This company has also been doing things such as calling my parents (who aren't and have never been on the account) if they call my phone first and don't get ahold of me immediately. To me, this is ridiculous because although I have a great relationship with my parents, it really is none of their business what we have going on in our investment accounts. The investment company should not be giving account info to ANYONE that isn't on the account. That said, we are planning on pulling the money out of this company and into a company like Vanguard or Scottrade.

We are fairly new to investing. We have about 25k in our 401(k)s, about 11k in another brokerage account, and about 8k in IRAs. The brokerage account has more individual stocks in it, and we want to do more mutual funds and long term investing in the new account. What would you recommend we do for our ages? We were thinking maybe a Target Fund (2045 or 2050) or possibly just an index fund.

Any ideas?

[Small Biz Owner]

From what I have seen target dated funds seem to have high fees. I would try Vanguard they are known for low fees.
I would also suggest you pose this question on the Market Talk and the Investing board. There are a lot of seasoned investors who could give you some advise. Frank the Impaler, Rovo, Mod E, In Houston, Yclept are some of them.

[SVT]

Just to make things clear, the Target Funds (if it's Vanguard or Spartan) are a group of index funds. The Vanguard TR funds are comprised of Total Stock Market (US), Total International, and Total Bond indexes.

You and your husband need to do some reading and figure out a total asset allocation. I can tell you that you should be diversified and invest in stocks (US and International, large cap, small cap, growth and value), bonds, REITs, precious metals, etc. The percentages are what you and your husband need to come up with based on your goals, risk tolerance, etc. You should read the following:

All About Asset Allocation by Richard Ferri
The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk by William Bernstein

And you can also read the excellent articles on fundadvice.com such as:
www.fundadvice.com/articles/buy-hold/fine-tuning-your-asset-allocation.html

I recommend going to the website in my signature too.

[phil5185]

The brokerage account has more individual stocks in it, and we want to do more mutual funds and long term investing in the new account. What would you recommend we do for our ages? We were thinking maybe a Target Fund (2045 or 2050) or possibly just an index fund.

Either choice is well within the margin of error of 30-yr predicting, both excellent. If you use a Target, push it out a bit to account for their tendency to be conservative, ie pick the 2050.

The Targets re-allocate in real time, so you are seldom lagging the market - whereas an index investor usually takes about 6 months to notice a misapplication, then some time to validate, plus more time to correct. That lag leaves you mis-allocated a few times per decade, that can interrupt the power of 30-yr compounding. So, from that standpoint, a slightly higher fee for the Target may be worth it.

During the 50 yrs that I've been in stocks, I made the most money after I quit individual stocks, short positions, puts, calls, covered calls, corn futures, and went to broad index funds. (That was before Targets were invented, if I were young I would use Targets).

[phil5185]

and this company requires phone calls and in person visits, which don't always work with our work schedules. We are fairly proactive investors, so we like to be able to view/change everything online. This company has also been doing things such as calling my parents (who aren't and have never been on the account) if they call my phone first and don't get ahold of me immediately.

Definitely get free of this company. The ploy is "the trusted family broker" - or 'the trusted family banker' - or 'the trusted family insurance guy". You are about to be set up for a pressure pitch on variable annuities, whole life policies, yada. The salesperson uses the family tie to lay a guilt trip on you for not buying 'X'.

[Small Biz Owner]

The salesperson uses the family tie to lay a guilt trip on you for not buying 'X'

I just bought "X". US Steel is close to a low again. Family ties not so bad.
Just kidding Phil