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Vanguard Accounts - using as an investment & savings account?

1,663 Views | 11 Replies | Last: 1 yr ago by kalltamu
E
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AG
My wife an I got married last month and each have our own savings accounts. We are fortunate enough to have more then the 6 months savings in each and would like to come up with a plan where we can put our extra money now and each month into more of an longterm investment account. Now its basically in "high yield" savings accounts not doing much.

Since the market is down, would now be a good time to start a combined account in somewhere like Vanguard? Would you skip it and get a financial advisor? What are your experiences and suggestions?

We don't want to have to pay much attention to it, and would also not want it to be strictly a retirement account so we can have access to the funds for any larger expenses/investments if they were to come up in the next few years.
Ghost of Bisbee
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AG
Following.
Also, congrats on the marriage (and sex)
JSKolache
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AG
You each want a roth ira, and vanguard is a good provider. You can withdraw your contributions to the roth penalty free, but any earnings must stay in the acct or face tax penalities.
Chipotlemonger
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AG
If you don't want it to be for retirement, and you're happy with what you're currently saving for retirement, you could always just open a trading account at Vanguard or other shops. Throw the money into VTI or VOO if you have more risk tolerance. If you want to be more conservative on it for potential usage in the nearer term, you could simply create your own personal style target date fund with something like 33/33/33 stock/bonds/cash ratio, 50/50 stock/bond, etc.

I wouldn't personally use the Roth IRA as a piggy bank for anything except retirement.
OldArmyCT
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Once I read "...Roth IRA fort savings account..." I moved to the next comment. I've had a brokerage account for 32+ years I use for savings. Threw money in it whenever I had some to throw, took some out wheneverI needed to, bought various things with it like a stock or 3, a fund, an ETF,, and it was the last account I accessed for funds. It's pretty large now, it's linked to my bank accounts. It just takes time and discipline. Don't worry about the interest rate on cash, keep it invested.
Baby Billy
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If you want something really simple through Vanguard,
VTI-80%
VXUS-20%

VTI is their total stock index. It holds large, mid, and small caps in the USA.

VXUS is the international version of VTI
Ghost of Bisbee
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OldArmyCT said:

Once I read "...Roth IRA fort savings account..." I moved to the next comment. I've had a brokerage account for 32+ years I use for savings. Threw money in it whenever I had some to throw, took some out wheneverI needed to, bought various things with it like a stock or 3, a fund, an ETF,, and it was the last account I accessed for funds. It's pretty large now, it's linked to my bank accounts. It just takes time and discipline. Don't worry about the interest rate on cash, keep it invested.


What's your strategy for keeping track of the realized gains? Assume you don't withdraw enough to worry about losses.
LMCane
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do not pay for a financial advisor when you are just starting out investing.

that's a total waste of money.

get a Vanguard (I use Fidelity) brokerage account and as others have said, if you don't know what you are doing then just start using a sector SPDR ETF
YouBet
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E said:

My wife an I got married last month and each have our own savings accounts. We are fortunate enough to have more then the 6 months savings in each and would like to come up with a plan where we can put our extra money now and each month into more of an longterm investment account. Now its basically in "high yield" savings accounts not doing much.

Since the market is down, would now be a good time to start a combined account in somewhere like Vanguard? Would you skip it and get a financial advisor? What are your experiences and suggestions?

We don't want to have to pay much attention to it, and would also not want it to be strictly a retirement account so we can have access to the funds for any larger expenses/investments if they were to come up in the next few years.
My brain tends to short circuit when I see this because you are asking for a product that sits perfectly between the "risk-free" nature of an online savings account with the growth potential of an investment. So there are tax implications the further you slide to the right on that spectrum, generally speaking.

From a diversity standpoint, it seems like you would still set aside the 6-12 months of your savings you've already built and put that into a more conservative vehicle. And then going forward, any new monies go into a riskier vehicle with larger growth potential, but could also go down especially considering the next 1-5 years. I'm assuming you want to maintain some level of liquid cash for emergencies that protects the principal...inflation notwithstanding? If you think you are going to have some larger expenses come up in near term you really need to set aside some level of cash and protect it.

