Going all in for VTI??

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fishdrzig
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Going all in for VTI??

Post by fishdrzig » Sat Apr 25, 2015 7:34 am

Alright, I expect to get chewed out here for not going all in 4x25 from the outset but I have all allocated except for VTI.  If you were in my shoes (and hopefully you are not) now, what would be your strategy for entry into VTI going forward??  Thanks for the responses.
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dualstow
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Re: Going all in for VTI??

Post by dualstow » Sat Apr 25, 2015 7:42 am

Are you saying you have your gold, cash and bonds and no stocks at the moment?
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ochotona
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Re: Going all in for VTI??

Post by ochotona » Sat Apr 25, 2015 8:06 am

You could divide up your buys into a bunch of different limit orders with different prices that you find acceptable, "good until cancelled", then forget about it. -5%, -10%, -15%, -20% from current levels, for example. They will execute automatically as those limits are hit.

I use different ETFs, but I have the equivalent of half VTI and half VT now.
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sophie
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Re: Going all in for VTI??

Post by sophie » Sat Apr 25, 2015 8:56 am

Every time I put in limit orders less than a buy price, the price of the asset takes off, and I'm left in the dust with my useless "good 'till cancelled" limit order feeling like I've missed out.  Even better, when I buy multiple assets at once (e.g. stocks + bond funds), the one that goes UP doesn't kick in, and the one going DOWN does.  Thus I've taken to placing market orders for ETFs.

If you have a lot of money and don't want to put it into the PP all at once, it's fine to divide it into aliquots and buy into all 4 assets at regular intervals, e.g. monthly.  That gets expensive with gold so you might want to buy that less often, e.g. every 3 months.

If your PP is currently unbalanced, though, I would buy your preferred stock investment right away, at least enough to get you to 15% stocks.  Otherwise, if stocks jump up, your gold and bonds can both drop and you will be a very unhappy camper.  An unbalanced PP is fairly risky because the assets were chosen to be highly volatile.  The package works together well, but only if you have enough of all components.
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Re: Going all in for VTI??

Post by ILoveMoney » Sat Apr 25, 2015 11:18 am

sophie wrote: If you have a lot of money and don't want to put it into the PP all at once, it's fine to divide it into aliquots and buy into all 4 assets at regular intervals, e.g. monthly.  That gets expensive with gold so you might want to buy that less often, e.g. every 3 months.
Could you explain why you would want to buy cash, stocks & bonds e.g. monthly and gold e.g. once every three months?

Don't follow your comment that dollar cost averaging gets expensive with gold or why you would delay buying that particular asset over the other three.
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ochotona
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Re: Going all in for VTI??

Post by ochotona » Sat Apr 25, 2015 11:31 am

sophie wrote: If you have a lot of money and don't want to put it into the PP all at once, it's fine to divide it into aliquots and buy into all 4 assets at regular intervals, e.g. monthly.

If your PP is currently unbalanced, though, I would buy your preferred stock investment right away, at least enough to get you to 15% stocks.  Otherwise, if stocks jump up, your gold and bonds can both drop and you will be a very unhappy camper.  An unbalanced PP is fairly risky because the assets were chosen to be highly volatile.  The package works together well, but only if you have enough of all components.
I agree... sometimes it just seems your limit prices and what reality dishes out are divergent. It's fine to divide money into lots, and start a regular buying program. At least you get an "average" price over an interval.
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Re: Going all in for VTI??

Post by fishdrzig » Sat Apr 25, 2015 12:50 pm

dualstow wrote: Are you saying you have your gold, cash and bonds and no stocks at the moment?
Yes
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dualstow
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Re: Going all in for VTI??

Post by dualstow » Sat Apr 25, 2015 1:00 pm

I was going to say something similar to one line from Sophie --> at least get your minimum 15% in ASAP. Even with this long bull run, you have to have some stocks. If you're under 40, I would consider getting 20%-25% very soon. If & when stocks plunge, you can handle it.
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Re: Going all in for VTI??

Post by madbean » Sat Apr 25, 2015 1:08 pm

Could have said the same thing about buying IAU at around $16 when I first jumped in. Some said gold was going to the moon and others said it was in a bubble and about to crash. In hindsight, it would have been better to have waited but my crystal ball was in the shop at the time.

