SPFPX outperformance the first three years was due to its miniscule assets under management. So miniscule that a couple of us on this forum held something like 15% of its total AUM. Since then AUM have skyrocketed and as Ted said it has been run of the mill, especially last year when it underperformed its peers.

This is good news for existing shareholders. Assets in QMNIX have gone from $1 million to more than $1 billion in less than 3 years. I commend AQR for closing the door and not allow the fund to get bloated. Remember what fate befell MFLDX.

I think this is all much ado about nothing. In case folks didn't know, Schwab, Vanguard and Fidelity are currently in a pricing war, each one lowering its fees on funds and ETFs, sometimes on the same day. I don't know about you, but every hundredth of a percent is a boon for investors. Schwab's funds have always been competitive with Vanguard from a cost standpoint, as recently as a couple of years being even lower than Vanguard. Obviously Vanguard doesn't like this, since it's ALWAYS bragged about low-cost index funds. And here come Fidelity and Schwab calling Vanguard's bluff, resulting in a race to see who can offer these funds for the lowest cost. Ted is right that Dan is a shill for Vanguard. But my point is that none of this matters. Whether you choose the S&P 500, the 1000, some kind of Total Market, or something in between, it all comes out pretty much the same. Long-term investors would have been served well in ANY of these over the last 10 years, all of them returning between 7.2% and 7.4% annually. So Dan, the add was accurate as far as it went. I wouldn't get my knickers in a twist over Schwab stepping into Vanguard's low-cost turf. As for MFO investors, lower index fund fees are a positive change.

Funny, just two days ago I wrote the following email to my daughter (at her request):
"Here's my summary of financial planning. Or, you could read a 300 page book and get the same information with more details.
1) Have an emergency account. Ideally, it should have three months cost of living in it. At a minimum, have a couple of thousand dollars so you can fix a broken car, etc. without panic.
2) Plan a budget. Specifically, you should know your weekly, monthly, quarterly and annual spending requirements in advance for the most part. Make sure you have the money set into "buckets" for those expenses. Examples: rent, insurance, food, loan payments, vacations, etc. Also, there should be a bucket for allowances for each of you. Just because you have money left over doesn't mean that it is "allowance". Actually plan in advance how much "fun money" seems reasonable. Left-over money should go into savings for #3 or #4.
3) Save for retirement.
4) Save for a house or condo.
The easiest way to save for retirement is through a work 401k plan if they offer one. For most folks starting in their 20s, plan to save about 12% of your gross income. The company match if there is one is added on to this. If there is no company match, plan to save 15%. If you don't have access to a 401k, or if you want to save more, just open an IRA for each of you. Invest it 80% or more in the stock market (see details below). This will probably get you retired around age 60. If you save more, you can retire sooner.
The stock market is the best place for long term investing. The reason is stocks go up and down in the short run, but in the long run the market has always gone up. One easy way to invest is to just put 100% of your money into the Vanguard VTI exchange traded fund (ETF). Just add more money every month or every quarter or every year or whatever. If you want to "smooth out the bumps" some, you can get a little more complicated. Invest some of it in a fund that invests internationally instead of just the US. Some years that will be better, some years worse, but you'll get similar results with a smoother ride. An example ETF for this is VXUS. Another option is to invest some money in the bond market (usually slightly lower returns in the long run but definitely smooths the bumps). Finally, to probably increase your results in the long run, invest in small companies (fund VBR) more than large ones.
Keep in mind that the dips the stock market goes through don't really hurt you in the long run and actually help a little. If you are investing a certain amount every month (say $1000) to buy stocks, when the stock price goes down you get to buy more of them. Then when it goes back up, you gain faster than if it just went up the same amount every month.
The way to use the multiple funds is to:
- set target percentages
- each time you add money to the investments add to the ones that are trailing your targets
Example targets you could use:
40% VTI (total US stock market)
20% VXUS (international stocks)
20% VBR (small company stocks)
20% BND (total US bond market)
Saving for a house/condo is different. It should be in some pretty secure investment, like a credit union savings account or CDs, but not the stock market. You'll probably want to actually spend the money in just a few years, so you don't want to have a down stock market right when you need the money. Most folks living in a high cost-of-living area like Seattle probably spend about 30% of their gross income on housing. So for you, if you make a combined $130,000, 30% is 39,000. If you currently pay rent of $22,000 per year, save the other 17,000.
OK, where/how to open an account. I use Vanguard and Schwab for my retirement accounts and like both of them. You can open the accounts online and they both have good phone support, and Schwab has a Seattle office if you want to talk with a human being. The steps are:
- open the account (an IRA or a Roth IRA or a regular investment account)
- make an initial deposit (usually by an ACH transfer from your credit union savings or checking); this goes to a basic money market fund (kind of like a checking account)
- move the money into your chosen ETF investments
IRA and Roth IRA accounts are called "tax advantaged". The government wants people to save for retirement so they try to make it enticing. An IRA (like a 401k) lets you not pay income tax on the money you save. Instead, you pay income taxes when you take the money out 40 years from now. This is called "tax deferred".
A Roth IRA or a Roth 401k is different. You do pay income tax now on the money that you save. But when you take the money out later you do not pay any taxes then.
If the income tax rate now and 40 years from now is the same, it makes no mathematical difference which approach you use. If you expect your tax rate to be higher in the future, use the Roth approach. If you expect your tax rate to be lower in the future, use a regular IRA. Or you can do some of each to hedge your bets. Use a Roth 401k at work and a regular IRA, or a regular 401k at work and a Roth IRA.
I've got some good books if you want more details, but this is the basics."

