Stocks — Part XVII: What if you can’t buy VTSAX? Or even Vanguard?

sailing ship

Today we’ll explore some alternatives

In Part VI of this Stock Series, and in other posts on the blog, I recommend two specific mutual funds:

  • VTSAX (Vanguard Total Stock Market Index Fund)
  • VBTLX (Vanguard Total Bond Market Index Fund)

These are the funds I own myself. In each case they are the “Admiral Shares” version. As such they have rock bottom expense ratios, but also require a minimum investment of $10,000.

While these “Admiral Shares” versions best fit my needs, they might not fit yours. Perhaps you are just starting out and the 10k minimum is still too steep. Or maybe they are not offered in your 401k plan.

Vanguard is also the only investment company I recommend, or use. But maybe Vanguard itself is hard to access in the country where you live or in the 401k you are offered.

Not to worry. Today we’ll explore some alternatives.

Variations on the Funds

Each of these funds come in other flavors. For example, VTSAX is a Vanguard Total Stock Market Index Fund and that exact same portfolio can be found in five other funds, or what Vanguard calls “classes.” Below I list them with links to Vanguard and followed by their expense ratios and required minimum investment.

The first three are for us individual investors:

  • Admiral Shares: VTSAX .05%/$10,000
  • Investor Shares: VTSMX .17%/$3000
  • an ETF: VTI .05% (ETF=exchange traded fund. You buy ETFs in any amount you want, just like a stock. And, just like a stock, commissions and/or spreads are frequently involved, adding to your costs.)

These next three are “Institutional Shares” and you might find them in your 401k or other employer-sponsored retirement plan:

So, when I recommend VTSAX you can substitute any of these if that’s what is available and/or if one of these others better meets your needs. The important thing is that you are buying the Vanguard Total Stock Market Index Portfolio.

Similar variations can be found for VBTLX (Vanguard Total Bond Market Index Fund). If you click on those links you’ll go to the Vanguard page describing them. At the very top, under the fund name, you’ll find links to the Investor and ETF versions.

Vanguard has a very active institutional business serving 401k programs and the like. If you are curious, this is the link to the list of their institutional funds. (Mmm. Seems this link didn’t hold the list. But if you paste “institutional funds” in the search box it will bring it up.)

What if Vanguard isn’t available in my 401k (or similar) plan?

Even if your tax-advantaged, employer-offered plan doesn’t offer Vanguard you should still participate, certainly at least up to the amount needed to capture any employer match. Once you leave that employer you can easily roll your investments into an IRA with Vanguard.

The good news is that, due to the competitive pressure from Vanguard, nearly every other mutual fund company now offers low-cost index funds. Just like the variations you can find in Vanguard of VTSAX, you can in all probability  find a reasonable alternative in your 401k. Here’s what you are looking for:

  1. A low-cost Index Fund
  2. For tax-advantaged funds you’ll be holding for decades, I prefer a Total Stock Market Index Fund, but one tracking the S&P
    500 index is just fine too. See Addendum #1.
  3. You can also look for a Total Bond Market Index Fund. Most plans will also offer these.
  4. Target Retirement Funds are frequently offered in 401k plans and these can be an excellent choice. But look closely at the fees. They are always higher than those for index funds, sometimes by a lot depending on the company offering them.

For my international readers:

If you live outside the USA, Vanguard and its funds may or may not be available. Vanguard is growing rapidly and now is available in many countries outside the USA.  You can check the list out here:  Vanguard Global

If Vanguard simply is not an option, in your fund search you’ll want to follow the same guidelines as described above for 401k plans.

Also, when I talk about VTSAX or a Total Stock Market Index Fund, both these are indexes that mirror the US stock market. As I explain in my post on International Funds, this is all those of us in the USA really need. But you might find it difficult to access such a USA-centric fund.

No worries. Take a look at a Global Fund like VTWSX. This is an index fund that invests all over the globe. In some ways I like it even better than my beloved VTSAX. In fact the only reason I don’t recommend it instead, is because of it’s relatively steep expense ratio (.35%) and because VTSAX covers international pretty well for the reasons I describe in that International Funds post linked to above.

If you are inclined to go this route, you might consider the lower cost ETF version: VT  Ordinarily, I tend to avoid ETFs (exchange traded funds) because with them you have the possibility of sales commissions and/or spreads to consider. But since the expense ratio on VT is .19%, it is worth exploring. Just be careful what you pay to buy it.

One final caution. Be sure that whatever global fund you choose includes the US market. It is a huge chunk of the world economy and you can’t afford not to own a part of it. Many ‘international” funds, especially those offered by US-based firms like Vanguard, are “ex-US stocks.” The reason is that they are designed to supplement the holdings of investors already in the US market with VTSAX and the like. Makes sense, but likely doesn’t suit your needs as an investor outside the USA.

The Bottom Line:

Since I no longer work or have access to 401k plans (Rats!), my portfolio looks like this:

  • VTSAX (Vanguard Total Stock Market Index Fund) 75%
  • VBTLX (Vanguard Total Bond Market Index Fund) 25%

I also hold some cash, about 4% at the moment.

I target about 5%. (Yes I know all those add up to 105%. These are targets that vary with market swings.)

If for whatever reason I didn’t have access to those specific funds (or if I had access to the even lower expense ratio Institutional versions) I’d look for the Vanguard variations that delivered the same Vanguard stock and bond index portfolios.

If for whatever reason I didn’t have access to Vanguard, I’d look for similar low-cost funds from whatever sound investment company was available:

  • A Total Stock Market Index Fund for about 75% of my money
  • A Total Bond Market Index Fund for about 25% of my money

And if the future offered me the chance, I’d roll on in to Vanguard when I could.

If you’ve found similar solutions in your 401k, or as an international investor, please share them in the comments. I’d love to hear about them and my guess is so would the other jlcollinsnh readers sorting thru these concerns. Thanks!

Addendum I:

Throughout this blog I express a preference for investing in the total stock market index, as represented by VTSAX. But my preference for it over the S&P 500 index, as represented by VFIAX, is slight. VFAIX also comes in multiple variations, just like VTSAX.

Over on the Bogleheads forum, in response to a question, a guy called Nisiprius gives a great overview as to why this is so, right down to why the total market is preferable if available: http://www.bogleheads.org/forum/viewtopic.php?f=1&t=114954&p=1671962

In short, when available, go with a total stock market index fund. When only an S&P 500 index fund is available, as is often the case in 401K/403(b) plans, you can chose it with confidence. In my view, tying to replicate a total stock market index fund with multiple funds, while possible, is not worth the effort.

Addendum II:

For my Canadian readers, over on MMM Mr. Frugal Torque has a fine discussion outlining some of the investment considerations unique to your country: Part I and Part II.

Addendum III:

For my European readers, check out this cool post where Mrs. EW provides great map visuals of some index funds available to you.

Addendum IV:

Also from Mrs. EW — Index Investing with Dollars for Europeans

And her guest post here: Investing with Vanguard for Europeans 

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156 Comments

  1. Stephanie
    Posted May 2, 2013 at 9:53 am | Permalink

    what a super helpful post. I have bookmarked it. Thanks for all the work and research you have obviously put into this!

    • jlcollinsnh
      Posted May 2, 2013 at 11:19 am | Permalink

      My pleasure, Stephanie…

      Glad it was clear and useful for you!

  2. Posted May 2, 2013 at 10:21 am | Permalink

    Awesome post! I’m a lover of Vanguard. I had actually no knowledge of Vanguard until I started reading PF blogs. My company recently added Vanguard institutional funds in Dec 2012, and I immediately re-allocated my portfolio! Vanguard funds are easy to understand, and they are the best in their field.

    • jlcollinsnh
      Posted May 2, 2013 at 11:18 am | Permalink

      Thanks SFL!

      That’s great news about your new access to the Vanguard Institutional funds. The more Savvy people become, the more they’ll be demanding this option from their employers.

  3. Ruth
    Posted May 2, 2013 at 11:28 am | Permalink

    I love Vanguard. I didn’t see this in your post, but your Investor shares will automatically upgrade to Admiral when your total goes over $10k (or whatever the amount is for Admiral shares, different for different funds of theirs). So you don’t have to start with $10k or more, you can build your way up to Admiral shares. I just got a notice that this happened for me! I imagine that once you get over $100k they might automatically switch you to Institutional shares, but I wouldn’t know yet :-)

    I have too many Vanguard funds, bought in a moment of “I need diversification!” panic. They’re all indexes and cheap, but it’s likely not necessary to have so many. (Mid cap, small cap, international, etc., etc.)

    • jlcollinsnh
      Posted May 2, 2013 at 11:39 am | Permalink

      Thanks Ruth…

      That’s great input. I didn’t know Vanguard automatically upgraded accounts to Admiral status once they hit the 10k threshold. Back in the Jurassic age when I made the transition, you had to do it manually.

      Another fine example of their customer-centric philosophy. :)

      If I had all those funds, I’d consolidate them. But then I’m anal that way. If they are all low cost index funds you can also just leave them alone. Maybe focus new money in two or three core funds and let the others become smaller and smaller fractions of your holdings over time.

  4. Tara
    Posted May 2, 2013 at 1:05 pm | Permalink

    I don’t have access to VTSAX in my 401K, so I approximate it by buying the 3 funds available to me that approximate it: VIIIX (S&P 500 fund), VMCIX (midcap), and VEXRX (small cap) in the ratios recommended on the Boglehead forum (81/6/13 are the respective percentages).

    • jlcollinsnh
      Posted May 2, 2013 at 1:23 pm | Permalink

      Welcome Tara!

      I presume you also don’t have access to one of the three institutional versions?:

      VITPX: .02%/$200,000,000
      VITNX: .04%/$100,000,000
      VITSX: .04%/$5,000,000

      If that’s the case, you’ve done a fine job of replicating the Total Stock Market Index, which is what you want. Thumbs up!

  5. Posted May 2, 2013 at 2:27 pm | Permalink

    My plan is similar to Tara’s, though fortunately I have access to the insanely-low-fee VINIX (S&P 500) and VBTIX (Total Bond Market) funds.

    I have a similar 401k allocation to Tara (i.e. trying to mimic the total market), but with a small-cap tilt and an international fund thrown in for good measure. I know you don’t recommend international, but I feel it’s necessary for diversification and I grok the risks.

    I just wish the 401k plan offered an REIT. Is that unheard of?

    • jlcollinsnh
      Posted May 2, 2013 at 3:08 pm | Permalink

      Hey Joe…

      Aren’t those fees remarkable? and remarkably beautiful. :)

      Funny you should mention international funds. I just got off the phone with a good friend who was taking me to task for not holding them.

      For those who want to own them, I have no strong resistance. Go for it. You’ll prosper just fine. But for me, owning VTSAX I don’t feel the need (as explained in my international funds post linked to above) and I cringe a bit at the extra cost. But were it not for the cost factor, a Global Fund like VTWSX might just replace VTSAX as my core holding.

      As for REIT funds in 401k plans, I’ve yet to see one. But then, there are nearly as many different 401k plans as snowflakes. So my guess is the are out there somewhere.

      Any jlcollinsnh readers have one in their plan?

      • Posted May 2, 2013 at 4:49 pm | Permalink

        The international fund in my 401k plan is VTSNX (Total International Stock Index Fund Institutional Shares) which has a 0.12% expense ratio. Yes, it’s 3x the S&P 500 fund in my 401k plan, but lower than the Admiral version of the same fund. To each his own!

        If any readers step forward with an REIT fund in their 401k plan, I’ll quit my job and go work for their company :)

        • jlcollinsnh
          Posted May 2, 2013 at 6:03 pm | Permalink

          Ha! .12%!

          Official jlcollinsnh Seal of Approval now formally applied!

          Debating these levels of ERs are the kind of issues us Vanguard folk face. While the rest of the world pays average ERs north of 1%. :)

          Yeah, I’m very curious if any REIT-friendly 401k plans pop up myself…

          • Morgan
            Posted June 5, 2013 at 10:13 pm | Permalink

            Google has Vanguard as their 401(k) provider (go figure!) and I included a REIT (VGSNX, Vanguard REIT Index Fund Institutional Shares) when I worked for them. I did use the Target Retirement (2035) plan in addition to TCMMX, VBMPX, and VBMPX, but I couldn’t find anything that was clearly an S&P 500 tracker in their fund list, and that was what I thought I wanted.

            I’m not very good at this stuff, though. My other Vanguard portfolio (from a prior rollover) has VFINX, VEXPX, VMFXX and VSEQX, which (other than VFINX, which I sought out) is probably not a very broad an investment base.

