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.

https://www.sec.gov/Archives/edgar/data/1444822/000119312517110128/d350531d497.htm
497 1 d350531d497.htm AQR FUNDS PROSPECTUS SUPPLEMENT
AQR FUNDS
Supplement dated April 4, 2017 (“Supplement”)
to the Class I Shares and Class N Shares Prospectus dated May 1, 2016, as amended (“Prospectus”), of the AQR Diversified Arbitrage Fund, AQR Long-Short Equity Fund, AQR Equity Market Neutral Fund, AQR Multi-Strategy Alternative Fund, AQR Style Premia Alternative Fund and AQR Style Premia Alternative LV Fund (the “Funds”)
This Supplement updates certain information contained in the Prospectus. Please review this important information carefully. You may obtain copies of the Funds’ Prospectus and Statement of Additional Information free of charge, upon request, by calling (866) 290-2688, or by writing to AQR Funds, P.O. Box 2248, Denver, CO 80201-2248.
Effective at the close of business on June 30, 2017, the AQR Long-Short Equity Fund and AQR Equity Market Neutral Fund will be closed to new investors, subject to certain exceptions as set out below under the heading “Closed Fund Policies.”
Additionally, effective April 5, 2017, the section entitled “Closed Fund Policies” beginning on page 165 of the Prospectus is hereby deleted and replaced in its entirety with the following:
Closed Fund Policies
Effective at the close of business of the below dates (each, a “Closing Date”), the following Funds (each, as of its Closing Date, a “Closed Fund”) were or will be closed to new investors, subject to certain exceptions.
Closed Fund Closing Date
AQR Diversified Arbitrage Fund June 29, 2012
AQR Multi-Strategy Alternative Fund September 30, 2013
AQR Style Premia Alternative Fund March 31, 2016
AQR Style Premia Alternative LV Fund March 31, 2016
AQR Long-Short Equity Fund June 30, 2017
AQR Equity Market Neutral Fund June 30, 2017
Existing shareholders of a Closed Fund as of the applicable Closing Date are permitted to make additional investments in that Closed Fund and reinvest dividends and capital gains after the Closing Date in any account that held shares of the Closed Fund as of the Closing Date.
Notwithstanding the closing of a Closed Fund, you may open a new account in the Closed Fund (including through an exchange from another series of the Trust (each, a “Series”)) and thereafter reinvest dividends and capital gains in the Closed Fund if you meet the Closed Fund’s eligibility requirements and are:
● A current shareholder of the applicable Closed Fund as of the Closing Date—either (a) in your own name or jointly with another or as trustee for another, or (b) as beneficial owner of shares held in another name—opening a (i) new individual account or IRA account in your own name, (ii) trust account, (iii) joint account with another party or (iv) account on behalf of an immediate family member;
1
● A qualified defined contribution retirement plan that offers the applicable Closed Fund as an investment option of the plan (or another plan sponsored by the same employer), as of the Closing Date purchasing shares on behalf of new and existing participants;
● A financial advisor, wrap-fee program or model portfolio who as of the Closing Date has included the applicable Closed Fund as part of a discretionary fee-based program or model portfolio purchasing shares on behalf of a new or existing client;
● An investor opening a new account at a financial institution and/or financial intermediary firm or a client of an investment consultant that (i) has clients currently invested in the applicable Closed Fund or clients for whom the Adviser provides advisory services implementing a similar principal investment strategy and (ii) the new account to be opened has been pre-approved by the Adviser to purchase shares of the applicable Closed Fund. Investors should contact the firm through which they invest to determine whether new accounts are permitted;
● Clients of a financial institution, financial intermediary or consultant that submitted a letter of intent to invest in the Closed Fund that was accepted by the Adviser on or prior to the Closing Date;
● A shareholder of a Fund (including a Closed Fund) or another account or fund managed by the Adviser transferring, either by exchange or redemption and subsequent purchase, into a Closed Fund with a similar principal investment strategy where the Adviser concludes, in its judgment, that the transfer will not adversely affect the applicable Closed Fund;
● A participant in a tax-exempt retirement plan of the Adviser and its affiliates and rollover accounts from those plans, as well as employees of the Adviser and its affiliates, trustees and officers of the Trust and members of their immediate families; or
● A current shareholder of the AQR Diversified Arbitrage Fund transferring, either by exchange or redemption and subsequent purchase, into AQR Multi-Strategy Alternative Fund where the Adviser concludes, in its judgment, that the transfer will not adversely affect AQR Multi-Strategy Alternative Fund.
● A current shareholder of the AQR Long-Short Equity Fund transferring, either by exchange or redemption and subsequent purchase, into the AQR Equity Market Neutral Fund where the Adviser concludes, in its judgment, that the transfer will not adversely affect the AQR Equity Market Neutral Fund.
● A current shareholder of the AQR Equity Market Neutral Fund transferring, either by exchange or redemption and subsequent purchase, into the AQR Long-Short Equity Fund where the Adviser concludes, in its judgment, that the transfer will not adversely affect the AQR Long-Short Equity Fund.
The ability to permit, limit or decline investments in accordance with the eligibility requirements set out above relating to accounts held by financial institutions and/or financial intermediaries may vary depending upon systems capabilities, applicable contractual and legal restrictions and cooperation of those institutions and/or intermediaries.
Investors may be required to demonstrate eligibility to purchase shares of a Closed Fund before an investment is accepted.
Each Closed Fund reserves the right to (i) allow investments in Closed Funds that do not fit within the eligibility requirements above pursuant to guidelines approved by the Funds’ Board of Trustees, (ii) reject any investment, including those pursuant to eligibility requirements detailed above, and (iii) close and re-open the Closed Fund to new or existing shareholders at any time.
PLEASE RETAIN THIS SUPPLEMENT FOR YOUR FUTURE REFERENCE...
2