Agree with @dstone42 about advantages of 529 investing. TIAA manages Michigan's plan about which I have no complaints. There's a state income tax credit on up to 10k per year, but only in years you put in and don't take out. As to the issue of how hard the money is to get out, I do know this. Accustomed as I am to rapid wire transfers, I was caught short and paid a $30 late fee this semester because it takes 3-5 business days to do an electronic transfer. At tax time, be prepared to show your proofs (textbook receipts, classroom or lab clickers, tuition bills, evidence of scholarships, etc). Don't know how it may work in other states and especially for a small college that the plan may not have in its database.

There's the tax advantage of a 529 fund -- the gains are not taxed (as long as the withdrawals are used for college education).
I opened an account for each grandchild -- two of them with T Rowe Price (Alaska state plan) and three with Nebraska state plan. I don't use their target date funds -- there are some regular mutual fund choices (that's what I looked for when starting). It's mostly on automatic pilot -- $100 per kid per month out of my checking account. With an extra contribution at birthday and Christmas. It's hard to find time to examine the results closely, but the total has grown nicely and the individual funds' numbers stack up pretty well with S&P 500. The two older boys are in the sixth grade now, so in a few years I'll see how complicated it is to get the money out.

Do I love BBALX? Nope. I respect it as a well-designed tool. it's cheap, disciplined and less subject to manager risk than a purely active fund. Is it the right tool for your project? Don't know. But I have faith that you'll figure it out.
I didn't read the write up of this fund. It appears to be a fund of funds. I know that many here look at all sort of metrics in evaluating mutual funds. Color me stupid but I thought the whole purpose in buying mutual funds was to accumulate wealth - at least when we are in the accumulation phase. Based on this fund's performance over the past 1, 3, 5, 10, and 15 years it can't hold a candle to a simple passive investment in an S&P index fund.