            Anyway, I just wanted to let you know that Google’s 401(k) plan includes REITs…

          • Posted August 5, 2013 at 8:10 pm | Permalink

            Alright, I’m a man of my word so I’m quitting my job and going to work for google!

            PS: Is there an index of all articles in your “Stocks” series? I love to re-read them in order, but find that I have to click through the other (interesting, but non-stock-related) articles.

            If there isn’t, I’ll make one. I know you’re busy with your book.

          • jlcollinsnh
            Posted August 6, 2013 at 12:16 am | Permalink

            Sure there is! What kinda joint you think I’m running here anyway?? ;)

            Check out the “categories” list in the RH column.

          • Posted August 6, 2013 at 1:20 pm | Permalink

            Thanks! I’ve been sending the series to friends and always found it awkward to pass around. This’ll help!

          • jlcollinsnh
            Posted August 6, 2013 at 2:41 pm | Permalink

            Hi Joe…

            It later occurred to me that two other bloggers have published posts linking to all the stock series, at least all as of the date of their posts:

            http://www.mrmoneymustache.com/2013/03/07/how-about-that-stock-market/

            http://www.streetsmartfinance.org/2013/06/28/how-to-invest-money-in-any-economy/

            Maybe those will also help.

            I appreciate you passing my stuff along. It is the highest compliment of all!

      • Michael
        Posted September 16, 2014 at 1:02 pm | Permalink

        I have this REIT as an option in my 401k plan through Fidelity, VGSNX. I work for Ernst & Young

  6. Posted May 2, 2013 at 4:41 pm | Permalink

    Hi Jl,

    I assume you are not making any withdrawals from these funds.

    Presumably you have other income streams you use at this
    point in your retirement?
    Seems I once read you are in the 55 plus age bracket?

    Steve

    • jlcollinsnh
      Posted May 2, 2013 at 6:14 pm | Permalink

      Hi Steve….

      Yep. 55+.

      Nope. No other income streams since I hung up the job two years ago.

      As I’ve mentioned in this post – http://jlcollinsnh.com/2012/12/07/stocks-part-xiii-withdrawal-rates-how-much-can-i-spend-anyway/ – I’ve been drawing down a bit more than 5% each year. Mostly it has come from unwinding old investments I shouldn’t have made, like CGMFX. Those are done now.

      With the sale of the house, I’ve set aside a chunk of cash that should last thru most of next year.

      Each year I’ve also been moving IRA money into our ROTHs at a pace that keeps me just under the 15% tax bracket. This to avoid being pushed into higher tax brackets when our mandatory withdrawals kick in at age 70.5.

      Since I hold the REITs and Bonds in the IRAs, at some point I might have the interest and dividends routed to our cash accounts for spending. Or I might continue the ROTH strategy and draw living expenses from my taxable VTSAX fund.

      Depends on where we are at the time…

      • Posted May 2, 2013 at 9:10 pm | Permalink

        What’s your plan for SS?

        Also, what do you figure you need each year to pay expenses?
        I ask mainly because I am in your age bracket and will be making
        similar decisions when my wife leaves her job in 2 years.

        I am just 61. I figure about $4K monthly to be comfortable.

        Steve

        • jlcollinsnh
          Posted May 2, 2013 at 11:24 pm | Permalink

          My wife will take her SS at 66. My current thinking is that I’ll wait till 70.5. I figure she will outlive me by a couple of decades and, since my benefit will be larger than hers, this will maximize her guaranteed check.

          I think of my expenses in three categories:

          Basic living – rent, food, utilities, car and the like.
          Travel, which has been a big one since I retired two years ago.
          College for our daughter. Big expense but one that goes away in another couple of years.

          Because the travel is easy to cut back if we hit a rough patch and because the college expenses will end, I feel comfortable running over the traditional 4% withdrawal rate.

          so far, so good!

  7. Posted May 2, 2013 at 6:23 pm | Permalink

    So I’ve got a question for you that no one else has been able to answer thus far. Id like to get into vgslx because im 80/20 in stocks /bonds right now (im 24 btw). Anyway, should I put this in my roth ira or my taxable account. On the one hand, I seem to recall that dividends are taxed at my income tax rate instead of capital gains so it would make sense to put the Reit fund in my tax advantaged roth ira account. But on the other hand, id like to eventually turn the vgslx into the a downpayment on a home (in 5+ years). Any thoughts?

    • jlcollinsnh
      Posted May 2, 2013 at 8:50 pm | Permalink

      Hi CR….

      I’d definitely put it it the Roth. You can withdraw your contributions tax-free anytime. You can even withdraw the earns on them tax free for a down payment on a first house. Pretty much a no lose situation.

      Now having said and done that, I’d also scramble to accumulate the downpayment outside the Roth. Just because I HATE the idea of drawing down a Roth — the tax free growth potential over decades is just too beautiful to give up.

      Hope that helps?

      • Posted May 2, 2013 at 9:17 pm | Permalink

        So I thought about this again and I’ve got a new question. Whatever I put into my Roth, I’m not going to take out until retirement (in 41 years… for real). Does it make sense to hold the REIT fund in the Roth or outside of the Roth assuming I’ve got a sizable taxable investment fund (in VTSAX) as well?
        I guess it feels right that if I had the REIT fund in a taxable account, I could trade it in for a down payment at some point and keep a consistent RE asset allocation. But I don’t actually know if it matters that much. Maybe I should just trade VTSAX for a down-payment when the time comes.
        Does that all make sense?

        • jlcollinsnh
          Posted May 2, 2013 at 11:38 pm | Permalink

          sure, it makes sense and you are on to something.

          If, as you should, you think of all your assets as a whole where you hold them matters only for tax reasons.

          For instance, we hold our bonds and REITS in IRAs to protect the dividends from taxes. We fill our Roths with VTSAX because I expect stocks to have the strongest growth over time and the ROTH best protects that.

          But we also hold VTSAX in our taxable account because stock index funds are inherently tax efficient.

          So to see the way this works in a practical sense, consider our recent home sale. Since I count home equity along with the REIT as my RE allocation, I wanted the sale proceeds in the REIT in the IRA. But, of course, I couldn’t put that money into an IRA.

          So, the house sale proceeds actually went into the taxable VTSAX fund. Then, in turn, I transferred an equal amount of VTSAX shares in our IRA to the REIT also within the IRA. Net result, my allocation remained exactly the same.

          Make sense so far?

          Were I ever to buy a house again, I’d reverse the process:
          1. Sell taxable VTSAX shares to fund the purchase.
          2. Transfer REIT shares in the IRA to VTSAX shares also in the IRA. Thus keeping the allocation the same.

  8. Wrightius Maximus
    Posted May 3, 2013 at 1:04 am | Permalink

    Thank you for your brilliant blog. Such a good read.

    A question. I’m in Australia. We have access to Vanguard here. Our economy has faired better than most after the GFC. I can get a high interest savings accounts paying 5% pa. Now I’ve heard index funds have only been paying 2% pa the past decade and I’m wondering if I should take the 5% on offer locally or still put in Vanguard over the long term? I’m a newbie and I”ve read all mmm and ere and now I’m devouring yours. Brilliant work.

    • Antipodean
      Posted May 3, 2013 at 6:41 am | Permalink

      Hi WM,

      I am living in Australia as well.

      Not sure what you mean about index funds paying 2%pa? Here is link to Vanguard Australia pre-tax performance for retail funds for the last decade https://www.vanguardinvestments.com.au/retail/ret/investments/managed-funds-retail.jsp#grossperformancetab

      Hope this helps:)

      • Wrightius Maximus
        Posted May 3, 2013 at 9:42 am | Permalink

        Thanks Antipodean. I got my Info from mmm saying that his index funds had not faired too well in the past decade in “Where’s my 7%” I also read Simple living in Suffolk blog and he speaks of not faring too well either. Thank you very much for the link. I shall investigate further.

      • jlcollinsnh
        Posted May 3, 2013 at 1:06 pm | Permalink

        Thanks for adding to the conversation, AP. Great link!

      • Wrightius Maximus
        Posted May 4, 2013 at 10:17 pm | Permalink

        Thanks for that link AP. I’ve had a look around and I’m going to pick up the phone and call Vanguard. I see we are offered around 30 funds in Aus as opposed to 140 in the US. I am at the beginning of the journey with 50k to put in and then 36k+ pa for the next ten years. I am comfortable with risk and want to make my money work the hardest it can in that timeframe. What I’m asking is what Aust fund is comparable with the US VTSAX? Then I guess I pile it all into there? All thoughts are most welcome.

        • Antipodean
          Posted May 6, 2013 at 7:45 am | Permalink

          Hi WM

          The nearest of the Australian Vanguard funds to the VTSAX would be the VTS ETF https://www.vanguardinvestments.com.au/retail/ret/investments/etfdetailVTS.jsp

          To capture exposure to the rest of the world there is VEU ETF https://www.vanguardinvestments.com.au/retail/ret/investments/etfdetailVEU.jsp

          Living in Australia it would be prudent to consider local stocks due the benefits of our favourable tax treatment of dividends through imputation credits
          https://www.vanguardinvestments.com.au/retail/ret/investments/etfdetailVASIFE.jsp

          These ETF can be purchased via discount brokers such as ETrade.

          Depending on your age you may want to consider whether invest via Self-Managed Super Fund to take advantage of the favourable tax benefits.

          I invested about $50K in Feb this year in the Lifestyle High-Growth Managed Fund and plan to invest at least $19K (or more if I can grow my salary) per year for next 10 years via automated regular payments. I know the management fees are higher using the Vanguard managed funds vs Vanguard ETF but found the idea of investing regular small amounts into multiple ETF and re-balancing required too much micro-management on my part (a nice way of saying I am lazy).

          I guess it is up to you on what approach you figure works best for you:)

          • Wrightius Maximus
            Posted May 10, 2013 at 8:23 am | Permalink

            Thank you for your very detailed explanation Antipodean. I’m still very much at the beginning of investing but I’ve got a lot to invest and I want to do it correct. I just want to learn more.

    • jlcollinsnh
      Posted May 3, 2013 at 1:05 pm | Permalink

      Thanks, WM….

      and welcome. Glad you’re enjoying it around here.

      As to your question, what you are really comparing is apples and oranges: a Savings Account with a (hopefully) secure principle and an interest rate with a Stock Fund.

      Stocks have the potential for capital gains and, as I explain elsewhere on the blog, they should dramatically outperform savings accounts over time. You are only looking at the 5% savings interest rate v. the stock dividend currently at 2%. This dividend and the value of the stocks both have the potential to grow.

      Of course, there is also the possibility that they will decline, especially in the short term. The saving interest and value should remain fixed. Although it will lose ground to inflation over time.

      Make sense? If it does, you can use these guidelines to make your call. Good luck!

  9. D
    Posted May 3, 2013 at 3:43 am | Permalink

    Hi,

    First of all many thanks for picking up the subject. As someone following your blog from Europe I would like to share a few additional details.

    The Bogleheads also covered the differences between US/UK/European investors and list some alternatives:
    http://www.bogleheads.org/wiki/EU_investing

    When it comes to investments or even saving for retirment we are far away from the ‘United States of Europe’. Different tax systems, different pension vehicles, different social securitiy systems etc. Mind you Europe hasn’t felt that fragmented in many ways and on the edge of breaking into pieces for quite some time.

    There are different tax rules in most EU countries and it does matter what fund domicile you chose, e.g. most Vanguard funds over here are Dublin-based vehicles that usually come with a tax disadvantage to domestic funds or investors outside of Ireland, if the funds do reinvest the distribution.

    Also, unfortunately with the exception of the UK (where you do have an investment culture) there is little regulation when it comes to funds/ETFs across Europe, ie. rules what they can/cannot do. So one has to look very deeply into the details. There are ETFs that are “replicated” (=they invest your Dollars/Euros physically in the underlying stocks/bonds) and ones with a lower annual management charge that are “synthetic” (=they ‘guarantee’ you to match the performance of the index, however, they do invest in options, derivatives and all sorts of things). An analysis of the db x-tracker MSCI World ETF has for example shown that it did not hold a single stock out of the MSCI World, but was invested in YEN-derivatives and all kinds of complex stuff.

    When it comes to the bond part of the portfolio one has to realise that you either go for a bond index fund/ETF that invests in domestic (government) bonds such as German Bunds or UK Gilts or you will end up with a European portfolio with high weightings in countries such as Italy, Spain and France which might not be the safest option within the current Euro crisis. So high risk at low yields. Perhaps that even speaks against a bond portion at all for the time being.

