Yes, here’s yet another ETF from Vanguard in my Roth IRA (I have a few of these)–the Vanguard Value Exchange Traded Fund (VTV), not to be confused with the Vanguard Index Funds Small Cap Value Exchange Traded Fund (VBR). This is the ETF equivalent of the Vanguard Value Index Fund (VIVAX).
This ETF tracks the index of large cap “value” stocks–value investing being the kind of investing where someone seeks out stocks that are undervalued and buying them. This fund pays a nice 4.19% yield; unfortunately, it is down considerably for the year (16.82%). It has a rather high turnover for an “index” type fund of 27%, meaning that it’s the kind of ETF best held in a tax sheltered account unless you like paying capital gains taxes. This ETF also makes up a miniscule part of my portfolio–far under one percent–so I am definitely in no danger of being overexposed.
If you are interested in following a value index, this is definitely one to consider. While it’s not performed well recently, its low costs (hey, it’s Vanguard) and yield are likely to help it stay in my portfolio for a long, long time.
Tags: Investing, IRAs, Mutual funds, Stocks, Taxes
Another audiobook on compact disc I was able to borrow from the fabulous Hawai’i State Public Library System, The Age of Turbulence, a monstrous 16 CD set that retails for $44.95. Somewhat autobiographical (it is, after all, written by Alan Greenspan himself) and narrated by Robertson Dean, Greenspan offers his own personal history of himself, discussions of working with presidents from Nixon to the second George Bush, and his views on the economies of both the U.S. and other countries.
The narrator himself has a very professional voice and is easy to listen to; it’s quite entertaining to learn about Greenspan’s early days and interests (such as music) as well as his associations with the various presidents. Particularly fascinating was his view of Gerald Ford as a man who had very few psychological hangups, as opposed to Nixon, who he saw as very intelligent but exhibiting many psychological hangups.
Of particular interest was the discussions on the former Eastern Bloc countries and what happened as the USSR and Berlin Wall fell, and how the economic systems in those countries (what he calls centrally planned economies) were horribly outpaced by the capitalist economies of the western world. As someone who was growing up during the end of the Cold War and lived through all of these historical events, I never realized the economic implications until then.
My favorite discussion in the book is where Greenspan admits to “Fedspeak“: the confusing bits of rhetoric that Greenspan would use in official statements by the former Fed chair. Indeed, Fedspeak is apparently intentional, meant to be intentionally vague, and he appears acutely aware of the amount of analysis that goes on in the financial and journalistic communities whenever the chairman speaks.
While I seriously doubt I would pay the list price for this CD, I think it’s more than worth one borrow from the library. It may seem boring to some listeners, but if you want to know a bit about modern economic history, you could not learn from a better author.
Tags: Economy, Social aspects
Yes, another ETF in my Roth IRA from Vanguard. I’m not sure but there may be a few more of these, but I’ll go one at a time. This is the Vanguard Small Cap Exchange Traded Fund (VB). This is a small cap index fund, tracking the MCSI US Small Cap 1750 Index, and is the ETF equivalent of the Vanguard Small Cap Index Fund (NAESX).
Since this is in my Roth IRA, I have no tax concerns (notice a theme? I own almost everything in tax advantaged accounts, and the few things I do are either individual stocks I plan on owning for a long time or I series Savings Bonds which can have tax deferred for a long period of time). It’s less than a percent of my overall portfolio, so no overexposure issues here. It’s down for the year 13.75%, trailing the slightly above flat for the year S&P 500 badly. Costs are very low (yes, it’s Vanguard), and it pays a dividend yield, albeit a small one of 2.02%.
If you are interested in following a small cap index, you can do a lot worse than this ETF. I intend to hold onto this one for quite some time (yes, I’m boring in my investing–I rarely sell stuff). Look into this and other Vanguard ETFs at Vanguard’s Web site if you want more information on these funds.
