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  • Portfolio advice

    Hello,

    First time poster so please go easy on me. I am a PGY-2 resident currently working my way through boglehead's guide to investing. I was considering the following portfolio allocation:

    50% total US stock market (VTI)
    20% international stocks (VXUS)
    10% RETIs (VNQ)
    20% bonds. (BND)

    I have enough to max out a ROTH IRA. My training program does not offer a match. I don't have much in terms of loans (about 80K). I know that Vanguard fund's are a favorite. However, I have found cheaper expense ratios with Fidelity. I looked at their prospectus and I don't understand why or how they can offer a zero expense ratio fund. I just wanted to see if anyone can enlighten me about this issue. Should I consider getting their funds or just go with Vanguard?


    Thanks

  • #2
    Go with whichever one you feel most comfortable with. All the major brokerages offer very low cost fund options. You don't hit your goal by saving a few hundredths of a percent here and there. You get there by living below your means, investing reasonably, and sticking to a plan.

    Comment


    • #3
      Originally posted by Java View Post
      Hello,

      First time poster so please go easy on me. I am a PGY-2 resident currently working my way through boglehead's guide to investing. I was considering the following portfolio allocation:

      50% total US stock market (VTI)
      20% international stocks (VXUS)
      10% RETIs (VNQ)
      20% bonds. (BND)

      I have enough to max out a ROTH IRA. My training program does not offer a match. I don't have much in terms of loans (about 80K). I know that Vanguard fund's are a favorite. However, I have found cheaper expense ratios with Fidelity. I looked at their prospectus and I don't understand why or how they can offer a zero expense ratio fund. I just wanted to see if anyone can enlighten me about this issue. Should I consider getting their funds or just go with Vanguard?


      Thanks
      welcome.
      your AA is perfectly fine.
      you dont say what accounts you have, but i am inferring you only have a rIRA. so you have a small amount of total assets. so AA does not matter. so just pick total US and move on until you have other accounts.
      re: ER on zero funds. 1- they are a loss leader. 2- read about securities lending.
      it should not be a consideration for your money.
      pick who you want, pick where you want, its all inconsequential.

      Comment


      • #4
        I like your allocations. Nice and simple. Some could argue about this or that (go more aggressive, skip the bonds, etc...) but it’s a great start, better than mine when I first started. You are on the right track. Keep learning. I agree with Cord up there 1000%, especially about living below your means.

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        • #5
          Your allocations are just fine.
          •Plus- Your AA is suitable for a portfolio with one or multiple accounts. With solely a Roth, you will gain a real money experience in rebalancing and experiencing the ups/downs and rebalancing. Good habits to acquire.
          It is more work than needed, but leaves you to only add tax efficiency to your toolbox once you start retirement saving when employed.
          •Minus- Are you sure the AA is consistent with your personal risk assessment? If it is, stick with it.

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          • #6
            Another vote for keeping it simple while you have a low amount but and increase in fund size as things pick up. Savings rate is way more important then return at this point. I would consider target date or total us fund until you have 50-100k invested. Then spend the time figuring out how you want to slice and dice.
            good luck!

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            • #7
              You are doing great! Good comments also. The earlier you start saving the more time for the magic of compounding.

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              • #8
                Thank you for your input guys! I appreciate your help!

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                • #9
                  As someone else said it's nitpicking but I'd ditch the bonds, assuming you're a traditional age to be pgy2.

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                  • #10
                    More nitpicking:
                    +10% US Stocks
                    - 10% Bonds
                    Thought process is at your age, you will have some bonds that give you some ballast and experience with the impact on the account without sacrificing too much growth. Hitting savings rate will be much more important.

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                    • #11
                      In the current era, transaction costs are free, and expense ratios are approaching zero. Brokerage shops extract their profits via custodial fees, management fees, and by paying out low interest rates on cash accounts.
                      Ownership structure explains why Vanguard will always be the brokerage shop with lowest all-in fees. Vanguard is owned by the customers. Fidelity is owned by the Johnson family and former employees. Schwab is a publicly traded company owned by the shareholders, expecting a return.
                      Your AA is fine.

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