patrick.net

To Porkchopexpress

If you don’t want to talk to a fee only planning guy, you could call up Vanguard and the amount of money you invested would qualify you for free advice.

Your situation has several solutions; do you want to use it for income now, or delay spending it?

Are you working or retired? Are you older or younger?

I like the idea of tax efficiency and also capital appreciation.

You could buy several funds; Vanguard Tax Managed Capital Appreciation, High yield tax free (municipal bonds)

In addition, some can go into Vanguard Wellington (balanced; stocks 60%:bonds 40%.

If more income is desired, Vanguard Wellesley Income Fund has dividend stocks and bonds.

If a variable annuity is interesting to you, check if T.Rowe Price has them; Vanguard stopped selling them.
Try to get a low fee one. I guess Fidelity has them since they seem to have everything.

mell says

Can a a anybody answer if trading on Interactive brokers is completely free, incl. pennystocks and regardless of frequency and volume for all US stocks?

Not free. You have to pay commissions on your trades especially options. Fees are minimal for stock trades.

I shorted the S&P on Friday. IBKR charged $24 for 20 contracts, which is typical. For stock options, they charge $7 for 10 contracts on average. Thus, I tend to let the options expire worthless unless it’s cutting real close.

porkchopexpress says

Question for the group. Let's say you come into a large sum of money...$5M net of taxes. How do you invest/preserve it to maximize its value to you and your family?

Do you put it in a low-risk, dividend-paying mutual fund and earn like 5% in income?
Do you take some of it and buy an annuity?

I'd like to hear ideas.

It really depends on your goal and knowledge. That would determine how the $5M should be invested.

porkchopexpress says

Question for the group. Let's say you come into a large sum of money...$5M net of taxes. How do you invest/preserve it to maximize its value to you and your family?

Do you put it in a low-risk, dividend-paying mutual fund and earn like 5% in income?
Do you take some of it and buy an annuity?

I'd like to hear ideas.

@porkchopexpress

I would first of all pay off all debt.

I'd put the majority of it in about 20 reliable stocks, preferably those that pay a dividend and only rarely change any of them. I hate mutual funds with a passion, because their business is skimming your money and none of them reliably do better than the indexes.

But would also consider some land.

But you can buy index mutual funds with low or even no fees (Fidelity Zero funds)

My Total Stock Market Index Fund at Vanguard has a 0.05% expense ratio; 500 bucks per million invested.

I have $0.79 in etrade. I don't know if I'll ever get it out of there. It became due to company stock.

I've been using td ameritrade since they bought out datek in the 90s and prefer it.

clambo says

even no fees

But then they must make their money through kickbacks for investing in certain stocks, which is bad for investors. Mutual funds are not charities, so they have to make money somehow.

Eman says

porkchopexpress says

Question for the group. Let's say you come into a large sum of money...$5M net of taxes. How do you invest/preserve it to maximize its value to you and your family?

Do you put it in a low-risk, dividend-paying mutual fund and earn like 5% in income?
Do you take some of it and buy an annuity?

I'd like to hear ideas.

It really depends on your goal and knowledge. That would determine how the $5M should be invested.

My goal is to preserve the capital and live off the interest, but rates are dogshit. That’s why I considered a lower risk dividend/income paying mutual fund like the Wellesley, but it still pays less than 3%. I could invest in a higher-paying dividend fund or individual stocks, but then the risk goes up significantly but perhaps I’m overestimating the risk.

I think my objective would be to get at least 5-6% safely and preserve the principle, which is why I’d avoid the annuity route.

Patrick says

porkchopexpress says

Question for the group. Let's say you come into a large sum of money...$5M net of taxes. How do you invest/preserve it to maximize its value to you and your family?

Do you put it in a low-risk, dividend-paying mutual fund and earn like 5% in income?
Do you take some of it and buy an annuity?

I'd like to hear ideas.

@porkchopexpress

I would first of all pay off all debt.

I'd put the majority of it in about 20 reliable stocks, preferably those that pay a dividend and only rarely change any of them. I hate mutual funds with a passion, because their business is skimming your money and none of them reliably do better than the indexes.

But would also consider some land.

I like the land idea and paying debt. Some would argue one should not pay off the mortgage given the tax break assuming you could invest it at a higher return elsewhere.

I don’t think I’m smart enough to invest in my own stocks and monitor their health to adjust my investments accordingly. I suppose this is why I like low cost mutual funds like what Vanguard has.

porkchopexpress says

monitor their health to adjust my investments accordingly

"The dead make the best investors."

There was some study that showed that the people who monitored and modified their investments the most did the worst, and the people who did the least after buying did much better, with the literal dead whose estates were tied up in probate doing the best.

Just pick the biggest holdings of the mutual funds you like. You don't need to pay them at all.

