I'm CEO at Wealthfront. Saw your note - check out our whitepaper. It's full of information on how to allocate assets (both taxable & tax-deferred accounts), and which ETFs are the cheapest / best index funds. You can use the info yourself, or have Wealthfront automate it for you.
https://www.wealthfront.com/whitepapers/investment-methodolo...
I personally own (not through a broker) shares in a diversified portfolio of companies, all of which offer Dividend Reinvestment Plans with optional cash purchases of additional shares directly through the company's transfer agent. This means that I pay no fees when purchasing additional shares for my DRiPs, in fact, a lot of the companies I invest in offer discounts on shares purchased through their Share Purchase Plan. I mostly invest in large companies that pay reasonable dividends with long histories of stability and dividend payments/increases. My goal is to almost never stop buying, making use of dollar cost averaging, and earn a safe return that ought to still beat the market in order to save for retirement/other future investments.
Buying DRIP stock has a lot of tax complexity. You establish a new cost basis for stock with every dividend you receive. I.e. 4x a year.
Above all, the importance of recordkeeping cannot be
overstated. Unlike other tax-related documents, DRIP
statements, recording all reinvestments and OCPs,
should be kept indefinitely. [1]
But if you die and leave everything to your heirs, all is forgiven. They get a brand new tax basis and it no longer matters when you bought.
Thanks for the advice. It is important not to overlook the downsides of any investment strategy, and I do keep very diligent records.
The downside to DRiPs as you mentioned is the amount of paperwork you have to do and the difficulty in selling. For me, however, I am willing to incur that cost for the upsides which are particularly maximized by my personal situation.
I am not sure about how difficult US taxes are, but in Canada they are fairly straightforward for someone adept at math and logic.
Betterment and Bitcoin speculation for the most part. With the right knowledge, you can certainly outperform Betterment, but as a programmer I'm content just outsourcing that and saving that time for other things (like getting better at programming, for example, which implicitly earns me money as well).
I'm a buy & hold stock market investor in companies which have good management, care about the shareholders and of course, good balances.
I use the simple strategy of (1 - my_age)% in the stock market and the rest in fixed income funds(or less risky investments, including some hedge in gold and dolar due the fact that I live in the third world and currency fluctuations happen frequently).
It's funny because even though I work with software development, I don't have much interest about internet companies(read FB, TW and so on). The other sectors in the industry are less of a gamble and I like that.
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[ 4.9 ms ] story [ 42.5 ms ] threadnow i just buy aaa bonds and sp500. lost too much gamblin' alreafy.
25% in Vanguard dividend growth index fund
25% in Vanguard total stock market index fund
25% in Vanguard total bond market index fund
25% in stocks I chose myself
[1] https://finance.yahoo.com/education/drip/dspp_plans/article/...
The downside to DRiPs as you mentioned is the amount of paperwork you have to do and the difficulty in selling. For me, however, I am willing to incur that cost for the upsides which are particularly maximized by my personal situation.
I am not sure about how difficult US taxes are, but in Canada they are fairly straightforward for someone adept at math and logic.
http://arachnoid.com/equities_myths
Warren Buffet has chosen index funds as the basic approach for his estate and relatives after he's gone.
I use the simple strategy of (1 - my_age)% in the stock market and the rest in fixed income funds(or less risky investments, including some hedge in gold and dolar due the fact that I live in the third world and currency fluctuations happen frequently).
It's funny because even though I work with software development, I don't have much interest about internet companies(read FB, TW and so on). The other sectors in the industry are less of a gamble and I like that.