    You would not believe that the total number of people that invest in stocks average around 5% in most bigger European country (exceptions are UK and Sweden). That means that 95% of Germany’s population has lazy money on the beach for currently 0.25-0.5% in a cash/savings account (inflation rate 2% rising). Unfortunately, that also leads to very little competition in the investment market (dominated by the big banks) and a situation where funds/ETFs still get ‘sold’ (by financial advisers, bankers etc.) and not ‘bought’ (by self-directed, informed private investors).

    Looking forward to following your blog in the future.

    Greetings from sunny Europe!

    D

    • jlcollinsnh
      Posted May 3, 2013 at 1:10 pm | Permalink

      Hi D…

      Thanks for adding a European perspective!

      Very interesting, especially the low numbers of investors. Mmmm. I guess given the difference in governments and cultures it makes sense that this would be the case.

  10. Ottawa
    Posted May 3, 2013 at 8:35 am | Permalink

    I loved your (now 17 part) investing series….A Canadian perspective…

    We’ve just had Vanguard move into Canada. The equivalent to VTI is VUS, for those of us who don’t wish to move money into US$ (Norbert’s Gambit helps with the conversion costs if you do). VUS is currency hedged which will add a little drag, but the 0.17% MER is not too bad.

    VEF might be the best route for international exposure holding around 950 common stocks of companies in approximately 22 countries in Europe, Australia, Asia, and the Far East ( https://www.vanguardcanada.ca/individual/etfs/etfs-detail-overview.htm?portId=9555) However, a 0.43% MER.

    The Vanguard REIT (VRE) is new on the scene and I’m waiting to see how it shapes up…until then I’m in XRE (ZRE would be good too).

    Would be interested to hear your perspective on my strategy: I will be receiving an indexed DBB pension at 60. I treat this as my bond fund. Thus, I invest little in bonds (10% – combination of Canadian short term and US high yield).

    In summary (all ETFs):
    VUS (30%)
    XRE (10%) (bearing in mind 55% of net worth currently in mortgage free house)
    ZDV (25%) Canadian dividend ETF
    HXT (20%) Canadian top 60 by market cap ETF (Growth)
    XSB and CHB (10%) short term bond and high yield bond
    ZUT (5%) utilities ETF

    I will be looking to shift the HXT into an international ETF like VEF…as I’ve got more Canadian exposure than I’d like.

    I find my portfolio to be WAY more clunky than I’d like…I hope that Vanguard will continue to make offerings into the Canadian space…appreciate any comments! Cheers

    • jlcollinsnh
      Posted May 3, 2013 at 1:21 pm | Permalink

      Welcome Ottawa….

      and thanks for the Canadian update. Does VRE focus only on Canadian RE?

      As to your portfolio, I agree it seems a bit clunky. When I found myself in that postion a few years back I sold some positions and just let others ride. I focused new money on the three funds I hold now. When I retired I drew down on the remaining “extras” till they were done.

      With 55% of your net worth in your house, you certainly don’t need a REIT. In fact that percent in RE would make me uncomfortable enough to consider:
      1. Selling the house
      2. refinancing to free up capital to deploy for a more balanced allocation.

      Since Canada is a small economy, I applaud your plan to expand internationally. Personally I’d look at a Global Fund like VTWSX, if you have access to it. If not, at least if provides a model for where you want to be.

      Cheers!

  11. Posted May 3, 2013 at 8:51 am | Permalink

    I’m still working on getting my financial “house” in order, but do have a 401k through work. I’ll admit to being lazy, and doing the “set and forget” with a Targeted Fund. It seemed to have been doing okay.

    Towards the end of 2012, our parent company decided they would combine our company 401k plan into their plan. I figured the Target Fund had worked for me so far, so I’d continue doing so in the new plan. The fund for my age bracket is considered their most aggressive plan (I’m 34). We finally got our statements from last quarter. My “aggressive” return? 3%. There were complaints across the board from our company regarding the new plan. We had a quarter overlap between the two plans, so we all got to see the difference in return % on the two plans during the same quarter, prior to our old 401k money being rolled into the new 401k plan.

    Looking into it, there is one Vanguard Index Fund offered that fared MUCH better than my Aggressive plan last quarter. Actually on the sheet provided, it fared much better the last quarter, year, 5 year and 10 year period. I’ll be switching my allocations this weekend.

    Thank you so much for making it easier for those of us “newbies” to understand the market!

    • jlcollinsnh
      Posted May 3, 2013 at 1:29 pm | Permalink

      Welcome Ms W….

      As you’ve likely figured out, we love simple around here. Lots of reasons, not the least of which it provides better performance.

      You might be being “lazy” using a TRF, but you are also being smart. Here’s my take on why: http://jlcollinsnh.com/2012/12/18/stocks-part-xv-target-retirement-funds-the-simplest-path-to-wealth-of-all/

      I’d be curious as to which TRF you have and which.Index fund you’ll be moving to. Performance comparison can be very tricky, and misleading. Even looking out ten years. The last ten years have been a fairly unique time….

      • Posted May 6, 2013 at 2:13 pm | Permalink

        Looking through my paperwork/online. The TRF under the new plan is MRP25 (Managed Aggressive II – Axia Advisory Corp). The expense ratio (according to the website) is .92%. The website shows the quarterly return at 4.61%, so higher than what I had originally thought. Under our old plan I was enrolled in the American Funds 2045 Target date-R2, which returned 7.20% in the same quarter, but with a much higher expense ratio (1.49%)!

        The Vanguard Fund offered in the plan is VINIX, which is listed as an “Institutional Fund”? I obviously know very little, and don’t see it listed in your post. It has an expense ratio of .04%.

        So, I understand that past performance doesn’t guarantee future returns. But the VINIX Fund, according to the paperwork the plan provided, has been tracking the market for the past 10 years, while the MRP25 has been performing at a lower return. So, in combination with the lower expense ratio, wouldn’t I want an index fund over a managed fund?

        Right now my portfolio is small. I have about $4,500 in the 401k plan, along with about $1,000 in a Roth IRA and some equity in my home. My largest “investment” for the next few years will be in my education, so I can move ahead in my career.

        • jlcollinsnh
          Posted May 6, 2013 at 3:00 pm | Permalink

          VINIX is the institutional version of Vanguard’s S&P 500 index fund. As such it will precisely tract the market. You don’t see it in my post as I only talked about the variations of the Total Stock Market Index.

          “So, in combination with the lower expense ratio, wouldn’t I want an index fund over a managed fund?”
          Exactly, and VINIX is a fine choice.

          Don;t worry that your portfolio is starting small. Everybody’s does. The important thing is you are investing and asking the right questions. You are on your way!

  12. Eric
    Posted May 3, 2013 at 10:02 am | Permalink

    My employer does out 401k through Fidelity, so I don’t have any access to Vanguard to at the moment. They just (as of May 2013) started offering an index fund as an option – FUSVX: Fidelity Spartan 500 Index Advantage. It has a low expense ratio, 0.06%, however its not as diversified as the VTSAX, as it only includes large cap stocks. But it will have to do for now, as it is the only index fund I have available.

    I’m excited to finally have an index fund. My prior 401k funds didn’t even come close to matching the market.

    • jlcollinsnh
      Posted May 3, 2013 at 1:35 pm | Permalink

      Hi Eric….

      Fidelity Spartan 500 is a fine and low cost fund. It tracks the S&P 500 and as such is an exact match to Vanguard’s. My only concern is Fidelity uses it as a “loss-leader” to try to lure folks into their more expensive options.

      You are correct that neither are as diversified as VTSAX. That said, they still closely match its performance over time.

      So, don’t give it a second thought. Fund your Spartan 500 to the max. You can always roll it over to Vanguard and VTSAX when you leave that employer. It will serve you just fine in the meantime.

  13. Rockstache
    Posted May 3, 2013 at 12:45 pm | Permalink

    I love your Vanguard series so much! I was so excited when I saw this new post.

    I recently opened my first Vanguard Roth IRA but I only had $1,000 to put in it to start. I do plan to fully fund it this year (and one for my husband), but ony had the $1,000up front. I put it in to a Target Fund to begin with because that was the only one that seemed to offer $1,000 funds as a minimum. Was this a bad move? Once I get $3,000 built up in there, can I transfer into the VTSMX fund? If so, will there be any penalties (tax or otherwise)? Thank you so much for your help, I love your blog.

    • jlcollinsnh
      Posted May 3, 2013 at 1:42 pm | Permalink

      Welcome Rock….

      and thanks for the enthusiasm!

      Putting your grand in a TRF is just fine. Good move, if fact as I was just discussing with Ms. W above. In fact, you could just stick with it, keep adding to it over time and call it a day.

      Once you build it up to $3000 you can easily switch to VTSMX. It’s in your ROTH so no tax or penalties to worry about. Once it’s there, as Ruth explained above, Vanguard will automatically move it to VTSAX and Admiral status once you hit 10k.

      Bottom line: You are off to a great start!

  14. Posted May 3, 2013 at 1:09 pm | Permalink

    Thanks for the information, but I’m surprised that you don’t own any international funds like the Vanguard International Stock Index Fund (VGTSX). Is there a reason for this?

  15. Danny
    Posted May 3, 2013 at 7:40 pm | Permalink

    I was turned onto your site through MMM, and got to say that I’m impressed, and especially by this series. I just switched jobs about a month ago and was going to just rollover my 401(k) into the new company program (which isn’t Vanguard). However, after reading this series for a while and it logically making a lot of sense, you’ve inspired me to do some research, open a Vanguard IRA and primarily invest in the three mutual funds listed above. Just wanted to thank you kindly for sharing your knowledge and experiences!

    • jlcollinsnh
      Posted May 3, 2013 at 10:11 pm | Permalink

      My pleasure Danny…

      thanks for the kind words! Glad to hear this made sense to you.

  16. AK
    Posted May 3, 2013 at 8:49 pm | Permalink

    Dear Joe,

    I am new to your blog, and have enjoyed reading random posts. Enjoyed your post on the Vanguard. I have been with them myself for more than 15 years. Recently I was stunned (and pleased) to read that Vanguard is managing $2 trillion U.S. mutual fund assets (15% of all US investments)

    https://institutional.vanguard.com/VGApp/iip/site/institutional/researchcommentary/article/InvCommCEOThanks

    http://articles.marketwatch.com/2013-01-14/finance/36322923_1_vanguard-chairman-vanguard-investor-jack-bogle

    Pretty amazing!!!

    • jlcollinsnh
      Posted May 4, 2013 at 9:35 am | Permalink

      Well, you know what they say:

      It’s getting the first trillion that’s hardest. ;)

  17. Posted May 3, 2013 at 10:24 pm | Permalink

    Every young person ought to read this article! Guess what? Last Christmas, my wife and I gave $10k VTSAX(your favorite) investment to both of my daughters. It has no strings attached EXCEPT that they can’t touch it till only after they retire.

    And you were the inspiration for this gift, my friend!

    Oh, your blog is looking more like MMM( 44 comments and counting.. way to go, pal)

    Shilpan

    • jlcollinsnh
      Posted May 4, 2013 at 7:46 am | Permalink

      Cool beans!

      Now, assuming they are around age 20 now, that they will retire at age 62 and that this investment will double every seven years on average:

      Age Investment
      27 $20,000
      34 $40,000
      41 $ 80,000
      48 $160,000
      55 $320,000
      62 $640,000

      Nice gift!

      Here’s another idea. Once your kids start working, fund a ROTH IRA in their names. You can match their income up to $5000 a year. It could grow as illustrated above, tax free and free of tax when they withdraw it in retirement.

      jlcollinsnh is a long, long way from MMM. But the comments are growing and I love the participation from readers!

    • Ed
      Posted April 30, 2014 at 9:40 pm | Permalink

      Shilpan,

      would like to do something similar for my stepson’s soon arriving daughter. How do you keep them from not touching till they retire?

  18. RW
    Posted May 4, 2013 at 5:18 am | Permalink

    Jim,
    Happily invested in Vanguard, Thanks for the great advice.
    You mentioned in a reply above (from Steve) exchanging a traditional IRA into a Roth IRA, Besides paying the taxes when you exchange is there any other drawbacks or pitfalls? Other than paying less taxes when withdrawing, when would this make since to consider or not? Are you planning a series or post about withdrawing assets to avoid the tax man?

    Love to hear about Prague!

    As always enjoying the series and your blog!

    RW

    • jlcollinsnh
      Posted May 4, 2013 at 9:34 am | Permalink

      Thanks RW….

      Glad you like it!

      OK, on to your questions:

      Besides paying the taxes when you exchange is there any other drawbacks or pitfalls?
      Nope. Paying the taxes is it.

