NinjaPigeon - My Flight to Financial Independence

Sunday, March 12, 2006

Reading and planning

Been doing a lot of reading lately. For about a year now I've known I am being way too conservative with my assets. I've slowly been making progress and trying to learn enough to go to the next level. With a positive net worth almost within my grasp, I'm very close to being ready.

I've decided to transfer most of my savings into a Vanguard Mutual Fund account. Right now it is tied up in ING for the 4.75% promotional rate. However, that ends on 4/16. So somewhere towards the end of April I'm going to open up my new MF account.

A good post I've found on different portfolio allocations really helped me narrow down my options to something that works with my risk tolerance, overall financial goals, and diversification capability. Right now, I'm leaning towards the following allocations:

Vanguard Small Cap Index (NAESX) 17.50%
Vanguard 500 Index (VFINX)
Vanguard REIT Index (VGSIX)
Vanguard Total Intl Stock Index (VGTSX) 32.50%
Vanguard Midcap index (VIMSX)

Unfortunately, the minimum required amount per fund to avoid any fees is $10k. I definately don't have $50k laying around though, so I'll be stuck with some fees for a while. However, I believe that getting started now is much more prudent than trying to penny pinch over those fees.

I debated trying to leverage some ETFs in my portfolio but decided against it for several reasons. I don't have a lot to invest, so the purchase and redemption fees of an ETF would work against me. Furthermore, I'd like to DCA into my funds, which would rack up too many brokerage fees with an ETF. Also, I still want to read more on ETFs before I try them out. Perhaps once I get my mutual funds high enough I might exchange some of them for ETFs.


  • Instead of investing directly with Vanguard, you may want to take a look at opening an account with Charles Schwab. They offer Vanguard funds as no-load funds, meaning there are no fees and it doesn't cost anything to buy or sell them. The minimum investment through Schwab is usually smaller - around $500 or so for each fund. I used to own shares of VGSIX in my Schwab account, but sold them. Instead, I own Alpine Realty Income & Growth fund (AIGYX). Schwab also offers this one for purchase at no charge and with a $500 minimum.

    By Blogger Shaun, at 3/22/2006 1:00 PM  

  • Thanks for the info. I'll check it out ;)

    By Blogger NinjaPigeon, at 3/22/2006 8:36 PM  

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