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Started By
Message
For your retirement accounts. Do you diversify with mutual funds or stock?
Posted on 3/20/12 at 11:35 pm
Posted on 3/20/12 at 11:35 pm
That is diversified?
Ex. Buy X mutual fund or
Buy KO,XOM, MCD, etc etc.
Ex. Buy X mutual fund or
Buy KO,XOM, MCD, etc etc.
3
Posted on 3/20/12 at 11:43 pm to wegotdatwood
I do a mix of both. For my company 401k all we're really allowed to choose are funds. But for my Roth IRA i choose stocks that i like.
Something to note though of the 401k: My company matches with company stock, so i do a "rebalancing" every 3 months so i don't have too much of the company stock concentrated in my 401k (even though it's outperforming everything else i've elected right now).
Something to note though of the 401k: My company matches with company stock, so i do a "rebalancing" every 3 months so i don't have too much of the company stock concentrated in my 401k (even though it's outperforming everything else i've elected right now).
Posted on 3/20/12 at 11:49 pm to GregYoureMyBoyBlue
What's the longest you've held stock in the roth?
I would like to get 1 stock that I hold forever. Others I like to take profit when I feel is good.
I would like to get 1 stock that I hold forever. Others I like to take profit when I feel is good.
Posted on 3/21/12 at 8:08 am to wegotdatwood
Diversify, diversify, diversify! Depending on how old you are! Have money in large cap, small cap, tech, healthcare, foreign stocks, domestic, speculative stocks, foreign bonds, muni bonds, gold, etc. you want to have positions in things that have little correlation with each other. I like to have a small position too in something cool to invest in that you like- firearms, art , wine things that don't correlate that tightly with the market. You can take diversification too far but u get the point.
I'm not convinced there is one stock you can hold for ever.
I'm not convinced there is one stock you can hold for ever.
Posted on 3/21/12 at 8:45 am to wegotdatwood
Considering i opened the Roth about a year and a half ago, a year and a half...
I wholeheartedly agree with diversifying, but i'm not going to buy something just for that specific reason of diversification. The stock, bond, commodity, real estate, etc has to be something i like and not just something i can diversify with. But that's just my opinion.
ETA: My parents bought walmart in the early 80's and it basically paid for their condo haha.
I wholeheartedly agree with diversifying, but i'm not going to buy something just for that specific reason of diversification. The stock, bond, commodity, real estate, etc has to be something i like and not just something i can diversify with. But that's just my opinion.
ETA: My parents bought walmart in the early 80's and it basically paid for their condo haha.
This post was edited on 3/21/12 at 8:46 am
Posted on 3/21/12 at 9:40 am to wegotdatwood
Nothing wrong with owning individual stocks and/or bonds.... But the vast majority of people don't have enough money to get properly diversified by owning individual securities.
To answer your question, the vast majority of my retirement money is in funds except for the company stock that I own inside my 401k and in the stock purchase plan.
To answer your question, the vast majority of my retirement money is in funds except for the company stock that I own inside my 401k and in the stock purchase plan.
This post was edited on 3/21/12 at 9:45 am
Posted on 3/21/12 at 9:47 am to JPLSU1981
ETFs >>>> Mutual Funds
Fight me.
Fight me.
Posted on 3/21/12 at 12:17 pm to JPLSU1981
quote:
But the vast majority of people don't have enough money to get properly diversified by owning individual securities.
I'm definitely part of the majority.
Posted on 3/21/12 at 12:41 pm to wegotdatwood
I use either index funds or ETF's, whichever is less expensive. Normally that's the ETF but not always. I never sell them, just add as more money comes in.
Company stock gets sold off periodically to avoid having too much.
Company stock gets sold off periodically to avoid having too much.
Posted on 3/21/12 at 3:27 pm to TheHiddenFlask
quote:
Fight me
Ok, ETFs can be good low cost alternatives- especially for someone with little to invest and as a means of diversification. However there are many down falls.