      Other than paying less taxes when withdrawing, when would this make since to consider or not?
      This is a tough question with no easy answer. What you want to do is pay taxes as late as possible but also at the lowest rate possible. Since I think 15% is as low a rate as I’ll ever see, each year since I retired (and my income dropped) I’ve been converting as much as I can without being pushed into the 25% bracket. My other motivation is that at 70.5 mandatory withdrawals kick in. Since we’ll also both be collecting SS then, our tax rate could easily be higher.

      Are you planning a series or post about withdrawing assets to avoid the tax man?
      Nope. But it’s a great idea! I’ll add it to the list.

  19. slowth
    Posted May 5, 2013 at 4:05 pm | Permalink

    Thank you for another helpful post. In a recent post you determined that a 100% stock allocation had a better (historical) return than a mixed stock/bond portfolio, so why hold any bonds? Are you holding bonds to limit your risk from market collapse, and in that case your bond and REIT holdings could allow you to recover? I have bonds now, around 20% of my portfolio, but I’m trying to decide if I should shift that to stocks instead.

    • jlcollinsnh
      Posted May 6, 2013 at 11:15 am | Permalink

      Welcome Slowth…

      glad you liked it!

      There are two main reasons to hold bonds:
      1. They tend to be less volatile than stocks and so owning them tends to reduce portfolio risk and makes for a smoother ride.
      2. They are a deflation hedge.

      The price you pay is, typically, lower total returns over time. But the exeption, at least in some research, is an 80/20 split like you hold.

      My guess as to the reason is that, assuming you are conscientious about rebalancing, over time this mix will give you the advantage of buying low and selling high while still holding a strong enough stock percent for maximum performance.

      For more on bonds: http://jlcollinsnh.com/2012/10/01/stocks-part-xii-bonds-and-a-bit-on-reits/

  20. Wrightius Maximus
    Posted May 6, 2013 at 1:54 am | Permalink

    Wow.

    This is a newbies account of what I’ve done so far. I rang up Vanguard Australia where they do offer VTSAX. I was told that I can only purchase through a broker (gulp, more new scary stuff to learn). Then I was told I may be subject to more tax as it is an international fund. Why is nothing straight forward? : ). I just don’t want to mess it all up. I’m very skeptical of getting any help/financial advice as I am now aware that fees eat up a lot of my money. Confused. I wanted to deposit into VTSAX every fortnight as I got paid but now I know brokers fees will cost me dearly if I deposit that regularly. Anyone have any thoughts on what is the ideal deposit rate to keep brokers fees as low as possible?

    • jlcollinsnh
      Posted May 6, 2013 at 11:24 am | Permalink

      The good news, WM, is that you are moving slowly, asking good questions and gathering information before you act.

      The market will always be there. You’ve got time.

      Hopefully, with this blog, you now know what you are looking for. With some help from Vanguard and your fellow Aussies like AP, you’ll soon know how to best get it where you are.

      Please share with us what you learn!

      • WrightiusMaximus
        Posted May 14, 2013 at 2:11 am | Permalink

        I think I’m going to go for this one Mr Collins. https://www.vanguardinvestments.com.au/retail/ret/investments/funddetailHIG.jsp
        Does it look good? VTS is only available as an ETF in Australia. I don’t fancy tackling spreads and brokers as I’m a newbie.

        • WrightiusMaximus
          Posted May 15, 2013 at 2:22 am | Permalink

          Or this one?
          https://www.vanguardinvestments.com.au/retail/ret/investments/funddetailHYF.jsp

          It’s either the HighGrowth fund or HighYield fund.

          I can’t make up my mind.

          • jlcollinsnh
            Posted May 18, 2013 at 3:03 pm | Permalink

            Hi WM….

            Well, those two are basically at opposite ends of the stock universe. Both will go in and out of fashion, usually at opposite times.

            Growth is the more aggressive of the two and I’d expect it to be more volatile.

            Which you choose depends on your temperament as much as any performance considerations.

            A total stock market index fund would, by definition, have both covered and that’s what I’d buy.

            Were that not available to me, I’d split my money between these two and basically replicate it.

  21. Posted May 6, 2013 at 5:57 am | Permalink

    I’ll send all of my fellow Dutchies to this blog post!

    • jlcollinsnh
      Posted May 6, 2013 at 11:20 am | Permalink

      Thank you!

      and I hope they, and you, will add any useful Dutch-specific info to the conversation!

  22. brighteye
    Posted May 7, 2013 at 4:48 am | Permalink

    This post is most welcome! Love your blog and your writing style. As a investing beginner I often get confused about the fund names, so this is really helpful. And I appreciate that you included advice for your international followers :-)

    • jlcollinsnh
      Posted May 7, 2013 at 7:25 am | Permalink

      Welcome, Brighteye….

      and thanks for the thumbs-up! Glad you are finding value here.

  23. Teepin
    Posted May 11, 2013 at 5:10 am | Permalink

    I’ve been lead here from MMM. I’m a Kiwi with an investment in our New Zealand Share Market through individual share investments, term investments through banks and a few Bonds, which I have built up over the last 15 years, plus of course property investment which is breed into Kiwis. My only international investment is through my ‘Kiwi Saver Fund’ our NZ Superannuation fund, which I started 5 years ago. It is comprised of 30 per cent indexed Australasian shares, 20 per cent indexed World shares, 10 per cent Property, 30 per cent NZ and International bonds, 10 per cent cash, I contribute 3 per cent which is matched by 3 per cent from my employer plus a small bonus from our Government each year, this Kiwi Saver is locked up till I’m 65. So after reading a number PF blogs I have been very keen to get some more international exposure. Vanguard really appeals, low fees and index based. It ticks all the boxes. As Vanguard have no exposure here in New Zealand I’ve had to look over the ditch to Australia. Late last year I took the plunge with a small dabble in a Vanguard ETF listed on the Australia Stock Exchange tracking the Total US market called VTS. So far so good, upward share price and a small dividend paid, so I plan to add to it in the near future, and will look at an ETF that tracks the World Share Market as well. My question is – as a Kiwi is an ETF through the Aussy Stock Exchange my best plan of attack to or is here an easier way (or should I say more direct way) that I have missed?

    • jlcollinsnh
      Posted May 12, 2013 at 12:23 pm | Permalink

      Welcome Teepin…

      Glad you found your way over here.

      Perhaps one of our Kiwi/Aussie readers has figured this out and will weight in.

      My guess, and it is just that, is that the ETF was/is likely your best way. What did the transaction cost you?

      But I would also spend some time on the Vanguard site and/or give them a call to see if there is a way to buy the funds directly from them.

      • Teepin
        Posted May 19, 2013 at 2:38 am | Permalink

        I buy shares through my bank. I have a cash management account so mostly I buy online. Here are the Brokerage fees they charge here in NZ.

        New Zealand Trades 0.3% with a minimum of NZ$30.00 per trade or Telephone order 0.7% with a minimum of NZ$35.00 per trade
        Australian Trades 0.3% with a minimum of AU$30.00 per trade or Telephone order 0.7% with a minimum of AU$35.00 per trade
        United States Trades-For orders up to US$50,000 0.8% with a minimum of US$50.00 per trade plus Agency Fee 0.4% with a minimum of US$40.00 per trade

        Really enjoying your blog
        Cheers
        Teepin

        • jlcollinsnh
          Posted May 19, 2013 at 11:55 am | Permalink

          Thanks, Teepin…..

          …glad you are!

          And thanks for the great informational comment above. Very helpful addition to the data base here!

    • Reuben
      Posted June 7, 2013 at 2:22 am | Permalink

      Hi Teepin

      I am a fellow kiwi investor and am interested in the VTS ETF on the aussie exchange. I was wondering about what taxes are incurred on the returns on the investment (dividends/capital gain). To my understanding only dividends are taxed currently, do you have any further info? Also, do you just accept the foreign exchange risk (NZ dollar weak against AUS recently) or do you go about it some other way?

      Cheers, Reuben

  24. Donna
    Posted May 25, 2013 at 3:04 am | Permalink

    Hi Jim:

    First, I want to Thank You for sharing your knowledge and experience regarding money and investing.

    Second, I have a couple of questions that you may know the answers to right off. I have a general investment account in which I have selected specific dividend stocks. Overall the stocks have done quite well. I want to know, can I transfer these specific stocks to a Vanguard ROTH IRA? In other words, can one choose the stocks that make up their ROTH IRA or are these IRAs all pre-selected stocks. The other question I have is as an American living abroad and working for a foreign company, am I allowed to have a ROTH IRA?
    I tend to spend some of my winter and summer vacations reading up on money matters but these are two questions I haven’t gotten to yet.
    Thank you in advance for your feedback.
    Take care.
    D

    • jlcollinsnh
      Posted May 25, 2013 at 12:35 pm | Permalink

      Hi Donna…

      Glad you found your way here!

      Yes, you can hold individual stocks in your IRAs, Roth and otherwise. If you currently hold these at another brokerage, Vanguard can help you transfer them. Once you are set up with Vanguard, you can buy and sell stocks thru them. But while you can do, whether you should is another question. Consider first:

      1. Do you really want to own individual stocks? If you read much of this blog you’ll read why I don’t like this idea.
      2. One of the advantages of owning individual stocks is that you can decide to sell the losers when you chose for a tax deduction and to offset gains in others. You lose this advantage in an IRA.
      3. Dividends enjoy favorable tax treatment. Inside an IRA they will be taxed as regular income once you begin withdrawing them. This doesn’t apply to Roths, of course.

      As a US citizen, you can own a Roth regardless of where you live. Subject, of course, to the income restrictions on all Roths.

  25. Lasse
    Posted May 27, 2013 at 10:53 am | Permalink

    I’ve been following your blog for quite a long time now, and I have learned ALOT.
    Unfortunately I do not live in the US, and the tax laws on investment are quite different here in Denmark compared to the US tax laws.
    So I have felt like I knew what to do, I just didn’t know how to go about doing it for a long time now, and as a result the wife and I still just have our money sitting idle in the bank.

    Basically I think the main dilemma boils down to whether or not we want to pay 42% on our investments in Vanguard, or pay 27% on investing in a Danish index fund that also have 10 times higher fees – About 0,5+% vs Vanguards 0,6%

    What would you choose?
    Of course the exposure provided by Vanguard and any Danish index funds might be different as well, but that’s a whole other question, I guess.

    We would also like to ask your opinion on paying for financial advise – would you advice us to spend about 1000 $ on getting proper independent financial investment advice?
    The price on this has been holding us back, because it’s a lot of money, but then again it’s also a very complicated field, where we could be setting ourselves up for a loss or needless heavy taxation without setting it up properly in the beginning.
    Still we only have about 40k $ in savings and are putting in about 2-3k$ a month, so it’s not a lot yet, but it’s growing at least.

    I know, especially the second question, is hard to answer, but we would appreciate any advice you can give, because having our money in the bank at 0,25% interest is frustrating in the extreme.

    Thanks so much for the wisdom you’re spreading here, and keep up the good work!

    • jlcollinsnh
      Posted May 27, 2013 at 12:42 pm | Permalink

      Hi Lasse…

      and welcome. We can always use a few more Danes around here!

      My daughter is about to wind up her year studying in France with a return to Denmark to catch up with some of her Danish friends.

      As you know, I have no expertise in Danish or European investing options. All I can offer you is some general guidelines at to what I in your position would be looking for, and that would be something that closely matches this:

      VTWSX: https://personal.vanguard.com/us/funds/snapshot?FundId=0628&FundIntExt=INT

      Please note that this includes the USA market, which given its size is critically important.

      In fact, the only reason I don’t recommend this rather than VTSAX is the .35% expense ratio which, while low, is still much higher than the .06% of VTSAX.

      Since you are stuck with higher ERs overall, it is not the same concern for you.

      What you are looking for is a broad based world stock index fund with the lowest cost you can find.

      Your second question is actually the easier of the two.

      Before spending money on an advisor, read the stock series on this blog, especially this one:
      http://jlcollinsnh.com/2012/06/06/why-i-dont-like-investment-advisors/

      Ask whatever questions you have here. After all that, if you still feel the need you can consult a fee-only advisor.

      But don’t be in a rush. You are in the process of learning to find your own way. Keep saving your money while you do. The market will be there for you when you are ready.

      Hope this helps!

      • Lasse
        Posted May 28, 2013 at 5:01 pm | Permalink

        Thank you for the reply!

        I have read every one of the posts on your blog and I have learned a lot from them already.
        Unfortunately some of the information I feel that we still need to really take the plunge is information on taxes and what would be smart in terms of our relatively complex Danish tax on investments.
        I can’t seem to find much, if any, information on this around the internet, as it seems passive investment isn’t really all that big here in Denmark for some strange reason. But I’ve searched the net for almost a year now, so we’re getting a bit ripe for paying an independent advisor, even though we really would rather not shell out that kind of money. We’ll hold off a bit longer then, while I try to get a bit wiser still.

