1. i like vanguard and, to a lesser degree, fidelity but i only own mutual funds.

2. i don't think you should sell just for tax reasons.

why did you buy this stock? do you still wish to own it?

capital gains tax has brackets just like income tax. if you know (or can approximate) your AGI you can go look it up.

Just sold my S&P 500 index shares (DIA). I want to put the money in some sort of managed fund to get a better return. I'm thinking about the Vanguard Growth Equity Fund (VGEQX) or Mid cap growth (VMGRX). I have a job and 401k,so o problem with ramping up the variance.

Good plan? Anything else I should look at?

If you want to ramp up risk, variance, and (let's hope) return, why not just put the money in a small cap index fund (Russell 2000)? The Russell 2000 will most likely out perform those two funds you mention without trying to get clever.

Note that I am suggesting this only as a alternative to your specific action. I am not advocating an unbalanced portfolio.

Also, this. lol.

So you guys prefer just owning the S&P 500? (or Russell 2000)

i prefer a broadly diversified portfolio with exposure to fixed income as well as us and international equities.

No, we prefer using index funds to build a balanced portfolio of bonds, international stocks, and domestic stocks. The core of this should be a Total Market Index Fund. I then tilt toward small caps by using a Russell 2000 Index fund.

But getting rid of an S&P 500 index fund to go into actively managed is lolbad. There have literally been hundreds of studies that show managed funds almost always lose out over index funds over the long run. If you want to be more aggressive to amp up your returns, you should start with a TSM index and then add more aggressive index funds to it (for example a small cap index).

Transferring from index to actively managed is almost certainly going to make your returns worse, not better.

Thanks for the replies. I think I'll just go with DIA for now and add some small cap index fund when I nest my next chunk of cash.

If you only have a small amount of money and only doing one fund, use VTI instead of the S&P 500. It's the Vanguard Total Stock Market Index Fund. It's very low cost and includes the S&P 500 as well as mid and small caps.

I will. Thanks.

I remember reading that index funds were keeping Enron at 13cents when it should have been worthless because they had to own every stock. Does the system still work like that?

Yeah, pretty much, but since it's well established it's very difficult to outperform the indices you shouldn't worry about it. Just own x% debt and y% equity. Most people prefer more equity especially when you are young.

Voluntary short term disability offered through work; should we accept it?

Roughly $160 annually, will replace up to 50% of salary (so it will provide roughly $650 net per week) but will not pay for more than 13 weeks in a two year period.

It would end up providing roughly $8,450 in assistance in the event of a short term disability but we already have more than that on hand as our short term emergency fund.

Acemanhattan,

Obviously you have shared very little of your personal circumstances which massively affect the answer to your question, but if you fit the standard demographic of 2p2 posters - 20-40 years old, male, no obvious health problems, work in a white collar job, no dependents - then I'd find it surprising if a standard insurance plan for short-term disability is likely to be worthwhile for you.

What is the credible risk you are insuring against?

I inherited 100k and don't want it just sitting in my bank account.

Want to invest it short term for about 1-2 years before I likely use it to put a down payment on a home.

If I'm willing to take on a medium amount of risk, is putting it in sort sort of mutual fund "worth it" as a general rule over tossing it in a GIC? I'm concerned about the transaction costs and the fact that I'd be withdrawing it after only a couple years.

Any money you need for a down payment should stay in very liquid savings.

If by 'credible risk' you mean some identifiable risk, then there isn't any; it would purely be insurance against the unlikely and unknown.

You will need to do your own pot odds calculations here.

You're talking about a total benefit of $8,500. It hardly seems worth worrying about. Is that $8,500 going to make the difference between you being comfortable or destitute? If not, then pass on it. If you're really worried about disability, I would look around for something more substantial and better. Insurance is meant to guard against the catastrophic. $8,500 doesn't qualify, imo.

The question is really motivated by this line of thinking:

Say you have some amount of money, $x,xxx saved up. What percentage of that amount would you be willing to pay each month to make sure that your savings remained untouched. In this case it's something like .0017% (not .17%, but .0017%) for the short term disability coverage.

Your line of thinking is poor.

The correct way to think is that you are paying $x every month to reduce the chance of paying $y by z%.

It is a basic pot odds problem, and you need to consider the marginal utility of your money (just like in a tournament).

Since the variables that effect z are the likelihood some disability is experienced coupled with the likelihood the insurer pays the claim, and since these variables aren't well understood or well defined (hardly any outcome can be reasonably dismissed when we are only guessing about z), it is absolutely not a "basic pot odds" problem. So, in the sense that we are trying to make meaningful, real world, decisions, my line of thinking isn't any poorer than yours.

We know that once x crosses some threshold relative to y it isn't wise for us to pay x anymore. This is my line of thinking. This is also the line of thinking that is clearly implicit in your post except for your post also pretends to know things it can't.

In the case that you describe, your annual payment is $160, and your maximum annual payout is $4,225.

Assuming you get paid $4,225 out every time (the result most generous to getting insurance) you would need to get paid at least once every 4225/160 = 26 years (or 3.8% per year).

So, in other words, are you likely to have two such 13-week-debilitating week incidents in your line of work over an average career of 50 years? If it is some sort of manual or physical job, then you might. If you work in an office or some other low-risk environment, then you probably won't.

Either way, it's difficult for us to assess your risk since you have provided such little information, and you need to figure out whether the risk of this happening is above or below the ~3.8% level.

I appreciate this analysis. The payout number is 1/2 of what we would expect in the most generous circumstance though. The insurance would replace 1/2 of $1,300 (the $650 I mentioned was the net amount we get on a disability claim) so the question is whether we would expect 1 such disability that leads to a full claim payout every 50 years. I still think your analysis is correct though. The insurance would be for my fiance and she works in a non-hazardous office environment so I'd say her odds are smaller than 1 claim in 50 years.

There does exist an alternative scenario in which we might consider using the payment to ensure that she receives 1/2 of her salary during time she will take off to have a baby and then we don't pay the insurance ever again after that. This will be a one time event that will occur roughly 5-7 years from now.

The numbers would be pretty easy to run though, so I'll do that later today.

Couple of questions regarding Roth IRA and Vangaurd Target Retirement fund:

A Roth IRA is simply an account that can hold various investments, correct? And the Target Retirement Fund itself has noting to do with a Roth directly, it is simply an investment that can be owned in the retirement account but that can just as readily be owned outside of a Roth IRA account?

Since I am a non-working student my fiance is the only one out of the two of us that is eligible to make an IRA contribution. We intend on making the max contribution (investing in the Target Retirement Fund) this year, but we will have, roughly, another $7,000 that we plan on investing as well and I'm wondering how we should invest those funds. Should we simply stick to the same retirement fund?

Clearly this probably depends on our financial goals, risk tolerance etc. As far as that goes, we're 30, just starting to invest and are okay with a simple no frills investment path that gets us to retirement in 35 years. That being said (though we won't tell the fiance) we aren't all that risk averse and wouldn't mind tending toward aggressive investments (in the Bogle sense).