ETFs are prone to tracking errors in the index benchmark they are supposed to track. These deviations can be substantial and costly and not represent the true price of the underlying commodity, equity, bond price. Much less in some cases like UNG you don't even own a real asset. You own a contract. With ETFs like the GLD, you face liquidity and third party risks. I would much rather the inconvenience of owning a physical block of gold.
In addition, elaborating on liquidity, some ETFs have significant bid ask spreads and you can screwed by placing a market order. Use limit orders only. Bond ETFs are in my opinion worthless. Hardly ever does the price match the NAV
And stay away from leveraged ETFs unless you are trader and really under the concept.
Posted on 3/21/12 at 3:37 pm to greenhead11
Because the price doesn't match the nav you'd never buy it? So you'd never touch any closed end funds ever?
Posted on 3/21/12 at 4:07 pm to greenhead11
quote:
And stay away from leveraged ETFs unless you are trader and really under the concept.
What about ones that write covered calls?
Posted on 3/21/12 at 4:52 pm to StrangeBrew
Kfizzzle,
In my time investing I have learned to never say never. I don't own any funds or ETFs personally, but I can't say I never will. I would consider investing in a closed end fund if i thought It was trading at a significant discount to the NAV but thats hard to judge. Or maybe take the IPO risk. It's annoying how in open ended funds you can incidentally pay a premium to NAV due to tracking errors, wide spreads, etc.
Strange brew
,To be honest I don't know much about covered call ETFs. In today's market I love writing covered calls to generate extra income. I'll write covered calls on stocks that I don't think are going to pop where the premium is enough to justify the limited upside should my stock get called.
My main point with the previous comment was to avoid double triple 40 times short stuff. leveraged funds like SDS require a thorough understanding of the vix, derivatives, etc to be used properly. I wouldnt mess with it unless I knew damn well the market was gonna drop big tomorrow. Then I'd run for cover!
In my time investing I have learned to never say never. I don't own any funds or ETFs personally, but I can't say I never will. I would consider investing in a closed end fund if i thought It was trading at a significant discount to the NAV but thats hard to judge. Or maybe take the IPO risk. It's annoying how in open ended funds you can incidentally pay a premium to NAV due to tracking errors, wide spreads, etc.
Strange brew
,To be honest I don't know much about covered call ETFs. In today's market I love writing covered calls to generate extra income. I'll write covered calls on stocks that I don't think are going to pop where the premium is enough to justify the limited upside should my stock get called.
My main point with the previous comment was to avoid double triple 40 times short stuff. leveraged funds like SDS require a thorough understanding of the vix, derivatives, etc to be used properly. I wouldnt mess with it unless I knew damn well the market was gonna drop big tomorrow. Then I'd run for cover!
Posted on 3/21/12 at 7:25 pm to greenhead11
quote:
ETFs are prone to tracking errors in the index benchmark they are supposed to track. These deviations can be substantial and costly and not represent the true price of the underlying commodity, equity, bond price. Much less in some cases like UNG you don't even own a real asset. You own a contract. With ETFs like the GLD, you face liquidity and third party risks. I would much rather the inconvenience of owning a physical block of gold.
Meh, index funds can do the same, it is the investor's job to understand this and ferret out those that DO track accurately. You would like that big mass of gold until you had to unload it, and you are still paying a spread to obtain it upfront.
quote:
In addition, elaborating on liquidity, some ETFs have significant bid ask spreads and you can screwed by placing a market order. Use limit orders only. Bond ETFs are in my opinion worthless. Hardly ever does the price match the NAV
And if you are the seller it is to your advantage. Using limits and low bids can also net good deals if one is patient, and aftermarket activity will kill investors on spreads of thinly traded ETFs. The bond ETFs I agree, especially if a liquidity event occurs and the fund guaranteed NAV pricing is much more palatable.
Posted on 3/21/12 at 9:38 pm to tirebiter
What you said.