        At any rate, one of the Danish index investment funds with the lowest fees have 3 US funds at 0,5% fees. They follow either the MSCI USA Growth, MSCI USA Small Cap, MSCI USA Value. They also have the same kinds just for Europe (MSCI Europa Growth and so forth).
        Do those sound useful?
        They have some global ones like ‘MSCI World Minimum Volatility Index’, but I don’t know if that’s any good either.
        It feels like really deep water if I should go out and try to compare other index funds to what Vanguard provides, because not only might they follow slightly different indexes, some also charge you fees for buying into the funds, withdrawing from the fund and god know what!

        Even with the higher taxes on foreign investment funds, I am seriously drawn on to the simplicity of just having a Vanguard investment with a clear-cut recipe on what to do when (reallocation and so forth). I really don’t think the wife or I have it in us to become investment pros :-)

        Again thanks for the help, it is appreciated.

        • jlcollinsnh
          Posted May 28, 2013 at 8:15 pm | Permalink

          Hi Lasse…

          Sounds like you’ve been doing your homework and maybe for you the time has come to seek paid advice. Chose carefully and try to go fee only so the advisor doesn’t have a conflict with earning commissions.

          Have your questions ready and clearly prepared. (Which it sounds like you already do)

          Don’t get too hung up on trying to find an exact match to what Vanguard offers. You just want to get close and for as little in fees and taxes as you can manage. Even seemingly small ones can hurt your returns significantly over time.

          Of the funds you mentioned, MSCI World Minimum Volatility Index sounds closest to what I was describing in a world fund. I’d closely consider that.

          If you combined MSCI USA Growth, MSCI USA Small Cap, MSCI USA Value you’d have a close approximation of VTSAX. But it is a same you’d have to deal with and annual rebalance three funds. Too much trouble for me.

          You and your wife should not have to become investment pros! and congrats on the efforts you’ve made so far. You are closer than you thing. With a low cost index fund that tracks MSCI World Minimum Volatility Index it sound to me like you are there!

          • Lasse
            Posted May 29, 2013 at 8:25 am | Permalink

            That sounds like good news, that makes us a bit more optimistic.
            I will contact the fund and ask them for some more in-depth information, and maybe I’ll be back with another question, if that is okay.

            Also in the off chance that your daughter swings by Aarhus in Denmark and wants a tour-guide, feel free to contact us. We know the place well, and my wife (from Georgia, US) would certainly appreciate the opportunity to talk to a fellow country(wo)man :-)

          • jlcollinsnh
            Posted May 29, 2013 at 11:49 am | Permalink

            No worries, Lasse…

            …feel free to ask any other question that comes up.

            Thanks for your very kind offer. I’ll let her know, but my guess is she’ll be very busy and well taken care of. She’s visiting her Danish friends from previous trips and some Danish girls who were exchange students living with us a few years back.

            Mmmm. Since you’re wife is an American and still, I assume, a citizen, she should be able to buy funds directly from Vanguard. You might have her email them and ask about it. Please let us know what you learn.

  26. Lasse
    Posted June 2, 2013 at 4:09 am | Permalink

    Hi again!

    Yes, my wife is still a US citizen and she already has some funds at Vanguard. Some in a money market account and some in the VFINX index fund.

    The problem for us is not to get Vanguard, as we can buy the Vanguard ETF versions of the funds you recommend, and I presume we could also open a new, joint account at Vanguard from Denmark.
    The main problem is taxation, and if the taxation laws makes it a bad investments compared to more expensive Danish index funds which are taxed more leniently.

    From what I know now, it seems that the main difference between Vanguard and a Danish index fund like the ones we discussed earlier, is that with Vanguard you are taxes on your gains/losses yearly regardless of whether you actualise the gain/loss. In the Danish funds you don’t pay taxes till you sell them.

    But I found out that there is an big investment event here on the 18th, so I’m going to go to that, and see if I can’t get wiser on these questions.
    I’ll report back and with what I find out.

    PS: It seems I can’t reply to your last post, so I’m posting this as a separate post.

    • jlcollinsnh
      Posted June 2, 2013 at 2:57 pm | Permalink

      Ah. That tax treatment makes quite a difference. Having then already accounted for any gain or loss, would I be correct in then assuming when you did sell you Vanguard shares it would not be a taxable event?

      Great info! thanks for sharing it here.

      • Lasse
        Posted June 2, 2013 at 4:22 pm | Permalink

        Yes, you’re correct.
        You’re only taxed on the gains once, regardless of whether it is foreign or Danish funds you invest in.

        To matters more complex though, you can only deduct up to 33% of your losses if you invest in foreign funds, where as you will still be taxed up to 42% on your gains.
        In Danish funds the loss/gain deduction/tax is the same, so up to 42%.

        If we were investing for a personal pension fund, it would be really simple though, as it’s only taxed 15% when you withdraw it, regardless of whether it’s foreign or national funds.
        But then we would like to be FI before we hit the state pension age (around 65).

        It’s all these added complexities that makes it really hard for me to figure what is the best method of going about following your advice – But sometimes I also feel that I’m probably not doing ourselves a favour, by having the money in the bank doing nothing, while I try to find out how to save a few percent here or there :-)

    • Lauge Jepsen
      Posted June 5, 2013 at 4:06 pm | Permalink

      Hi Lasse.

      Are you sure Danish index funds aren’t taxed the same way as international funds (i.e. annually)? I was quite convinced that it was so. Do you have a link or a reference. I think I’m pretty much in the same boat as you guys (fellow dane) and am trying to get an overview of my options as well.

      • Lasse
        Posted June 12, 2013 at 12:46 pm | Permalink

        Hi Lauge
        Apologies for the late reply. I simply didn’t see your question at first.

        The taxlaws unfortunately discriminates in favour of Danish funds, but you can read some more about it here:
        http://www.miranova.dk/skat-paa-udenlandske-investeringsfonde-etf

        Also as James already recommended this fund, might be the best equivalent of the Vanguard funds mentioned on this site:
        http://www.sparinvestindex.dk/afdelinger/alle%20afdelinger/index%20globale%20aktier%20min%20risiko.aspx

        I haven’t invested in anything yet, so I can’t tell you anything about it from first-hand experience, but check it out. If you want to get the Vanguard funds, you can open an account at Nordnet.dk for instance and buy the ETFs equivalents. But I’m not sure it’s such a good idea, even if they have lower fees.

        I got in contact with two other danes through the Money Mustache blog, so maybe we should make a small “support-group” for people trying to reach FI in Denmark? :-)
        I certainly could use some people to spar with.
        But feel free to PM me (username LSK) at MMM or keep this conversation going here.

        • jlcollinsnh
          Posted June 12, 2013 at 12:57 pm | Permalink

          Great idea, Lasse.

          If you get a few more Danes on board, I’d be happy to have you do a guest post that can become the focal point for your discussions.

          • Lasse
            Posted June 17, 2013 at 6:41 am | Permalink

            Thank you.
            I have been refering everyone I talk to about FI to this site, as it simply has the explainations that is the easiest to understand – And understanding investment as a “non-investor” is no easy task! :-)

            Still doing a guest post would require a bit more understanding and most importantly experience than I have at the moment, I think. Though if any other dane, more experienced in investment, would like to write a post, I would love to read and contribute if necessary.

          • jlcollinsnh
            Posted June 17, 2013 at 9:57 pm | Permalink

            Thanks Lasse….

            Passing this blog on to your friends is the highest praise of all. Since word-of-mouth is the only way readership spreads, I appreciate it!

  27. Lauge Jepsen
    Posted June 5, 2013 at 4:39 am | Permalink

    Hey there.

    I’ve been reading your blog for a while now and am slowly beginning to make an investment plan based on your advice. I have one major problem, though, which I hope you might be able to offer some reflections on:

    I happen to live in a country (Denmark), which quite recently (in 2009, i think) made some changes to the way taxations on investments are done.

    It used to be that you had to pay taxes on your profits when you realised them (i.e sold your stocks, bonds, ect).

    However, with the new laws, your investments are taxed annually even if you don’t realise any of the profit. This means that I have to pay taxes even if I don’t have any of the money in hand, just because my investment went up. Likewise, if I loose money on my investments, the losses are tax-deductible.

    I’m not really sure how this affects the advice you are giving on this site. Intuitively, the final amount paid in taxes should be the same either way. With the anual taxation the tax is simply paid ‘along the way’ instead of ‘in the end’. However, as I see it, the main problem is that no matter what I’ll be required to keep working at all times. If the market goes up, I need a steady income to pay my taxes (the only other alternative is to withdraw money from my investments, to pay for my investments, which seems like a big no-no). If the market goes down I need an income to utilise my tax-deduction, otherwise I’m simply giving away money, when the market inevitably rises again later.

    Also, tax-levels differ depending on my income level. I can’t even begin to contemplate what this does to the tax-deduction part, along the way.

    Can you (or anyone of your readers) offer some advice given the circumstances described? Obviously, I don’t expect you to sort out my financials for me, or investigate danish tax-law on my behalf :) I’m simply looking for a piece of advice. It could be that your strategy is simply not usable in my country and that I’ll have investigate other options.

    No matter what, keep up the great work. I really enjoy reading this blog. At the very least it has opened my eyes in regards to long term investments :)

    • jlcollinsnh
      Posted June 5, 2013 at 2:07 pm | Permalink

      Hi Lauge…

      And welcome! Thanks for the kind words and your question.

      As you already know, I am no expert in Danish tax law. Although after hearing from my Danish readers about it, I’m amazed you guys are ranked as some of the happiest people on earth! :)

      First be sure to read this post, and you’ll also find my conversation above with your fellow Dane, Lasse, interesting.

      I think the strategy discussed here is usable for you, but with some modification. Starting with the need to find funds equivalent to the Vanguard ones I discuss.

      Given the “pay as you go” treatment of the annual gain or loss on shares, Danes will lose the advantage of tax free growth. On the other hand, you won’t have the tax due when you start selling the shares.

      I gather you are able to deduct losses against earned income, but not carry them forward to apply against future gains?

      None of this should prevent you from retiring. You’ll just have to pay the cap gain tax from your investment returns, just like you’ll be using them to pay your other expenses.

      “in the end” is simpler and will most likely give better results. So I’m glad that’s what we have here. But the difference would not deter me from investing.

      My only suggestion would be to try to pay any annual tax due from cash on hand, rather than selling shares. Leave them to grow.

      Then, years from now, when us Americans are faced with huge tax bills on our accumulated gains, you Danes can put you feet up by the fire and say, “No worries here!”

      • Lauge Jepsen
        Posted June 5, 2013 at 4:29 pm | Permalink

        Thanks a lot for your feedback, I really appreciate it!

        I’m glad to hear that the approach you ‘preach’ may still work, despite my special circumstances. I think I need to fully understand the Danish tax law in regards to ROI and explore my specific options in regards to suitable index funds. Maybe Lasse and I could start a support group for frustrated Danish investors :D

        I still just started accumulating my F-you money so there is time, yet :) Just glad to hear that all is not lost.

        Anyway, thanks again!

        p.s.: No deductions can only be carried on to future gains if you handle investments through a company, but no one no longer recommends doing that due to other aspects of the Danish tax laws….

  28. David
    Posted June 5, 2013 at 3:02 pm | Permalink

    Hi James,

    Presently I have VTSAX Admiral Shares, and have been thinking about ETFs. You mention ‘just like a stock, commissions and/or spreads are frequently involved, adding to your costs.’ Do you see any benefits to holding ETFs over regular mutual fund shares? I’m guessing the greater liquidity of ETFs doesn’t really matter to us long-term investors.

    Thanks!
    David

    • jlcollinsnh
      Posted June 5, 2013 at 3:34 pm | Permalink

      Hi David…

      I think you hit on the main reason some like ETFs. They are easy to trade. Since frequent trading is just about the last thing I want to do, they hold no interest for me.

      As for liquidity, you can sell VTSAX any business day and it will be clear by the end of the day’s trading. That’s plenty of liquidity for all but the most active traders.

      With my status at Vanguard, I’m offered a bunch of free trades each year thru Vanguard Brokerage so, if I wanted ETFs I could own them even with out those costs. But why bother? VTSAX suits my needs perfectly.

  29. John
    Posted June 11, 2013 at 12:36 pm | Permalink

    JCollins,

    Just wanted to make mention that my 401k plan has an REIT fund in it with an ER of .95%. Do you think this is too high?

