I started a little college fund for my son last year... He just finished 5th grade, so I only have 7 years left to save (wish he would stop growing up!) Looking at the cost of college and trade schools these days, I probably should have started saving about 10 years before he was born!.... But better late than never, and anything is better than nothing So far, it's gone strait into a savings account, and I haven't touched it... I didn't trust myself enough to even think about investing it at first, but I think I have a fairly decent grasp on the investment world now So what are my options? 1).. Individual stocks are out, I'm ok with all or nothing using my own money, but not his 2).. Bond or CD is out, just not enough capital yet to yield any significant appreciation 3).. Mutual fund is feasible, but I'm not keen on the idea of paying fees if there are any 4).. Index fund, a likely suitor, diversity and simplicity bundled into one package, and could see worthwhile gains over a 7 year period 5).. ETF's, all the benefits of an index fund, with the opertunity to take advantage of sector performance The plan is: I have a Robinhood account which I've quit using.. I put all "my" money in a TDA account and do my trading there now, for many reasons, one being that paying the commission keeps me more disciplined... But for this savings plan, I think that Robinhood account would be the perfect tool... Like my own zero load, zero fee, self managed mutual fund Before I decide to do it, I'd like to hear thoughts from y'all with FAR more experience than me! A few questions come to mind: Like taxes... When that time rolls around next year, will I hate myself for having two accounts active?? Selection... I've been watching all the SPDR ETF's for a while now, they seem popular and easy to follow.. But I know there are more (a lot more), so where does SPDR rank on the list? Stradegy... I don't have one yet, but I will... I'm not afraid to read, I do it every day... But if you have an ETF investment strategy that works for you, I'd love to hear it! Thanks in advance to anyone who can help! And thanks to everyone else for making this site what it is!... A place where even a dude like me can come to learn and ask dumb questions about having a future!
First, you are an awesome dad. Well done. I probably am not the best person to talk to regarding ETFs. I'm not very well educated on the variety of them. However, the man who put me through college (my dad) has been a stock broker all his life, and has encouraged me to buy more and more of EFA this year. His firm believer it will outperform the SPYs this year. That coming from a billionaire, I'll take his word for it. Hope it helps.
Thsts the best compliment a man can get!.. Thanks for that! I wish someone would say that to our first one, who hasn't talked to us since he left home almost a year ago.... That's another story, but it's also the beginning to this story... The ungreatful one gave me all the motivation I need to do better for the sweet one! So, EFA is basically an international index fund?... That's something I don't but should pay much attention to... Definitely be adding to my research list!...... Much thanks!
Hmm, I wasn't aware they had specific tax deferred funds for education I wonder though, what kind of limitations come along with it?.. Like my 401k, it's either this mutual fund or that mutual fund.... Almost like eating at Chick-fil-a, you want chicken or chicken?
@Jrich Like @tbw875 said, you are such a great dad Maybe you can start with an ETF with big caps and offers dividends. You can find some ETFs by clicking the link at the bottom. 1. Check the list of stock holdings in the ETF: Would be better if the holdings are diversified, you want to own a little bit of everything. Check if you like their holdings especially their biggest holdings. For example, if their biggest holdings are XOM and MSFT and you don't really like the outlooks of these 2 stocks, then you probably don't want that ETF 2. Check the expense ratio: If both ETFs offer similar holdings, then you probably would want to go with the one with cheaper fees. If you want to buy some additional ETFs later on, maybe you can be a little more aggressive by going with some ETFs with more growth names but have rich valuations (AMZN, NFLX) or maybe you can get some foreign exposures by buying some foreign/global ETFs I do own some ETFs but I am no expert on it, so just my 2 cents here, good luck http://etfdb.com/type/investment-st...ee_month_average_volume&sort_order=asc&page=1
TDA offers some commission free ETFs too. If you find an ETF that you like on the list and planning to hold for awhile, maybe you can just buy the ETF on TDA https://research.tdameritrade.com/grid/public/etfs/commissionfree/commissionfree.asp
Thanks for that list, that'll come in handy! But, when you talk about fees, I thought ETF's were traded just like any stock.. You don't pay fees to own a share of stock.. Why pay fees for an ETF?? I know they have to be managed, but I thought ETF managers made their profit from arbitrage.... Which, if I understand correctly, is a profit from any temporary difference in price between the fund and its holdings
I think it's because managers need to make adjustments to holdings when said holdings no longer meet criteria for the ETF. For instance if it was a high dividend yield ETF and a handful of the holdings significantly decreased or stopped paying dividends, the manager would have to swap those holdings out for new ones that satisfy the criteria. Just my .02.
Hmmm, I don't normally listen to "hot" tips but you got my attention. For those unaware, EFA is an i-Shares ETF that tracks the MSCI-EAFE index. MSCI stands for Morgan Stanley Capital International. The EAFE is an index that is composed of 21 other major international MSCI indexes from Europe, Australia, and Southeast Asia. I think you and your dad may be right. Thanks for bringing it to our attention. Monthly Chart:
https://seekingalpha.com/amp/article/3173636-how-to-beat-the-market-with-sector-rotation This is actually what I had in mind, and turns out it's already a thing Seems simple enough