The only HB radio show I ever listened to he was discussing this with someone having the same kind of misgivings only in his case it was bonds. As you can probably imagine, HB's advice was to just do it.

I still don't like seeing my IAU way down in the red but as long as I'm getting satisfactory returns on the overall portfolio it doesn't really matter.
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KevinW
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Re: Going all in for VTI??

Post by KevinW » Sat Apr 25, 2015 1:25 pm

My advice is to just go all-in, buy VTI, and move on. KISS.  :D
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ochotona
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Re: Going all in for VTI??

Post by ochotona » Sat Apr 25, 2015 1:53 pm

dualstow wrote: I was going to say something similar to one line from Sophie --> at least get your minimum 15% in ASAP. Even with this long bull run, you have to have some stocks. If you're under 40, I would consider getting 20%-25% very soon. If & when stocks plunge, you can handle it.
STRONGLY AGREED
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dualstow
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Re: Going all in for VTI??

Post by dualstow » Sat Apr 25, 2015 3:11 pm

KevinW wrote: My advice is to just go all-in, buy VTI, and move on. KISS.  :D
Not to psychoanalyze too much, but if dr fish has *no* stocks, there's something going on there. S/he wrote in the OP that they "expect to get chewed out", and I'm guessing "go all in" will turn out to be advice that's easier to give than to take.
At the same time, I agree with you. It's probably the best thing to do.
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sophie
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Re: Going all in for VTI??

Post by sophie » Sun Apr 26, 2015 8:43 pm

ILoveMoney wrote:
sophie wrote: If you have a lot of money and don't want to put it into the PP all at once, it's fine to divide it into aliquots and buy into all 4 assets at regular intervals, e.g. monthly.  That gets expensive with gold so you might want to buy that less often, e.g. every 3 months.
Could you explain why you would want to buy cash, stocks & bonds e.g. monthly and gold e.g. once every three months?

Don't follow your comment that dollar cost averaging gets expensive with gold or why you would delay buying that particular asset over the other three.
It's just because of the investment fees.  If you are buying physical gold, the cost to buy (shipping + markup) is high.  If you are buying ETF gold, you are going to incur commission fees on each purchase unless you're at Schwab and can buy SGOL commission-free.  Whereas at pretty much every major brokerage you can buy some form of cash, stocks, and bonds commission-free.

It's not quite "dollar-cost averaging" to stage your PP conversion, but it's certainly a way to make you more comfortable with the process.

And...pssst....buy that minimum 15% stocks asap.  Is there a reason why you stayed away from stocks?  That's usually everyone's favorite asset.  In the PP, it is a critical counterbalance to gold and bonds, which are the universal "panic" assets.
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Re: Going all in for VTI??

Post by rickb » Sun Apr 26, 2015 11:31 pm

sophie wrote: And...pssst....buy that minimum 15% stocks asap.  Is there a reason why you stayed away from stocks?  That's usually everyone's favorite asset.  In the PP, it is a critical counterbalance to gold and bonds, which are the universal "panic" assets.
My guess is that it's because stocks are at an all time high.

The bottom line is that whenever you start a PP, you're going to have to hold your nose when buying something.  As the late Peter (not William) Bernstein said: "If you are comfortable with everything you own, you're not properly diversified."

The point is that your notions of what MUST go up (from wherever it is) and what MUST go down (from wherever it is) are not necessarily right (maybe 50-50 if you're an absolute investing genius). 

Will the stock market crash sometime in the future?  Absolutely.  But it might not be tomorrow, or within the next week, or within the next month, or even in the next year.

Will the stock market double or triple or quadruple from where it is now before it crashes?  Nobody knows.

Many people have been predicting the bond market will crash - for at least the last three years (if not longer).  In 2011, no less a luminary than Bill Gross (perhaps the smartest bond manager on the planet) made a big bet against US Treasuries - predicting interest rates would rise.  Instead, they fell.

See Browne's golden rule #4: ''No one can predict the future.''  That includes YOU.
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Re: Going all in for VTI??

Post by LC475 » Wed May 06, 2015 3:38 pm

KevinW wrote: My advice is to just go all-in, buy VTI, and move on. KISS.  :D
I agree, with a variant: if you will be buying more than, say, $10,000, split the stock portion between two funds with $5,000 in each.  The funds should be from different companies.  This gives you maximum safety and even more diversification for those "just in case" scenarios.
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