Hi, guys.
I think the asset allocation question is interesting. Once, a long, long time ago, I concluded that the only fund a long-term investor needed was a U.S. microcap value fund; highest possible returns, volatility be danged. (Remember Fremont US Microcap FUSMX, a favorite?)
I'm not 100% sure of that anymore. Over the past decade (at least through late last year), bonds has outperformed stocks. Over the 40 years period from 1969-2009, bonds outperformed. From the period from inception of the benchmark to the last presidential election (1994-2016), EM bonds had pretty much matched the S&P 500 and utterly buried EM stocks. You might say, "that's unfair, you've picked periods where the stock market has three of its worst crises in a century and two 'lost decades.' The bond market meanwhile had a 35 year bull market."
Mostly, I'd nod. On the other hand, you also had a period of the most amazing drivers of economic growth we've ever seen, from the rise of the internet and mass computerization to the fall of trade barriers and financial deregulation worldwide.
So, how much confidence do you have in describing the state of the markets in 2050?
I'm clueless and might well be ... ummm, "watching from the sidelines" by then.
So if I had to make a suggestion, it would be "spread your bets, stay agile, keep your costs down."
---
In that way, BBALX is rather more aggressive than most. That is, they've structured-in exposure (for example, to natural resources and emerging markets) that others might dodge. It dropped 30% in '09. Is that bad? Mostly if you think of it as designed to be "conservative" rather than "risk-conscious." Fidelity Global Balanced and Vanguard STAR, for example, both dropped noticeably more. The global balanced funds from PIMCO, T. Rowe Price (RPGAX) and Templeton weren't around, so we can't use them as benchmarks.
Do I love BBALX? Nope. I respect it as a well-designed tool. it's cheap, disciplined and less subject to manager risk than a purely active fund. Is it the right tool for your project? Don't know. But I have faith that you'll figure it out.
For what that's worth,
David

I bought BPTRX for my daughter years ago as I liked his other funds ( way before the asset bloat there) and thought she had a 50 + year horizon. The crazy leverage he uses helped drive the fund to one of my best investments but I wouldn't recommend it for anyone who needs the money before sometime in the 2040s.
As an added benefit, Ron Baron has an annual meeting with a suprize entertainer that some years caught her attention when the stock performance did not. (Paul McCarthy one year) a nice bennie although who knows what that cost us shareholders?
Now we should lighten up but who wants to pay capital gains?
Couple of thoughts
1) Not a big an issue now but back then (1990s) hard to find decent funds that would take small amounts of money
2) given the vagaries of managers and performance would pick a fund with something resembling a team approach in a big company so you dont get stuck with an under preforming fund with a a large capital gain years hence.
But realistically best to use SPY or VTI

FYI: Tesla (TSLA) is trading up 4%+ today on the back of strong delivery numbers, leaving the stock at a new all-time high. Below is a chart of Tesla (TSLA) since its IPO back in 2010. While it may seem like the stock has been going up forever recently, it has actually been trading in a range between $140 and $280 over the last two and a half years. Is today’s breakout to new highs the start of another big leg higher?
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/tesla-tsla-overtakes-ford-f-in-market-cap/

@Ben WP - Numerous attaboy's to you. I highly applaud your efforts. I also am in full agreement that handing them the tool without owners instructions could prove fruitless.
I started my grandson with a stake in OAKBX the day he was born roughly 6 years ago. I add to it on his birthday, at Christmas and whenever I jus think about it. At that time I tried explaining to his parents why, why that fund, etc., etc., and basically got the deer in the headlights look. It wasn't that they weren't grateful I don't think, it was probably more along the lines of them being overwhelmed by being new parents and all. I'll have another go at it soon.
They also have a relative on the other side who works for and is pushing all manner of PrimeAmerica stuff at them. They get guilted and consoled in all manner of financial matters that they don't understand and feel pressured to help the uncle out because he's MIL's brother. You know how that goes. Thankfully they've managed to glean a few things from my mumblings and haven't gone too deep with this guy.
But back to your situation. It sounds like your kids might be on top of this financial stuff since they have investments of their own. Why not just have the discussion with them with respect toward what you would like to do and see where it goes. I know I make it all sound so easy but maybe you all can agree on a plan and investment choices. Don't make it complicated, the simpler the better. Heck, even Mr. Buffett says 90% SPY + 10% bond fund and go about your life.
On the other hand they might have way too many other things that weigh on their minds on a daily basis and you might get the same reaction as I did. In that case put your hands to pencil and paper, write down your plan including why you're doing what you're doing and just get started. There will come opportunities in the future to add to your writings and hopefully they'll begin to show an interest.
Good luck.

? Boilerplate meant also such as from the great Fairmark.
I know something (a little anyway) about compliance, doing this sort of copy / paste editing and original writing / rewriting of prospectus text for freelance work, irregularly. It is not easy dealing with that kind of lawyering. I agree that it gets worse by the year. Sometimes anyway. Some years it gets better.
I do not get your last Q. I opened Roths for my two kids the year they were legit. 15-20y ago. I never have dreamed of filing, and did not file, a tax return for them. Fret 'rules' aside, no one cares, no one tracks. I would do the same now.