Really, the question is how much do you want to hold back that might need to get spent near term vs how much you want to put back in the market. The more you put in the latter means the more risk you are going to have that it won't be there if you need to pull it back for a major expense that you didn't see coming.

GarryowenAg
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I have a lot (to me) invested in VWUAX from the last couple years. I'm looking forward to seeing green again ones of these days.
htxag09
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LMCane said:

do not pay for a financial advisor when you are just starting out investing.

that's a total waste of money.

get a Vanguard (I use Fidelity) brokerage account and as others have said, if you don't know what you are doing then just start using a sector SPDR ETF
As someone who started working with a financial advisor a couple years after graduation and has been working with him since, I'd have to say I disagree.

Sure, it's a waste of money for some people.

But there's a lot of people, like my wife and I, who didn't really know where to start nor have the time to research where to start. We sat down with him, talked about our situation, what we want to do now, what we want to save for, where we need to be in retirement, and laid out a plan.

The changes we made, the money we've saved, and the returns we've seen on our investments have been well worth his expenses, IMO.
kalltamu
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htxag09 said:

LMCane said:

do not pay for a financial advisor when you are just starting out investing.

that's a total waste of money.

get a Vanguard (I use Fidelity) brokerage account and as others have said, if you don't know what you are doing then just start using a sector SPDR ETF
As someone who started working with a financial advisor a couple years after graduation and has been working with him since, I'd have to say I disagree.

Sure, it's a waste of money for some people.

But there's a lot of people, like my wife and I, who didn't really know where to start nor have the time to research where to start. We sat down with him, talked about our situation, what we want to do now, what we want to save for, where we need to be in retirement, and laid out a plan.

The changes we made, the money we've saved, and the returns we've seen on our investments have been well worth his expenses, IMO.
I think this is a fair point and a lot of it depends on what the individual is looking for or needs. I personally think the average person who says they don't want to spend much time on it like the OP should either do something very simple like the Boglehead 3-Fund investing style where they minimize their expenses and just try to generically match the market or they should use a financial advisor. I am personally leery of the financial advisor model simply because of the amount their fee takes out of your total return over time. No individual year is too bad but the compounding on the difference in expense over time can end up being a huge amount of money in the long run. However, I also think every person's situation is different and their needs are different.

To the OP, if you decide not to use a financial advisor there are a lot of simple portfolios at https://www.bogleheads.org/wiki/Lazy_portfolios or http://www.lazyportfolioetf.com/. I personally recommend something like the two or three fund portfolio because of the simplicity if you really do want to pay next to no attention to it (not necessarily a bad idea because trading too much is what hurts a lot of people). The advantage of these systems is diversification with simplicity. The second advantage is that it actually is a system for people who don't understand everything and don't really want to.

There are also some retirement date funds out there that will do the rebalancing for you but I would NOT use them in a taxable account under any circumstances. Some people got screwed last year in those mutual funds from Vanguard because of tax issues. Its a long story but I personally would stick to simple portfolio of ETFs with VTI, VXUS, and BND that I rebalanced myself in a taxable account to avoid any tax issues that can crop up inside mutual funds of this nature.

Once again, I'm making this recommendation based on the assumption you don't want to actively manage it much. This process has historically provided good returns in the past without much in the way of expenses but htxag09 is right that a good financial advisor can help you with an actual plan based on your individual situation. This has a LOT of value in my opinion but it really depends on your situation.

Once again, this is just my opinion but I was in your shoes at one point and I have tried a lot of random things. Some I would recommend... others not so much. This is the advantage of htxag09 going to a financial advisor right from the beginning. He probably didn't fumble around for as long as I did before he found something that fit his knowledge/risk profile but now that I'm comfortable with what I do I really don't want one. Once again, its an individual decision based on your circumstances.
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