https://www.sec.gov/Archives/edgar/data/1396092/000120928617000225/e2088.htm
497 1 e2088.htm
B. Riley Diversified Equity Fund (the “Fund”)
(Investor Class Shares – BRDRX)
(Institutional Class Shares – BRDZX)
(Class A Shares – BRDAX)
8730 Stony Point Parkway, Suite 205
Richmond, Virginia 23235
Supplement dated April 4, 2017
To the Fund’s Prospectus dated May 1, 2016
(as supplemented from time to time)
* * * * * * * *
Elimination of Investment Minimums for the Fund
Effective immediately, all references to investment minimums and minimum subsequent investments in the Fund are hereby removed. B. Riley Asset Management, a division of B. Riley Capital Management, LLC, the investment adviser to the Fund, determined to no longer require investment minimums or minimum subsequent investments for the Fund.
Previously, the minimum initial purchase or exchange into the Fund was $5,000 for Investor Class Shares, $10,000 for Institutional Class Shares, and $3,000 for Class A Shares. Subsequent investment amounts were previously $2,500, $2,500 and $100, respectively, for Investor Class Shares, Institutional Class Shares, and Class A Shares.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

In its ads, is Schwab effectively selling away from SWPPX and SWTSX? Why offer them if Schwab 1000 SNXFX offers "decades of advantages"? Is Schwab doing its investors a disservice? (Well, we know they're not fiduciaries.)
It's all marketing. Vanguard does the same thing. A decade ago, when Vanguard's large cap stock index was new, I suggested to my mother that she take advantage of Vanguard's (then) free financial plan review. The CFP suggested a respectable mix of Vanguard index funds - no surprise there.
But I questioned one selection - Vanguard 500 over their Large Cap Stock fund. Vanguard had made a big deal out of how it worked with MSCI to design indexes for making tracking funds more efficient. For example, adding buffer zones to reduce turnover. If you believed Vanguard (and I do believe they do a lot of work on how to best manage index funds), then this should have been the better fund, and the one to recommend. (In reality, you need a microscope to see the performance differences, and which one does better depends upon the time period selected.)
But everyone knows the S&P 500. So Vanguard 500 was recommended based on brand recognition (sellability), not on it being the best Vanguard had to offer. I'm sure Schwab has made a calculation based on how much it gets for one fund vs. another, how much it has to pay S&P for licensing fees, how much better or worse one fund will sell than another, and tilted its advertising accordingly.
BTW, if there's anything out there on how Schwab manages its index funds as contrasted with Vanguard, MSCI, Fidelity, etc., I'm interested. (For example, how much portfolio lending is done, what percentage of that income goes back into the fund, timing flexibility on trades with index reconstitutions, etc.) I haven't seen anything from Schwab, but then again, I haven't really gone looking for Schwab's methodology.
I suspect this is a bigger factor than which index Schwab is tracking ineach of its large cap blend index funds. Which brings us full circle to the title of this thread.

Dan Wiener sent out a sharp email this morning to his subscribers. It's well-written, focused and does a nice job of reminding folks how to bring a critical eye to investment ads.
Here's an excerpt of Dan's missive:
"Over this morning’s third cup of coffee I turned my Wall Street Journal to a full-page ad from Charles Schwab & Co. that caught my eye. Citing “Decades of advantages” the advert compares the Schwab 1000 Index to the S&P 500 Index and, not surprisingly, declares the Schwab index a winner.
… let’s compare the Schwab 1000 Index Fund against another, oh, 600+-stock portfolio like, oh, Vanguard’s LargeCap Stock Index. The fund is relatively new, with only a 13-year history but over that period its 5-year and 10-year returns outpace the Schwab fund by anywhere from 12 basis points to 28 basis points, per annum. Not bad.
More importantly, if you believe Charles Schwab’s ad, more stocks means better diversification and better performance. So, how about comparing the Schwab index and fund … with Vanguard’s even broader Total Stock Market Index?
You know where this is headed. For all Schwab’s bluster, their fund can’t compete. Pick your Vanguard share class, Total Stock Market Index outperforms. Sometimes by as little as 22 basis points per annum, and sometimes by as much as 57 basis points depending on the share class and the time frame."