    Also, for a mid-twenties investor what are your thoughts on VGENX and VGHCX? Currently, my ROTH IRA portfolio is 40% VTSAX, 25% VGENX, 25% VGHCX and 10% VGSLX.

    Thanks!

    • jlcollinsnh
      Posted June 11, 2013 at 4:14 pm | Permalink

      Hi John….

      Yep, .95% is too high an ER for my tastes, especially since you can buy VGSLX @ .10. In your 401k plan I’d look for a total stock market index fund which should have a much lower ER.

      VGENX & VGHCX are both what’s called sector funds, each focused on one business sector. Energy and Health, respectively. I am not a fan. In choosing sector funds you are essentially trying to do the same thing as in choosing stocks: pick the one that will out perform. Both entail predicting the future, an un-winable game.

      Personally, I’d dump them and use the money to build your position in VGSLX, while reducing your expensive REIT in the 401k.

  30. TheDirtyGreek
    Posted June 17, 2013 at 8:06 am | Permalink

    Hello,
    I have some amateur questions. Do you have to have a Vanguard account to purchase VTSAX? I hold some other Vanguard funds in my Fidelity account. If it is available through Fidelity, is there any disadvantage to purchasing it through there as opposed to opening a Vanguard account? In my Fidelity account I have my personal investment account and a rollover IRA, so I could transfer everything to Vanguard at some point.

    • jlcollinsnh
      Posted June 17, 2013 at 10:00 pm | Permalink

      Hi DG…

      and welcome.

      You should be able to buy VTSAX thru your Fidelity account just as you have the other Vanguard funds. No disadvantage other than it is a bit more cumbersome.

      Personally, I prefer things to be as simple as possible, so I’d shift everything to Vanguard. But that reflects my temperament more than any financial advantage.

  31. dahlink
    Posted July 9, 2013 at 1:29 pm | Permalink

    Vanguard does not charge commissions for their ETFs. Would that make it a good choice to DCA until you get about 10K worth to shift to the admiral shares?

  32. Posted August 12, 2013 at 5:28 pm | Permalink

    Here in Sweden we have access to an index fund following the 30 largest swedish companies (named Avanza Zero), and the funds expense ratio is 0%. It comes with no additional costs what so ever, and is of course always recomended for swedes looking to invest in an index fund.
    My question though, is this:
    Would you recomend mainly investing in this no-cost index fund over investing in the Vanguard Total Stock Market Index ETF, which have an expense ratio of 0,05% ?

    My biggest concern would be that Avanza Zero focus on swedish companies only, and thats not a very big market compared to the US.

    • jlcollinsnh
      Posted August 14, 2013 at 3:14 pm | Permalink

      Hi Patriq….

      my concern would be the same as yours: The Swedish market is just too small.

      The Vanguard Total Stock Market ETF holds 3000+ companies, many of them multi-national giving you world-wide exposure. This would be my choice.

      Good luck!

  33. Mike
    Posted August 19, 2013 at 4:08 am | Permalink

    Thanks for running such a great blog! it’s so informative, especially for investment noobies like me.

    Just a quick question as I was reading your blog and checking out Vanguard (I recently opened an individual non-retirement account with them).

    I know you don’t necessarily prefer ETFs in general, but what about Vanguard ETFs through Vanguard Brokerage accounts?

    As I understand, if you purchase/sell Vanguard ETFs through Vanguard Brokerage account, they don’t charge you commissions. If commission is out of the equation, aside from the possibility of spreads (or what Vanguard calls “premium/discount”?) to consider (which can be plus or minus for you on a particular day, depending on the market conditions, right?), is there any other particular difference between Vanguard ETFs and Vanguard mutual funds of the same kind? To put it slightly differently, is there something that makes the former particularly less attractive?

    I’m asking because if you don’t have enough initial capital to qualify for the Admiral version of a mutual fund, expense ratio of the ETF version is actually cheaper than the regular Investor version. In most cases, the expense ratio of the ETF version is equal to the Admiral version, without the minimum initial investment level, of course.

    For those who don’t have enough yet to qualify for Admiral version, wouldn’t ETF make more sense, at least from the expense ratio point of view?

    Or, am I missing something more important/relevant here?

    Thanks for your thoughts!

    Mike

    • jlcollinsnh
      Posted August 19, 2013 at 11:58 pm | Permalink

      Welcome Mike …

      Your understanding of EtFs is spot on.

      As long as you watch for transaction expenses they are a fine way to start.

      One advantage investor shares offer is they convert automatically to admiral shares once you hit 10k.

    • Posted January 15, 2014 at 11:52 am | Permalink

      I have been mulling over this and Mike’s comment captures my exact thought.

      Mr. Collins – VTSAX has an ER of 0.05%, VTSMX (investor shares) is 0.17% and VTI (ETF) is 0.05%. The expense for the investor shares is more than 3 times as the admiral shares or the ETF.

      Why shouldn’t someone, who doesn’t have $10K to start off with, start with the buying the ETF once a month, commission free at Vanguard, and then convert to the Admiral shares. Why pay 3 times the expense for the investor shares?

      Do you recommend the investor shares because of the “automatically” conversion to the Admiral shares? Or is there any other reason?

      • jlcollinsnh
        Posted January 15, 2014 at 2:22 pm | Permalink

        Just as I said in my reply to Mike:

        ETFs are fine as long as you watch the transaction costs (and avoid the temptation to trade that they offer.) In return you get the lower ER.

        Investor shares have a higher ER but offer a seamless transition to Admiral when 10k is reached.

        Either works.

  34. Ralf Sköld
    Posted September 25, 2013 at 5:26 am | Permalink

    Hello there jlcollinsnh, i have a question for you.
    Its about how to invest in Vanguard from sweden. I do know of one way, but thought i could ask if you know a smarter way before i start investing it.

    I am a 29yr old swedish gentleman, with a pretty new found interest for saving up for an early retirement.
    Im very interested about investing thru the Vanguard Total Stock Market Index Fund
    But i am unsure about my options for doing it from sweden.

    I know i can buy them over the market as a stock traded fund (ETF). But im not sure if its the best way to get them for a person living in sweden. Or if i can buy the Admiral/Investor shares, and if so, if it is an option for me or not. Having a hard time understanding the info i see over the internet here, i did find a vanguard site for sweden, however, they have nothing like the Vanguard Total Stock Market Index Fund, the closest is a european index fund with about 450 different stocks. And thats not at all what im looking for.
    Found it at this link: https://www.vanguardinvestments.se/content/se/en/investments/mutual-funds.shtml#pagetab1

    From what i can se, the etf has an expense ratio of 0.05%/year just as the Admiral Share.
    However, id have to pay a brokerage fee every time i buy into it. (would probably be around every second month, to keep the brokerage fees at a decent level).
    Brokerage-fees for buying american stocks is at 13.95 USD, and buying every second month would be an investment of somewhere around 2000-2200 dollars worth, so a buying fee of 0.6% or so. Or would it possibly be better to buy every month, even though it bumps up the brokerage fee to 1.2%?

    also, i noted someone talking about a 20 dollar yearly fee for ppl with less then 50k invested, does this apply to ETFs too? Couldnt find any info about it.

    I do know where to invest it, we have something called Investersparkonto here in sweden.
    Basically you dont pay any taxes on dividends, nor for the valueincrease if you sell off any shares later on, it gives you a lower tax then the others if your investments grow at a pace of more then 3.8%/year on average or so. Instead you pay a small tax thats around 0.4% of your portfolio each year. Its gives around a 30% tax decrease compared to the other options currently aviable in sweden.

    Looking forward to see your take on the matter.
    Best regards
    Ralf

    • jlcollinsnh
      Posted September 25, 2013 at 10:12 am | Permalink

      Hi Ralf…

      Unfortunately I am completely unfamiliar with the nuances of investing in Sweden. But very possibly other readers will see your questions and join in with their ideas and experiences.

      I can however offer a few comments.

      First, you have identified the key problem with ETFs: Brokerage fees. The ones you describe are high for my taste. But if you are really going to hold them for the long term, this could work. You pay the fee only once (and again when you sell) and then you have only the low Vanguard fees to worry about. Over the decades, you’ll come out ahead.

      But I don’t understand why you say the brokerage fees would go up to 1.2% if you invest only once a month. If I understand correctly, there is a flat fee of $13.95 no matter how many shares you buy? If so, buying once rather than twice a month would cut your cost in half.

      Looking at the link you provided, I’d go with the Global Stock Index Fund. You definitely want the USA as part of the mix. Unfortunately, there is an addition fee that brings the total to .50%. Not great, but acceptable.

      I am unfamiliar with “a 20 dollar yearly fee for ppl” and “Investersparkonto”. Maybe sone of our readers has more insights?

      • Ralf Sköld
        Posted September 26, 2013 at 6:36 am | Permalink

        You misunderstood me, i thought of only buying every second month to keep the brokerage fees down. The fee isnt flat, but to get a higher brokerage fee i would have to buy for somewhere around 15k a pop, unfortunally 13.95 is the floor.

        Ofc, buying stocks on the swedish stockmarket is a lot cheaper, around 5 dollars or so id say.

        Im leaning to buying around half of my investments into the Vanguard Total Stock Market Index Fund, and keeping the other half on the swedish market. Here in sweden we have an index fund with 0.00% fees, but it only has the 200 largest companies in it. And the swedish stock market as a whole is to small for my tastes, dont want all my money on our pretty small home market.

        And the 20 dollar fee was someone talking about VANGUARD and less then 50k invested, there is no such fee in an investersparkonto.

        Very thankful for your reply, probably going to check out the global stock index fund too, se if its to my liking or not.

    • Lasse
      Posted September 26, 2013 at 1:26 pm | Permalink

      Hi Ralf

      I don’t know if you’ve read the comments & questions I posted earlier in this thread, but I think some of the same solutions should apply in your situation.
      Nordnet is a Swedish internet bank and broker, that covers Scandinavia and they have a setup, where you can create an account, set a certain amount of money to be transferred into that account each month, and then pick certain EFTs/funds from a long list, that the monthly saving goes towards buying each month.
      The good thing about the setup is that there is no fee for buying ETFs/funds, so you avoid having to pay the fee every month if you want to continuously build your investments over time.

      In Denmark the laws makes it very unattractive to buy into foreign funds like Vanguard, unless it is via your private pension-fund. Therefore I had to look for alternatives that mirror what Vanguard offers, and James suggested the MSCI World Minimum Volatility Index, of the Danish index funds available to me.
      So I setup a Nordnet account, picked my monthly amount and picked only the Danish fund that covered the above index, and let it run.
      The Danish fund that covers that index does have a higher fee than Vanguard, but at 0,6% it was the lowest one I could find, so I have to live with that so far.

      Maybe you could use a similar setup if you want?
      At least I would suggest you take a look at Nordnet and their monthly savings account setup.

      Hope it helps.
      /Lasse

      • Ralf Sköld
        Posted September 26, 2013 at 7:37 pm | Permalink

        Thanks Lasse, i will look into it this weekend! ;D

      • jlcollinsnh
        Posted September 26, 2013 at 7:38 pm | Permalink

        Let me add my thanks too, Lasse!

        Great seeing readers helping readers! :)

  35. Posted October 11, 2013 at 11:41 am | Permalink

    Ah, thanks J. for the addendum! I’ll work on a special page on my website devoted to index funds in The Netherlands/Europe.

  36. Posted November 12, 2013 at 9:53 pm | Permalink

    Hi Jim,

    I think I have almost read every one of your posts in the past fortnight. Absolutely love it all and have linked a bunch of friends too including my wife.

    My wife and I (both 29) have ~$300k worth of savings sitting in the bank, losing purchasing power every day thanks to inflation and tax on interest income.

    So far you have taught me NOT to dollar cost average. That said I probably won’t plummet it all into an index fund on the one day, purely just for that warm fuzzy feeling, but I suspect that we will drop a fair chunk in on say 4 days over the course of a month or so.

    You have also taught me to keep it simple. If I was in the states, I’d be sinking most of it into VTSAX however I am from Australia and currently living in Canada. Tricky.

    Right now I am trying to choose between the following:
    Vanguard Index International Shares Fund:
    - MSCI World ex-Australia Index
    - High management costs (max 0.90% pa / min 0.35% pa)
    - Buy cost 0.15%, Sell cost 0.10%
    - Dividend reinvestment option

    Vanguard US Total Market Shares Index ETF (VTS):
    - CRSP US Total Market Index
    - Low Management Cost (0.05% pa)
    - Buy/sell cost through my bank 0.11%
    - No dividend reinvestment

    The VTS ETF seems like the most similar option to what you have in the USA however it’s shortfall is that dividends aren’t able to be reinvested, which means I will lose 37% of each year to the tax man… At least that is how I understand the situation anyway!