The situation is real; our first grandchild was born a couple of months ago. The parents are both successful federal employees and do already invest, from the sounds of what I hear they have FANG or similar stocks. I am tempted to offer a modest amount so that the parents might start a fund for our grand daughter, in hopes that we or they could add periodically. The question is how to do it right.
My parents gave us lump sums for a couple of our kids, but seemed to forget the last two. No advice, no strings, no great interest. Parents-in-law gave share certificates directly to my wife on no schedule. Sears, Kodak, Pinnacle West, and the Hancock regional bank fund. No advice, no rationale, no pointers on dividend reinvestment at a time in my life when I knew squat about money. Both sets of parents had money, but did no better talking about it than they did with sex ed. Glad we sold the first two when we did, but if someone had told me that selling electricity to the Four Corners area was a sure thing, and to reinvest the dividends, we'd probably be sitting on a college fund for at least one kid. Same for the MF; it was a great idea, but if you don't tell the donee how to benefit from it, it's kind of useless. Fortunately, the past is the past.
David's and Charles' write ups of BBASX and MASNX, and the mention twice that these could serve as core funds for young people set me to thinking. Should I donate a position in a fund and tell my kids why I chose it and why I think it should be held and how to make it grow and the whole 50-minute lecture on buy-and-hold, including how to avoid all the screw- ups I made on my investing journey? Conversely, should I count on my over-achieving kids to pick the right investment for their daughter and skip the lecture on risk management?. (Actually, I'm not qualified to deliver that, but it sounded good.) With respect to the two funds above, I'd be reluctant to pick such funds because I don't really understand how the managers make money. I can read the beautifully written and cogently reasoned descriptions by our colleagues, but I myself could not take my son-in- law aside and explain in my own words why Ella would be in great shape 18 years from now. On the other hand, I could suggest a conservative allocation fund which is on my high conviction list, namely BRUFX. I could do ok explaining that one and have no qualms about buying it for the child. For comparison's sake, I manage a UGTM fund for my 18-year old. It's composed of positions in VIG, AKREX, DSENX, and HIMVX. 50% of all money this daughter earns is direct deposited into it.
All suggestions are welcome. I don't want to be a control freak, but I sure don't want to give a tool without a user's manual.

VF...the chart within the article references a bear market event spanning APR-OCT 2011, so the 6 years is from that specific point in time.

I sure would not file for either, and did not, with either of my kids, for many years. All the boilerplate you cite is ass-covering, of course.

Hi Catch! Thanks for your time and effort in responding. I noted several of your sources I want to explore further. We did this minor IRA drill years back for our own kids, and continue contributions to this day as a holiday present, but times have changed maybe at the IRS as far as minors are concerned. and my brain and memory of the details are slogging along.
However, Vanguard was happy to cash my check and fund the accounts, and recommended an ETF, so you were right on target. I am looking at their VUG which has some cool things in it a kid might recognize.
Well, "overload" has hit...the thread on Scotch Whiskey came along just in time...
cheers, hawk