I-bonds are paying 7.12% right now:

https://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm

But you'd still have to figure out what to do with the other $3,990,000.00

clambo says

Re: Vanguard brokerage

I like the web interface a lot.
I can make free trades until 25, then it costs me 2 bucks.

At Ameritrade stock trades are free. Now I do pay fees on option trades. I don't know of anyone who does free options trades.

I don’t see in any prospectus anything about a “kickback”.
In the registration process for a stock or a mutual fund would have this disclosure.
If someone wants extra diversity and convenience, mutual funds are the essence of investing.
Probably Vanguard pays a fee to Wilshire for the information about which stocks comprise the W5000 index.
Fidelity has its own method so does not pay Wilshire anything probably.

My only problem with index funds is that they don’t exclude ridiculous companies like Tesla and others, who knows if I once owned Theranos stock too?

To Porkchop:
The essence of investing is mutual funds.
The following have anything you need:
1. Vanguard =lowest fees
2. T. Rowe Price = good managed funds
3. Fidelity=good funds, a bit more expensive fees
4. Primecap Odyssey funds=excellent management, simple choices (3-4 funds)
5. Dodge and Cox=good management, low fees, simple choices (3-4 funds)

I don’t own anything at Dodge & Cox, at the others I do although most of my money is at Vanguard.

Booger says

clambo says

Re: Vanguard brokerage

I like the web interface a lot.
I can make free trades until 25, then it costs me 2 bucks.

At Ameritrade stock trades are free. Now I do pay fees on option trades. I don't know of anyone who does free options trades.

I believe Robinhood offers free options trades, but I heard you don’t get the best “order fill”; thus, you’re paying for it in one way or another.

Right, kind of a kickback scheme again.

clambo says

I don’t see in any prospectus anything about a “kickback”.

Lol, I don't think they're about to disclose the deals made on the country club golf course.

Robinhood and Vanguard are not the same animal.

Mutual funds don’t need kickbacks; they are a great cash business.

Vanguard is unique that it’s not a for profit enterprise, sort or like a credit union or something.

Since funds attract more capital if they are successful, they have an incentive to pick stocks that they believe are good, they profit from attracting more assets. They have no incentive to include a crummy stock in the fund.

Sometimes they close the funds to new investors, which benefits investors not the fund managers.
Several Vanguard funds closed to new investors.

Regarding Vanguard, I also try to invest enough to get the "Admiral" version which is a bit cheaper than the regular one.

Question is, what do I do about my $0.79 cents?

clambo says

The essence of investing is mutual funds.

You kids get off my lawn!

(just messing with ya clambo)

clambo says

Since funds attract more capital if they are successful, they have an incentive to pick stocks that they believe are good, they profit from attracting more assets.

@clambo How exactly do they profit from managing assets without commission or kickback?

https://www.zerohedge.com/markets/robinhood-down-users-unable-transfer-money-out
Robinhood Down, Users Unable To Transfer Money Out

Irrespective of where the “transaction fee” comes from.. Frequent trading is net negative for stocks.

I don’t think these exchanges makes markets more efficient , This is just one additional exploitative industry like medical insurance etc.

I'd add if you're worried about fees, you might need to save more or make more money. I liken it to women who used to coupon clip for groceries and other stuff. Time is money. You could make more doing something productive instead of trying to save $20 on a grocery bill. I remember mom's bragging about saving $30 on a grocery bill as a kid and I'd ask how much time did it take? 4-5 hours.... I'd always think, you're an adult and cannot make $30 in 5 hours?

I suck at math, but I'm a data and math guy somehow. I also was a bagger at a grocery store as my very first real job. I'd watch these women and be like WTF are you doing? Go enjoy life or go make money. Stop with the fucking coupon clipping. You're doing life wrong.

I simply don't care about fees with stocks (within reason). I just dump and run. I have an etrade account and haven't checked it in months. I honestly don't know what's in there stock wise. I agree with Patrick that hyper focus on stocks is likely to be more negative. Get a decent fee structure and set and forget unless you hear some news on something.

https://www.zerohedge.com/markets/robinhood-admits-data-security-incident-5-million-users-affected
Robinhood Admits 'Data Security Incident': 5 Million Users Affected

I've tried TD (their regular interface, not their thinkorswim interface, which is supposed to be more advanced and pretty nice), fidelity, and etrade. I like the etrade interface the best, Specifically, I like the "power by etrade" interface, which was designed by a company they absorbed. First it was built by OptionsHouse, then TradeKing bough them, then etrade bought tradeking. etrade rewrote the interface from flash to html5, which was nice. I've used this interface to do some options trading and analysis. They have some cool charts and projections of risk and future estimated price for options and combos, and good historical price charts on various securities, which I occasionally use. I'm generally happy with them, and the few support tickets I opened to report gui bugs or feature requests were promptly and well serviced.

just_passing_through says

Question is, what do I do about my $0.79 cents?