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

FYI: At $500 million in box office revenue and counting, we sure love Disney’s new movie “Beauty and the Beast.” With more than 1 billion sold, we sure love Apple’s iPhone. The same goes for Netflix, Chevy pickups, wide-screen televisions and grocery store aisles stocked high with fresh fruit and vegetables.
But for some reason, we hate the one entity that brought all these things within reach of most Americans: Wall Street.
Regards,
Ted
http://www.latimes.com/opinion/op-ed/la-oe-cohan-wall-street-regulations-20170402-story.html

FYI: T. Rowe Price Group (TROW) announced on Monday that retail investors and registered investment advisors or IRA's can buy transaction-fee free investor class shares for its mutual funds through Charles Schwab's (SCHW) mutual fund platform effective April 3.
Regards,
Ted
http://www.barrons.com/articles/t-rowe-price-free-to-be-transaction-fee-free-1491243858

Thanks @00BY. The 529 idea is great and I have used the Michigan plan already for my kids. This kid will have a hard time resisting the effects of the wolverine breast milk she's getting now with more subtle and overt pressures to follow. Where my parents wanted me to go to college and where I thought I should go were both wildly wrong headed. I think my father never forgave his alma mater for seeing that I didn't belong there. For all I know, this girl will be best suited for Augustana, but I'm not going to push in any direction now.

Kudos to you. You might consider opening a 529 account for their college fund.

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

Hi Davidmoran! Thanks for your comments. I think employee designation comes into play. The 12 yo mowed lawns, and its seems according to H&R Block that a 'household employee' under 18 who mows lawns, babysits, delivers newspapers is a special case and as such is exempt from fed tax and self employment tax.

The key here appears to be employee. If the 12 yo entered into an employment relationship (e.g. where the neighbors controlled the hours of mowing), then the work isn't contract work. So there's no SE tax and no 1040 until the income exceeds $6300 (Pub 929). That would be true regardless of age. What is special here in dealing with a child is that the employer (the neighbor) doesn't have to pay FICA or unemployment taxes for the child (as an employee).
If the work is being done as contract work (see IRS Tax Topic 762), then the $400 threshold for SE tax still seems to apply.
There's a similar exception for child newspaper deliverers (again, if they're employees). See this IRS FAQ: My son is a newspaper carrier.
You find these in Circular E (Pub 15). See the Special Rules Table here. It lists exceptions for family employees (under 18 and under 21), household employees (under 18), and newspaper carriers (under 18).
Tax Topic 756 also addresses household employees.
The difference between employee and contractor is discussed in Tax Topic 762.
Note also that while a child can earn income (in the IRS sense) for chores performed for the neighbors, it appears money received for the same chores performed for the parent may not be considered earned income. Rather, the chores are treated as part of "parental training and discipline."

Lincoln Financial/Insurance just about bought the farm along with its policyholders during the market melt. I recall that the Newton Savings and Loan that was purchased allowed this company to apply for TARP money 1 or 2 days before that window closed. The Delaware sale was part of a "pay the government monies back" program.
Hoping the economy doesn't travel any of the paths again. Lots of folks I know we very much concerned about a sinking financial ship of state.
https://www.google.com/#q=lincoln+financial+bailout&*
http://www.badfaithinsurance.org/reference/General/0715a.htm

FYI: Delaware Investments, a fund firm with headquarters in
Philadelphia, has rebranded its name to Macquarie
Investment Management on April 3, 2017.
Regards,
Ted
http://www.mfwire.com/common/artprint2007.asp?storyID=56032&wireid=2
M* Delaware Family of Funds:
http://quicktake.morningstar.com/fundfamily/delaware-investments/0C00001YXQ/fund-list.aspx

FYI: Jeremy Grantham, co-founder of Boston investment firm GMO, doesn’t expect valuations to drop back to normal levels for two decades. But he is keeping cash on hand to take advantage of any dip, which he says would need to be 15-20% to act.
Regards,
Ted
http://ritholtz.com/2017/04/grantham-time-decently-different/

k, thanks, but I would not do it even then, and did not.
If after 5 summers he or she has grown a large mowing service, has bought several machines, includes pals, and advertises, then maybe.
No one is ever going to check, and no one cares. Fidelity and Vanguard etc. do all the tracking one needs.

The note at the bottom of the article says he's included the times the S&P 5c has dropped 19% -- slightly extending the usual definition of -20%. (It didn't seem quite as bearish at the time, compared to the ~ 50% losses in the previous two.)