    Thank you once again for your great blog. Your daughter is very lucky to have such an experienced parent. My parents unfortunately don’t understand money too well, but thankfully my mother always taught me to save!

    • jlcollinsnh
      Posted November 12, 2013 at 11:12 pm | Permalink

      Welcome Petey…

      Thanks for the kind words and for passing the blog along to your friends and family. That’s the highest praise of all.

      Clearly you’ve been reading and absorbing the concepts here. It is reflected in your fund choices and the analysis of them. I like them both and there is no reason you can’t use both.

      Too bad about the transaction costs, but they are low enough that you can live with them as a long-term investor.

      Vanguard Index International Shares Fund holds about 1600 of the world’s major publicly traded companies. Since it does hedge currencies, you also get diversification on that front.

      VTS is the equivalent of VTSAX, but since it also doesn’t hedge the currency, and it is only the US and Aussie dollars in play lacking the diversification in the fund above, you have an additional risk related to any movement between them.

      I don’t know what the Autralian/Canadian tax law says on dividends, but here in the US they are taxable whether reinvested or not. There is a certain logic to that in that even when reinvested dividends are first paid. Perhaps the rule is the same where you are.

      Maybe some of my Canadian and/or Aussie readers can provide some insights?

      Oh, and dollar cost averaging is all right as long as you understand it messes with your allocation and can work against you in a rising market. But for some it is the help needed to ease into the market.

      For what it is worth, my parents also didn’t understand money and when my father’s health failed we wound up poor. Might be what motivated me to learn. ;)

      • Posted November 13, 2013 at 12:37 am | Permalink

        Thanks for your reply James.

        As you know, I first posted that comment on another blog post of yours some time ago. In that time I have joined the Vanguard Index International Shares Fund and have deposited $15k. A pittance, but it’s a start.

        While I understand the market and the “logic” involved with investing, it’s still not an easy decision when you have worked so hard to earn that money. Must not let emotion make decisions! What makes it harder is watching the status quo all buy houses while we are left renting. We know why we do it, but it’s hard to be the odd ones out sometimes and my wife really struggles with this.

        My only concern is not being exposed to real estate in Australia. I have been considering buying some A-REITS to make sure that we aren’t priced out of the market in Australia if/when we do want to buy a house.

        I did some research after reading your reply, you are indeed correct, dividend reinvestment is taxed – damn, they get you everywhere, right?!

        • jlcollinsnh
          Posted November 13, 2013 at 8:27 am | Permalink

          Hi Petey…

          Having read my stock series, you know investing in the market is a wild ride. If you and your wife are emotionally uncomfortable now while the market is been on a strong climb, how will you feel the next time it takes a steep drop?

          It is very, very important to understand — in you gut as well as your brain — that drops are a natural part of the process and to be expected.

          Investing and then panic selling when they happen is far worse than not investing at all.

          That emotional uncertainty is also one of the reasons to use DCA, even though I’m not a fan overall.

          I know nothing about the Australian housing market, but the last time I heard people around here worrying about being priced out of housing was rifght before our huge housing price collapse. Just sayin’, ya know? ;)

  37. Nash
    Posted November 20, 2013 at 6:23 am | Permalink

    Hello jlcollinsnh,

    Very informative and eye opening article. Really like it.
    I am presently living in Dubai as a Canadian Expat.
    Vanguard low cost index funds are unfortunately unavailable in Dubai But I found an alternative with ETF’s.

    By opening a brokerage account with Citi bank I have access to the US stock market including ETF’s.

    I was thinking of the following portfolio:
    40% VTI
    30% VXUS
    30% BND or AGG (bond’s mid term)
    Rebalancing one a year to keep the same ratio

    Charges:
    Citi bank commission: 0.3% buy or sell
    ETF commission: 0.065% buy or sell
    Custody Fee: 0.2% yearly

    Would appreciate your feedback…

    Cheers,

    • jlcollinsnh
      Posted November 20, 2013 at 9:43 am | Permalink

      Welcome Nash…

      Glad you enjoyed the post.

      The portfolio you describe will serve you well, so consider my thoughts just a bit fine tuning.

      With VTI you have the Total US Stock Market Index. With this I don’t feel the need to add VXUS for reasons I outline here:
      http://jlcollinsnh.com/2012/09/26/stocks-part-xi-international-funds-2/

      You don’t mention your age or retirement plans, but a 70/30 stock/bond allocation is conservative in my view for anyone in the wealth building stage of investing. But it is perfect if you are transitioning into the wealth preservation stage.

      Lots more on this in the stock series: http://jlcollinsnh.com/stock-series/

      Too bad about the layers of fees, especially the Citi commission, but you are kind of stuck with them.

      So, what took you to Dubai and how are you enjoying it? I gather it is a remarkable place to see…

      • Nash
        Posted November 21, 2013 at 12:02 am | Permalink

        Many thanks for your quick reply Collin regarding my previous post.

        The reason I chose VXUS is to really have international exposure to the stock market excluding the US

        With VTI and VXUS I feel I get exposure to a really broader equity market.

        Regarding Citi bank fees as you said I am stuck with them but at least its below 1%. I will just have to manage.

        I’ ve been in Dubai for the last 5 years and it’s ok.
        It is worth visiting at least once in your lifetime…

  38. Posted December 4, 2013 at 5:49 am | Permalink

    Here’s a discussion via email between J. and myself which we’d like to share with other readers.

    Hi Uncle J.!

    Just letting you know that I copy-pasted the stock series into a PDF document and uploaded it to my kindle. I am now reading, rereading and doing some more rererereading of the stock series. And so is the husband.

    The husband and I are almost ready to take the plunge. A little hick-up in the dividend leakage department, though. However, we’re still convinced of sticking with Vanguard. We’re thinking of dumping all of our cash into the Vanguard FTSE All-World ETF. http://www.morningstar.nl/nl/etf/snapshot/snapshot.aspx?id=0P0000YXJO and http://tools.morningstar.nl/nl/snapshotpdf/default.aspx?Site=nl&id=0P0000YXJO&currencyid=EUR It’s in euros and we like the diversification. 52% America, 28% Europe and 21% Greater Asia (includes a large chunk Japan and Australia, only 5% emerging). TER is 0.25% (but there is a dividend leakage, I don’t know how much, anywhere from 0.1% to 0.6%) http://econowiser.wordpress.com/2013/11/29/1139/ We could try and avoid tax leakage by choosing for Dutch versions…but then we’d be stuck with an index we don’t want to invest in (AEX) or (relatively small) fund providers that aren’t Vanguard with which we could risk investing with providers whose interests are not the same as ours. We love the whole Vanguard cooperative system.

    However, this FTSE All-World ETF was only founded in 2012 so we don’t have a lot of details to compare. We find it a bit scarier because of the lack of historical data. Still this ETF is our best option, we think, our second choice would be the S&P500 at 0.09%TER. My husband would not prefer this, he likes diversification. http://econowiser.wordpress.com/2013/11/16/vanguard-trackers-via-binckbank/

    You did reccomend the FTSE ex-US fund for investors who were interested in investing outside the US as well in your blogpost on international stocks http://jlcollinsnh.com/2012/09/26/stocks-part-xi-international-funds-2/ Therefore, I thought that you might find the FTSE All-World index including the US trustworthy for our purposes.

    I totally understand that you are not our personal investment advisor, however I’d love to know your thoughts on choosing the FTSE All-World Vanguard fund if you’d be willing to. I also totally understand that you have other priorities other than thinking about investing for Europeans, so if you can’t find the time to have a look at our situation, that’s fine. I know I am being rather bold here in asking you a favour.

    Thank you and best wishes,
    Mrs. EW

    J’s response:

    Hi Mrs. EW

    Always nice to hear from my Netherlands niece!

    I hesitate giving specific advice to folks outside the USA because my knowledge of the nuances of investing in other countries is pretty much zero. That said, the basics still apply.

    1. If you can do business with Vanguard, do so as they are the only investment company out there that puts the interests of their customers first.
    2. Buy broad based index funds.
    3. Costs matter hugely.
    4. Keep it simple.

    So looking at those criteria, you can see why VTSAX is my #1 choice:

    1. Vanguard
    2. covers virtually the entire US stock market: over 3000 companies. Further, the largest 500 (same as the S&P 500) of these make up ~ 70% of the fund and they have huge international operations.
    3. ER = .05, rock bottom
    4. One fund, huge diversification in the stock arena. Even VFIAX, the S&P 500 index fund, offers plenty of diversification in the stock arena. But VTSAX provides access to the small and mid caps which is why I prefer it a bit.

    So those are the benchmarks. You can use them to evaluate the options you actually have available to you.

    As for VTWSX https://personal.vanguard.com/us/funds/snapshot?FundId=0628&FundIntExt=INT
    you get the entire world in one fund. Very cool. But there is no Admiral Shares version and the Investors Shares version has an ER of .35% The ETF version drops the ER to .19%, a better choice as long as you can buy and sell without transaction commissions. That’s possible in the US, but I don’t know about Europe.

    If VTWSX had the same ER as VTSAX it would be my 1st choice. But it doesn’t and, as I say, costs matter hugely!

    Hope that helps!

    jlcollinsnh

    Mrs. EW’s response:

    Hi J.!

    That sure helps a lot! It confirms our reasoning, so I guess we’re on the right track.

    Thanks so much!

    Best wishes,
    Mrs. EW

    Addendum: we’ve almost made our decision. I still have a couple of phone calls to make. The results (which might be interesting for European index investors) and the decision we eventually made and why will be published here: http://econowiser.wordpress.com/index-investing-for-europeans/ ASAP.

  39. OrionX
    Posted January 8, 2014 at 10:30 am | Permalink

    Hi,
    I’ve very new to all this and your blog has been blowing my mind for awhile now. I am constantly recommending it to friends and family as we all try to wrap our heads around the mysterious world of investing.

    Here’s my question.
    My 401K doesn’t offer VTSAX,VGSLX,VBTLX.
    This is what is offered as fare as Vanguard goes:
    Vanguard Total Bond Market Index Signal
    Vanguard 500 Index Signal
    Vanguard Extended Market idx Signal
    Vanguard Developed Market Index Inv
    Vanguard Target Retirement Inv
    Vanguard Target Retirement 2010 inv
    Vanguard Target Retirement 2020 inv
    Vanguard Target Retirement 2030 inv
    Vanguard Target Retirement 2040 inv
    Vanguard Target Retirement 2050 inv

    Does it make sense for me to put everything into Vanguard Target Retirement 2050 inv so I get as much of VTSAX as I can? What does “Signal” mean? Any onsite would be great appreciated. Thanks for the great blog!

    • jlcollinsnh
      Posted January 8, 2014 at 1:50 pm | Permalink

      Welcome OX…

      ..glad you found your way here. Hopefully this blog can help unravel the “mysterious world of investing.” I know it seems that way at first, but with a little education and time I think you’ll find what you really need to know is the soul of simplicity.

      Signal Shares is simply Vanguard’s name for the portfolios they offer to institutions like your 401k. So the portfolio in Vanguard 500 Index Signal is precisely the same as that of the investor shares version VFINX or VFIAX the Admiral shares version. https://institutional.vanguard.com/VGApp/iip/site/institutional/investments/productoverview?strategy=1342558128

      If you want to duplicate VTSAX with the options you have:

      70% Vanguard 500 Index Signal
      30% Vanguard Extended Market idx Signal

      will pretty much get you there. Of course you’ll have to rebalance about once a year to stay on track.

      You don’t mention your age, but assuming you are young, Vanguard Target Retirement 2050 is a fine option too. It will give you a bit of bonds to smooth the ride and rebalance automatically for you.
      http://jlcollinsnh.com/2012/12/18/stocks-part-xv-target-retirement-funds-the-simplest-path-to-wealth-of-all/

      Thanks for the kind words and for passing the blog on to your family and friends. Much appreciated!

      • OrionX
        Posted January 8, 2014 at 4:42 pm | Permalink

        Thanks for the great information and quick response!  I’m passing this information on to several people I work with.
        We all want that F-you money.

        I’m 35, my personal goal is to retire early taking advantage of the “Roth Conversion Ladder” the Made Fientist outlines in his article “Traditional IRA vs. Roth IRA.
        (http://www.madfientist.com/traditional-ira-vs-roth-ira)
        Great interview too by the way (http://www.madfientist.com/jlcollinsnh-interview)

        Would the 70% 30% mix you recommend be a more aggressive approach were the Targeted Retirement 2050 is more conservative? Do either make more sense for someone aiming for early retirement?