Call them up and ask? I'm guessing you could have them close the account and write you a check for the balance.

Apple's employee stock options and RSUs are administered through eTrade, so I have an account there. Years ago, employees (including me) discovered that they charged for wire transfers, but not for check-writing. They would even throw in a book of 20 blank checks for free! So, writing checks against the account was the cheap way to transfer money out. Given the rise in Apple stock value, I sure which I had never (sold stock and) transferred any money out of there!

I've also managed to set up bank-to-bank ACH transfers between eTrade and my main brokerage: TD Ameritrade. You do that thing where you report small transfers made to the other account to verify with the sender that you own the other account. One-time minor hassle for permanent transfer ability. For you with only a single transfer in mind, it's probably better just to call and ask.

I like TD Ameritrade (or are they just called Ameritrade now?). I came to TD Ameritrade when they bought National Discount Brokers, which was my first stock broker ever. Maybe my fondness of user interface is just due to familiarity.

Patrick says

clambo says

Since funds attract more capital if they are successful, they have an incentive to pick stocks that they believe are good, they profit from attracting more assets.

clambo How exactly do they profit from managing assets without commission or kickback?

Actually I think I can answer my own question. From working at Schwab, I remember that they can legally trade your stock without your knowing about it, only as long as they immediately come up with the shares when you want to do something with them.

I think they can also lend out your stock to short sellers for interest, again, only as long as they immediately come up with the shares when you want to do something with them.

#42 for Patrick
Mutual funds make money by attracting assets and charging a fee to manage the fund, called “expense ratio”.
How many people do you need to manage a mutual fund? 5 guys and one MBA?
So, if the fund charges 0.5% and has $10 billion under management, they are doing okay.
Vanguard is unique and actually either sub contracts the work for some of the funds, or they do it themselves but for low cost.
Wellington in Boston and Primecap in Pasadena manage some funds for Vanguard.
I think at Fidelity are charging 0.7% of $50 billion in the fund. Contrafund and Magellan are huge.
Mutual fund management is an all cash business, so it can be very good.
The key is getting assets.
Today it’s hard, and guys like Blackrock make a bundle charging fees for basically unmanaged ETFs, now that’s a good racket.

Right, but we were talking about how brokerages can make money without skimming off yours.

Patrick says

Right, but we were talking about how brokerages can make money without skimming off yours.

Many charge outrageous interest rates if you trade on margin.

Right. But they get those rates by lending your stock, not their own.

Notice guys like Schwab want to “advise” you; they can charge you a percentage of your money.
Morgan Stanley and Merrill are in it too.
They realize they need a percentage of everything because brokers don’t make much doing trades evidently.

clambo says

Notice guys like Schwab want to “advise” you; they can charge you a percentage of your money.
Morgan Stanley and Merrill are in it too.
They realize they need a percentage of everything because brokers don’t make much doing trades evidently.

Yes, exactly. They offer to "manage" your money for (typically) 1% of assets per year. It's a horrible deal for the customer.

They really don't make much on trades anymore. The margin on that is zero or close to zero now. Decimalization helped. I remember when all the computers had to be changed from trading in 1/4, 1/8 etc to decimal places. It was a big money-losing change for brokers, but good for customers.

Now that I think about it, it's really amazing that the government acted in the interest of customers on that occasion, and not in the interest of brokers, as would be expected.

I prefer TD Ameritrade and Interactive Brokers for foreign stocks.

porkchopexpress says

Question for the group. Let's say you come into a large sum of money. How do you invest/preserve it to maximize its value to you and your family?

Do you put it in a low-risk, dividend-paying mutual fund and earn like 5% in income?
Do you take some of it and buy an annuity?

I'd like to hear ideas.

I'm playing the value cheap unloved sectors. Necessary for humanity. Commodities are at an all time low and in shortage because we're doing everything we can to starve capital ESG reasons.

I'm still scaling in each sector but have a look at Copper, Shipping, Battery metals, offshore oil and gas, rare earths, Russian oil and gas, Uranium, Gold/Silver, Coal, Agriculture, Natural gas. I can't go into each sector. I use Interactive Brokers for foreign stocks. When you have the same demand and regulations taxes etc lack of capital what to you think gas and oil go? Working great for me and if we get a correction it's fine because I'm in value plays and not buying tech crap at ATH. This is Long Term. Short term I'll trade whatever. Hope this helps!

SunnyvaleCA says

just_passing_through says

Question is, what do I do about my $0.79 cents?

Call them up and ask? I'm guessing you could have them close the account and write you a check for the balance.

You're absolutely right, I was mostly kidding. Chances are I'll get a gig with another corporate etrade account so for now I'm just letting it sit. Not really worth my time.