Hi @hawkmountain
You noted that minor accounts have been opened, but have they been funded yet? I ask, as to avoid all of the theoretical tax "stuff"; to fund the accounts at $399. I note further down this page about record keeping to maintain with the minor accounts paperwork, which will include the receipt of a form 5498 for each minor Roth IRA.
This first paragraph next is the common language found at many web sites. Obviously, opinion; but not legal advice. I'm sure you've seen this, too.
If the wage is paid by you or other family members, just keep records that include the type of work, the date of completion, the employer, and the agreed upon wage. You can include work done around the house provided it is legitimate and the pay is at the going market rate.
Implied with the above from a prior thread note I posted:
"The important thing to remember is that your child must have earned income during the year for which a contribution is made. Money from allowance or investing income does not count as earned income and, therefore, cannot be used towards contributions. Ideally, your child will receive a W-2 for work performed; otherwise, it is a good idea to keep excellent records from jobs that don’t provide a W-2: babysitting, yard work, mothers’ helpers, entrepreneurial endeavors, etc. Your records should include:
Type of work
When the work was done
For whom the work was done
How much your child was paid"
>>>Language from Fidelity custodial minor Roth IRA application form:
Please note that in order to open and contribute to this
account, the minor must have taxable compensation equal to
or greater than the amount of the annual contributions made
to his/her IRA each year. Please review IRS publication 590-A
for a definition of taxable compensation.
>>> From a section of the application regarding the minor:
Income Source Industry regulations require us to ask for this information.
Employed: Self-employed: (check one of these)
Occupation Employer Leave blank if self-employed.
Employer Address
City State/Province ZIP/Postal Code Country
Not employed: (this is also an available check box at the end of this section....one may suppose to use this if the above, Employed or Self-employed; are not check, eh? I don't know whether Fidelity would reject the application if one only checked this box for "Not employed", and then indicate the Source of Income, which has a "fill in the box" for your own comment about income source; i.e., yard work. This is very confusing, IMHO.
Source of Income Spouse, etc.
Ed Slott, minor Roth IRA site link here.
ADD: YouTube a few videos... https://www.youtube.com/results?search_query=roth+ira+for+minor
@msf and his offering of the bankrate.com link is one of the better detailed descriptions I have read regarding the $400 limit.
Lastly, I know all Fidelity IRA's now automatically include the brokerage feature. Is this the case for Vanguard? I ask, as this would allow for the purchase of etf's within the minor Roth accounts; otherwise contributing enough money over the years to attain a minimum for investment in a mutual fund would really throttle back the ability to have the wonderful affect of compounding for these accounts. Example: VTI is about $122/share to purchase and $399 would purchase 3 shares of VTI with $33 remaining to float in a MM account or to purchase another appropriate etf with the $33 balance.
'Course, the guidelines (IRS); versus those who interpret many times have different paths. I do not find any IRS tax court cases related to minor Roth IRA accounts. And part of all of this too, is of course; this "income" is not generated and shown on a W-2 (yet) and that won't be the case until age 16 (child labor law, eh?) and when the minor may have employment that requires a W-2 filing.
I know you are already on "overload" with all of this, but tis a good plan. Keep at it.......
Take care,
Catch

FYI: It seems passive investing is even starting to hit the likes of the Bloomberg Terminal , which according to the Financial Times and research by Burton-Taylor International saw the number of its Bloomberg terminals drop by 3,145 in 2016, only the second time in history such a drop has been recorded. Morgan Stanley predicts that Bloomberg Terminal revenue could decline by billions over the next few years.
Regards,
Ted
http://www.valuewalk.com/2017/03/passive-investing-bloomberg-terminal/

If Shadow had posted this article, I would have believed him :-D
However, I have to say this was much better than predictable "Trump resigns the Presidency" idea so many had yesterday. I actually sent out an email to my friends to tell them if they didn't stop I will never talk to them again. Then they thought *that* was an April Fool's joke.
Speaking of retirement, the two people who I think should have retired several years back are Denzel Washington and Nicholas Cage. It is so painful to watch them,
Aso.

Sometimes, investing is much like the weather. At times the sun can be out with a nice blue sky along with the temperature in the mid 80's and calm winds ... and, here comes a solar votrex that disrupts communications, travel and other things.
With this, now in retirement I run an all weather conserative asset allocation in my portfolio along with a rebalance plan that adjust my equity allocation based upon certain stock market conditions plus I also harvest some capital gains in the rebalance process thus keeping them from becoming vaporized in major stock market declines.
With this, when the day gets spoiled by a solar vortex (so-to-speak) and the bear comes growling I am already ahead of most; and, it is a big reason I keep an ample cash on hand so that I can become a buyer of stocks in major stock market pullbacks and corrections.
With my portfolio management tools and rebalance processes as the markets recover I continue to sell down equities through a systematic process. Really nothing complex about this just a disciplined and systematic approach that keys off of stock market pullbacks and their recovery where I harvest some capital gains along the way.
Folks ... thus far, this process has worked well form me and my family through the years. It has worked thus far for me, my father, his father and so on and so forth. It's really quite simple ... Make harvest of the crops whether they are capital gains in the markets or crops in the soil.