Tags: Investing, IRAs, Mutual funds, Stocks, Taxes
A few weeks ago, the Governor of Hawai’i (the state I live in) ordered furloughs of most state employees of three days a month for two years, and ordered departments that were exempt from her being able to order furloughs (Office of Hawaiian Affairs and the Department of Education) to cut their budgets by an equivalent amount of money–roughly 14%.
Needless to say, there’s been much uproar about this. The unions representing government employees are challenging the orders in court, and departments are considering their options, many choosing to close three Fridays a month.
For those employees who are already struggling with the high cost of living in Hawai’i, I doubt many have 14% slack in their budgets–quite frankly, very few do, and if they do, they may have to cope by reducing the amounts they are saving. But more likely, these employees are barely making ends meet already.
Everyone here knows someone who will be affected by these furloughs; professionally, I have to deal with state employees on a very regular basis, and it’s clear that there will be even more slowdowns to some state systems that already take long amounts of time to get business done (Ever try applying for some kind of welfare benefit? It already takes up to 90 days to work up a Medicaid application here–will it take 14% more time?).
My heart goes out to those who are receiving such cuts. I’ve been thinking about it myself: could I cut 14% out of my monthly budget?
My guess is I could, but I would have to substantially reduce the amount I’m saving for retirement, which would be like cutting off my nose to spite my face.
How about you? Could you do the same? If you’re like me, I’m guessing you’ll have difficulty doing so–join me in sending hope and positive energy to those who are facing these difficult times.
Tags: Ask the readers, Budgeting, Economy, Social aspects
I recently had a discussion with one of my friends who had told his girlfriend to go ahead and buy herself an iPhone because, “she deserved it.”
Similarly, this week at work when I discussed my thoughts about attending the Maui Photo Festival, namely that while I thought the festival itself was costly but worth it, and the airfare for me would not be a big deal (a 20 minute flight is not a big deal, really), housing and a rental car might be the real killers in terms of going.
“Just spend the money, Ryan,” I was told. “You deserve it.”
While I certainly would love to go to the festival (and still might), and I’m sure my friend’s girlfriend would love to have the iPhone, I’m not sure that convincing someone to spend money they may not have (in her case) or has but will make things much more difficult in the short run (in my case) by telling them they “deserve it” is really the best thing.
I’m sure we all feel like we deserve more and better than what we have; for instance, I often feel like I deserve a pay increase at work because of the effort I put in there. However, to use the excuse of, “I deserve it,” to live beyond my means might end up with my ending up “deserving” needless interest charges and the emotional drain of consumer debt that I’ve worked so hard to eliminate and avoid over the years.
While I’m all for rewards at the end of long amounts of saving or paying off debt, I’m not for the idea of giving myself some kind of “deserved” reward that ends me up in debt or destroying what I’ve spent long amounts of time working on. What I do indeed deserve is a secure financial future–and that’s one of the things that financial discipline helps me to obtain.
Tags: Budgeting, Debt, Frugality, Social aspects
We talked about Real Estate Investment Trusts not long ago, and we talked about Exchange Traded Funds awhile back. Now combine the two and we get one of my very small holdings, the Vanguard REIT Index ETF (VNQ).
This is a tiny holding in my Roth IRA; when I say tiny, I mean .14% of my total portfolio. That’s right, not even close to a single percent. Like real estate, this fund hasn’t done all that well, but since it’s from Vanguard, I get the low costs I would expect, and the ETF pays a nice dividend of 9.13%.
As usual, in a tax advantaged account, I have no real tax concerns. Since it’s such a small part of my portfolio, I have no danger of overexposure. And while it hasn’t performed well recently, it will go as real estate goes–and eventually it will come back.
If you are interested in real estate investing without the headache of being a landlord, this is one ETF to really consider.
Tags: Investing, IRAs, Mutual funds, Real estate, Taxes
Will the S&P 500 finish up for the month of June? After diving into seriously negative territory in early March, the venerable index has rallied mightily, ending May up approximately 40% from its low this year.