        Thanks again!

        • jlcollinsnh
          Posted January 8, 2014 at 5:52 pm | Permalink

          My pleasure OX…

          …Having F-you money is a wonderful thing! :)

          The Mad Fientist is brilliant and well worth reading. He even has a guest post here that made it into my Stock Series:
          http://jlcollinsnh.com/2013/12/05/stocks-part-xx-early-retirement-withdrawal-strategies-and-roth-conversion-ladders-from-a-mad-fientist/

          That’s about the highest praise I can offer!

          Both the 70%/30% funds and Targeted Retirement 2050 are aggressive and well suited for wealth building to early retirement. The former is all stocks and therefore a bit more aggressive.

          Remember, with either it will be a wild ride!

          Glad you liked the interview! It was fun to do.

          • Jack Lightning
            Posted January 15, 2014 at 2:39 pm | Permalink

            Hello,

            I’m a friend and co-worker of OrionX. He turned me on to your website and got my gears turning in terms of smarter investment strategy. Thanks for the stimulating and helpful information.

            My question is similar to the ones OrionX has outlined above. I am 33 years old and have the same 401K portfolio options listed in the initial question. I’ve been considering a hybrid approach using information from various sources. I’m not necessarily aiming to retire early, although I would like my 401K to perform well while keeping fees to a minimum.

            Below is the asset allocation approach I’ve been considering.

            Vanguard 500 Index Signal – 50%
            Vanguard Extended Market Index Signal – 20%
            Vanguard Developed Markets Index Inv. – 20%
            Vanguard Total Bond Market Index Signal – 10%

            If you have any feedback regarding this approach, I’d greatly appreciate it. Thanks!

          • jlcollinsnh
            Posted January 16, 2014 at 9:43 am | Permalink

            Welcome Jack…

            ..good to have you here! Any friend of OX and all that… ;)

            Basically, you have created your own Target Retirement fund with those four. As long as you rebalance each year, it is a great approach. I like it.

            With the first two you have mostly duplicated VTSAX. You also have 20% international and, while I strictly don’t see the need for that, it certainly is not a bad choice. http://jlcollinsnh.com/2012/09/26/stocks-part-xi-international-funds-2/

            The 10% bonds will give you some “dry powder” during market drops that will help when you rebalance.

            Keep in mind, rebalancing can be tough. Basically it entails selling your winners to buy your losers. Hard to do psychologically. But very important for that mix to work for you long-term.

            Good luck!

  40. Jack Lighning
    Posted January 17, 2014 at 3:42 pm | Permalink

    Thanks for the reassurance and for pointing me back to the post on International Stocks. The overall picture is starting to become more clear. I’ll be sure to pass your stock series on to friends as they become more interested in developing a degree of control over their financial futures.

    • jlcollinsnh
      Posted January 17, 2014 at 5:55 pm | Permalink

      My pleasure…

      …and thanks for passing the blog along.

  41. LW
    Posted January 19, 2014 at 12:05 pm | Permalink

    Thank you for this great site and a REAL PERSON’s perspective. We have rolled over everything we could to Vanguard and maintain our Roth IRA there too, but sadly half our retirement has to remain with others. I get nothing close to the same service with Fidelity or TIAA CREF. Please note that Vanguard customers can have their entire portfolio (Vanguard and everything else) analyzed for about $250. My consultant was fantastic and both educated me as well as put me on a plan and strategy that we feel comfortable with and we understand.

    FYI, we have a similar mix with VTSAX at about 50%. However, we have a bit of international stocks with the similar indexed stock fund VTIAX. One question please – do you feel the need to move some of your bonds to the short term bond fund? Thank you again for a wonderful blog.

    • jlcollinsnh
      Posted January 20, 2014 at 1:31 pm | Permalink

      Hi LW…

      and welcome.

      Most people have to use other than Vanguard in their 401k and similar plans. You just have to work with what you have, looking for low cost index funds among the choices. Most plans have them.

      For bond holdings I prefer Vanguard’s Total Bond Market Fund, VBTLX. This includes
      bonds of all maturities. For more: http://jlcollinsnh.com/2012/10/01/stocks-part-xii-bonds-and-a-bit-on-reits/

      Thanks for the kind words!

  42. Ali Clark
    Posted March 8, 2014 at 11:03 am | Permalink

    Newbie here! Trying to make sense of all this.

    I’m looking for your Vanguard recommendations in my freshly started 401K.
    Are these index funds?

    Vanguard LifeStrategy® Conservative Growth 0.70%
    Vanguard LifeStrategy® Moderate Growth 0.70%
    Vanguard LifeStrategy® Growth 0.70%
    LVIP Vanguard International Equity ETF 1.20%

    What about this guy?
    LVIP SSgA S&P 500 Index 0.54%

    • jlcollinsnh
      Posted April 8, 2014 at 3:53 pm | Permalink

      Welcome Ali…

      Always nice to have another newbie join in!

      Only the last one is an index fund. However, the first three are each what are known as a “fund of funds.” That is, they are made up of other funds and each of these are made up of index funds.

      The idea is that you get diversification and automatic rebalancing, but the ER (expense ratio) is a bit higher.

      For instance, Vanguard LifeStrategy® Growth — https://personal.vanguard.com/us/funds/snapshot?FundId=0122&FundIntExt=INT — is made up of:

      Vanguard Total Stock Market Index Fund Investor Shares 56.1%
      Vanguard Total International Stock Index Fund Investor Shares 24.1%
      Vanguard Total Bond Market II Index Fund Investor Shares† 15.9%
      Vanguard Total International Bond Index Fund 3.9%

      Basically an 80/20 stock/bond split using a nice selection of funds.

      Were I young and planning a few more years of work, that’s the one that would be my choice.

  43. mdFehrle
    Posted April 9, 2014 at 9:05 pm | Permalink

    Hello,
    Suggestion for moving approximately $330k from 401k to Vanguard IRA, due to termination of employment. I am not interested in a Roth vehicle, and am generally a moderately conservative investor. Any direction will be greatly appreciated.
    Thanks,

  44. Ed
    Posted April 30, 2014 at 9:21 pm | Permalink

    Jim,

    Much thanks for sharing your knowledge & experience. I am starting late at 57 years old, but hope to retire (earlier than I had ever thought) in 5 years, due to changes made as a result of your blog & MMM’s.

    Just had a couple of questions. My 403 B (current balance = $59,000) has the following Vanguard choices -VIFSX, VTMGX, VERSX, VIGSX, VMISX, VASVX & VBSSX. I had luckily chosen VIFSX a few years back when the other fund I was in closed.

    Whoops..I see another similar post above. Will follow that advice.

    Also, from silly decisions made pre-JLC, I have approximately $6000 of miscellaneous stocks sitting in 3 separate accounts (Scotttrade, Computershare & Sharebuilder). Would you recommend selling & transferring $$ to Vanguard?

    Just little background: I make $4800 gross/mo, and am now saving $1350/mo to the 403B as tax advantaged (pretty much have taxes close to zero). My only debt is $179,000 mortgage (house worth aprx $280k). My mortgage pmt. is $1200 PITI, and my other monthly expenses are about another $900, so its about exactly my take home pay ($2100). I have a few places where I can still cut, but being married to someone who, to put it delicately, is not saver, makes things a bit difficult. I am fortunate to have a pension that would just about cover monthly expenses, assuming I retire in 5 years. The plan is to let the 403b keep building (no more contributions after 62) for another 5 years or more. Any recommendations?

    Anyway, I am so happy do have found your site & MMM,s as I had basically assumed I would have to keep working into my late 60′s or even later. Your stock series is so thorough, yet so easy to understand, that it has inspired me to study even more. Thanks for all your efforts…you are appreciated more than you know.

    • jlcollinsnh
      Posted May 4, 2014 at 2:23 pm | Permalink

      Welcome Ed….

      …and thanks for your very kind words. They are very much appreciated.

      Sounds like you’re are doing very well in short order. Kudos!

      Like you I used to fool around with individual stocks and what to do with them now depends on how you feel about them. If you don’t hate them and especially if you have them in taxable accounts with some pending capital gains, I’d just hold them. Then, when you retire, liquidate them as needed to cover your expenses in the first few months/years. That’s what I did anyway.

      As for you 403b, VIFSX is a fine, low cost choice. Just keep maximizing your contributions as long as you can. Once you leave your employer you might consider rolling it over into an IRA holding VTSAX. Once there you might consider slowly rolling it into a ROTH for the long term tax advantages those offer. Just be careful not to convert too much at once which would push you into a higher tax bracket.

      Once you reach age 70 you’ll be required to make mandatory minimum withdrawals from your tax advantaged accounts — except ROTHs.

      Yeah. I wish I had discovered MMM years ago too! :)

      Good luck!

  45. Rick
    Posted May 14, 2014 at 8:51 am | Permalink

    I haven’t done any investing other than my TSP and Roth TSP at work (gov’t). Your series has been a great crash course for me and I’m ready to make a move in this portion of my financial life. I’m starting this from scratch so I don’t have the 10K or the 3K for Admiral or Investor shares.. I’ve seen a few questions and starting off with the ETF.. Would you recommend starting right now with the ETF or saving 3k as fast as possible in order to get started in Investor shares? Once at 3k do you then recommend going to investor shares?

    Thanks in advance!!

    Rick

  46. sam
    Posted June 24, 2014 at 2:57 pm | Permalink

    Hey Jim,

    My 401(k) offers the opportunity to invest in VTSSX, the signal version of what the Total Market Index fund is. Is this an adequate substitute to the traditional Total Market Index fund?

    I’m 25 so I’m not particularly worried about replicating the bond portion of your basket just yet.

    -Sam

    • jlcollinsnh
      Posted June 24, 2014 at 4:24 pm | Permalink

      Hi Sam…

      Yep, VTSSX and VTSAX hold exactly the same portfolio: The Total Stock Market Index. Ever the same low .05% ER.

      You are fortunate that your 401k offers it.

      • Sam
        Posted June 24, 2014 at 4:45 pm | Permalink

        Thanks Jim! Thats awesome. Soon after posting my comment, I read somewhere else that they are transitioning all of their signal funds into Admiral shares as of Oct ’14. Great to be able to invest in it.

        On an aside, I wanted to give a HUGE thank you for all the resources and advice you’ve provided here on this site. I am incredibly appreciative to have stumbled across all of this, especially at a younger age. I have my whole life in front of me and the opportunity to make the most of it has been vastly helped by what you’ve posted here!

        -Sam

        • jlcollinsnh
          Posted June 26, 2014 at 9:01 pm | Permalink

          Thanks for the very kind words, Sam…

          …and congrats on taking advantage of an early start. Kudos!

  47. Reid
    Posted July 15, 2014 at 9:18 pm | Permalink

    Jim,

    Prior to today my company only had one index option in our 401k. Luckily it was a not half-bad VIFSX. I have been rolling 100% investment in this for about 1 year. Guess who talked me into that? Thanks by-the-way.

    I was excited to see that we are opening up a host of new Vanguard options in the 401k this August:

    VFIAX
    VBTLX
    VIMAX
    VSMAX
    VTIAX

    My VIFSX will be rolled over into VFIAX. I can’t seem to find out how the Admiral Share version differs from the Signal Share. Appears to simply be a change in name. Not my real question though, should I keep going with the Vanguard 500 or switch to one of my the newly added funds, specifically: VTIAX? I don’t see a real benefit and the expense ratio is more than double. Gut tells me that VFIAX is my new horse. Am I thinking correctly?

    Thank you sir,

    Reid

    • jlcollinsnh
      Posted July 16, 2014 at 1:14 pm | Permalink

      Hi Reid…

      VIFSX and VFIAX are both S&P 500 index funds holding exactly the same portfolio. Even the .05 ERs are the same. As you suspect, simply a name change. Of the funds listed, VFIAX would be my choice.

      VTIAX is Vanguard’s Total International index fund, excluding the US market. If you want some international, this would be my choice. At .14% it is nearly 3x the ER, but still cheap for an international fund. All that said, I don’t personally feel the need for international for the reasons outlined here: http://jlcollinsnh.com/2012/09/26/stocks-part-xi-international-funds-2/

      So, in short, yes, I think your thinking is being done correctly. :)

      • Reid
        Posted July 16, 2014 at 8:00 pm | Permalink

        Thanks Jim. You have helped redirect and clarify my thinking immeasurably over the last year. I cannot thank you enough.

        • jlcollinsnh
          Posted July 16, 2014 at 8:56 pm | Permalink

          My pleasure, Reid…

          and thanks for letting me know. You have made my evening!

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