Posted on 3/21/12 at 9:46 pm to greenhead11
quote:
Much less in some cases like UNG you don't even own a real asset. You own a contract.
A contract is absolutely an asset.
quote:
I would much rather the inconvenience of owning a physical block of gold.
By doing this, you are suddenly in the business of providing physical security. Unless it's in a safe deposit box, in which case you just have a contract.
Posted on 3/21/12 at 11:13 pm to GregYoureMyBoyBlue
Vanguards admiral shares have the same expenses as their etfs. It works out well since considering you don't have to worry about buying shares for funds.
Posted on 3/21/12 at 11:17 pm to foshizzle
Tirebiter,
You are right about that benefitting the seller. Good point. But for the average retail investor i just wanted to warn whoever may read about potential dangers of ETFs. People arent aware of some of the risks. I like good ole fashion funds better (even though as I said, I own only equities). For a retirement account for less risky investors index funds that track well aren't bad and are time proven. I personally am not satisfied with index returns, and would rather take on extra risks. But I'm not worried about retirement now.
Foshizzle,
Good point too about gold contracts. I have a "fire proof" safe. Risk= me remembering how to open the damn thing. I just don't like the GLD, SLV etc. if everyone decided to cash in, a lot of people would get screwed. Besides I like owning gold too as an alternative shite hits the fan currency etc. I have a very small gold position. But at least GLD owns gold. UNG owns contracts for gas, so it's like you own contracts for contracts.
Either way, the scenario that anyone has significant problems with An ETF are small. Some people like the real stuff, some people like the ease of ETFs
You are right about that benefitting the seller. Good point. But for the average retail investor i just wanted to warn whoever may read about potential dangers of ETFs. People arent aware of some of the risks. I like good ole fashion funds better (even though as I said, I own only equities). For a retirement account for less risky investors index funds that track well aren't bad and are time proven. I personally am not satisfied with index returns, and would rather take on extra risks. But I'm not worried about retirement now.
Foshizzle,
Good point too about gold contracts. I have a "fire proof" safe. Risk= me remembering how to open the damn thing. I just don't like the GLD, SLV etc. if everyone decided to cash in, a lot of people would get screwed. Besides I like owning gold too as an alternative shite hits the fan currency etc. I have a very small gold position. But at least GLD owns gold. UNG owns contracts for gas, so it's like you own contracts for contracts.
Either way, the scenario that anyone has significant problems with An ETF are small. Some people like the real stuff, some people like the ease of ETFs
Posted on 3/22/12 at 11:44 am to greenhead11
quote:
You are right about that benefitting the seller. Good point. But for the average retail investor i just wanted to warn whoever may read about potential dangers of ETFs. People arent aware of some of the risks. I like good ole fashion funds better (even though as I said, I own only equities). For a retirement account for less risky investors index funds that track well aren't bad and are time proven. I personally am not satisfied with index returns, and would rather take on extra risks. But I'm not worried about retirement now.
I wasn't giving you a hard time, your post was much more accurate than not. Investors shouldn't be investing in ETF's with less than $500,000,000 in assets, either, as they will likely close due to economies of scale and may become illiquid. I would like to own PSCE to round out my existing large cap equity energy exposure, but it has less than $100,000,000 in assets and is a relatively new ETF which is highly volatile. I own physical gold and silver, but people need to realize they will pay a 28% Fed tax upon sale + dealer skim + storage costs, if any, which is why many prefer GLD/SLV or similar which is easy to buy in a tax advantaged account. GLD isn't going to fly me to check my supposed portion of segregated gold in the vault, either, which is why I have some collateral issues with the security.
Posted on 3/22/12 at 8:53 pm to tirebiter
Oh no worries, I didn't take it that you were. I did not know about the federal tax selling physical gold. Figures uncle Sam has got to have his cut! Definitely provides compelling rationale for the GLD in a tax sheltered account. I want to go see the vault. CNBC did a special on it, looked pretty intense. I'm now getting a little into alternative investments to diversify. Or just rationalizing a gun collection
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