I am not a licensed professional and I don't know your specific situation, so I can't tell you how to invest. However, you can listen in on the advice I will give my kids when they go out on their own. Now go out and make your Dad proud! At the time of this writing, I owned shares of VFINX, SLASX and HOTFX.
Kids, there are no guarantees in life and what happened in the past probably will not happen the same way in the future. What I have presented to you above, has worked for me over the years. If you follow this advice, it will likely work for you going forward.
A business insurance or a pet insurance is similar to a life insurance, as is mentioned in the insurance resources, and the free insurance quotes are applicable to all.
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About your Vanguard Index Fund. I don't like anything priced in USD. Compared to Gold. Yes I am Gold Bug but gold is money!!!
In 2000
Gold $250 / 1 share VFINX 120 = 2.08 Oz. of Gold
In 2008
Gold $ 930 / VFINX 130 = 7.15 Oz. of Gold
for Vanguard to keep up with inflation and devaluing of the USD. Vanguard Index would have to be 1860. The index should be worth 2 Oz. of gold to be of anything of value. Compare it with OIL
D4L,
One of the major issue I have with ETFs (including dividend focused) is their distribution is "ordinary income" which is taxed higher. This reduces the real return. While a "carefully invested" same amount in group of dividend stock, I would "tend" to get similar returns with less tax. So diversification through ETF comes at cost. Question is how to balance it ?
Excellent post. I like your overall approach.
DT
I don't understand exactly what all the hype is about ETF other than the fact they appear to be more tax-friendly.
Is there any projections for how an ETF would accumulate over 40 years like they do with the mutual funds?
Great series of advice.
I don't know about 1K in an Emergency Fund though. How old would you consider your kids to be starting out to have 1K in an emergency?
@Anon: I am not that familiar with gold investments.
Dividend Tree: ETF distributions are categorized by source. Based on my 1099, I received qualified dividends from IYR, IYM, VIG, VFH AND VTI.
@TheLocoMono: ETFs will perform exactly like a mutual fund. many ETFs are managed by the same company with a similar fund. The upside to ETFs is that they are more tax efficient, the down side is that they incur commissions when buying or selling.
1k emergency fund is a good place to start for someone just coming out of school - as long as they continue to build it. Given the power of compounding, it is imperative that they start investing as soon as possible.
Best Wishes,
D4L
I think that D4L touched great on most of the questions that readers had asked him. As far as the Gold investments are concerned, yes over the past 9 years GOLD has indeed outperformed the S&P 500. But you know what? Gold has been a terrible long-term investment for many decades. Asides from the 1970's and early 2000's gold investors have had their nerves tested with long periods of flat or negative returns. In addition to that, gold does not earn any return whatsoever unlike stocks or even bonds which pay you dividends/interest. Gold could be a good diversifier in part of your portfolio, but it is just another asset class.
Interesting point on the gold, it makes me think of how some investments are better for mid-term than long term. Kind of like the S&P 500 performance the last couple of years.
It sounds like ETF is no different than stocks because of the commissions involved.