At the close of trading on Thursday, the S&P 500 stood at an adjusted 920.26; it opened the month at 923.26. So it’s down for the month three points, but it’s a pretty microscopic .03% negative change from the start of the month.
My personal portfolio shows pretty much the same thing; my 403(b), consisting of several funds that mirror the international and broad market indices as well as two bond funds and a very small amount in miscellaneous areas, is essentially flat for the month–down exactly $25 as I write this.
It looks like, with three trading sessions left in the month, the outcome is too close to call. It’s not realistic to think we’ll have another huge gain this month like we did in March, April, and May, but it would be nice to have something positive–and breakeven would be okay as well. We’ll keep an eye on how things play out over the next few days.
Tags: 401(k)s and equivalents, Bonds, Investing, Mutual funds, Stocks
Here’s another ETF in my portfolio, this one kept in my Roth IRA–the Vanguard Index Funds Small Cap Value Exchange Traded Fund (VBR). This fund is the ETF is the equivalent of the Vanguard Small Cap Value Index Fund (VISVX).
This ETF tracks the index of small cap value stocks (stocks that are felt to be undervalued when bought). Unfortunately, it has not performed all that well this year–down 18.02% year to date versus the virtually breakeven performance of the S&P 500. It does pay a nice 3.01% yield.
This ETF makes up a miniscule amount of my portfolio–about a fifth of a percent–so I am in no danger of being overly exposed. Since it’s Vanguard, costs are minimal (an expense ratio of 0.11%). And since it’s in a tax advantaged account, I don’t have to worry about taxes.
If you are interested in following the small cap value index, this would be the ETF for you–like many ETFs it has the advantage of needing a smaller amount of money to get started than the equivalent mutual fund. I’m likely to hold this one for quite some time.
Tags: Investing, IRAs, Mutual funds, Stocks, Taxes
Remember all those things I (and so many other personal finance bloggers) said? That it’s impossible to time the market and that trying to pick individual stocks is harder than just going with the index. Here’s an example of why–
I’ve said it before and here it is again: I like Apple, Inc. I’ve used their products since the early 1980s. I own stock in the company. I love most of their products.
It seems that Apple watchers are not just looking at their products or their business. They also pay a lot of attention to CEO Steve Jobs, who was diagnosed with pancreatic cancer a few years ago and has been on a medical leave from the company since early this year. Mr. Jobs is supposed to be returning to work late this month.
This past weekend, the story broke: Mr. Jobs supposedly has had a liver transplant.
Now, I’m not sure if he did or did not have one (and quite honestly, in the age of HIPAA–I work at a hospital as my day job–I’m not sure that talking about someone else’s medical history is all that bright of an idea). Whether he has or not, I’m hoping he’s in good health and can return to work. But what I was expecting–what I would predict, based on the fact that similar things have happened in the past–would be a massive dumping of the stock and a nosedive in price.
Instead, in after hours trading (this is being written on Sunday afternoon at almost 5 p.m. Hawai’i time), AAPL is up 35 cents.
Even more evidence that stocks are just not predictable.
Tags: Investing, Social aspects, Stocks
A real estate investment trust (REIT) is a tax designation for a corporation investing in real estate that reduces or eliminates taxes with a catch–REITs must distribute almost all of their income to their investors. These REITs often issue stocks, so it’s possible to buy into REITs–including indices of REITs–as an individual investor.
A few years ago, when real estate was red hot, so were were REITs. These days, like real estate, REITs are taking a beating; for instance, the Vanguard REIT Index (VGSIX) is down 8.72% year to date, trailing the essentially flat for the year S&P 500 index; however, it also pays a yield of 8.98%, which is considerable, meaning that there is still some nice benefit to owning a REIT–income.
While it hasn’t performed great as of late, real estate is an area worth diversifying in; instead of buying actual real estate, a REIT or REIT fund (or ETF) may offer the benefits of buying real estate at a lower initial cost and without the headaches of being a landlord. Consider a REIT for diversifying your investments if you would like some exposure to real estate.
Tags: Investing, Mutual funds, Real estate
