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Buying Everything

Dennis Friedman, 3:01 am ET

IN A FEW YEARS, my wife and I will have additional income, thanks to both Social Security benefits and required minimum distributions from our IRAs. Our thought: Any money we don’t spend from these two income streams we’ll invest for the long term. We wanted to keep this money separate from our other investments, so we opened a new joint brokerage account at Vanguard Group.

We decided to invest our extra cash in the Vanguard Total World Stock ETF (symbol: VT). It’s a highly diversified portfolio and costs just 0.08% a year, equal to eight cents for every $100 invested. The Vanguard fund tracks the FTSE Global All-Cap Index and owns more than 9,000 stocks. It reflects the composition of the global market, with 58% of its assets in U.S. shares and the rest invested abroad.

We thought this would be a hassle-free way for an aging couple to invest their money in their later years. We don’t have to rebalance because the fund simply buys all of the world’s significant companies according to their stock market value. Since it’s an exchange-traded index fund and it has no bonds, it should be highly tax-efficient, with relatively little taxable income generated each year. We plan to invest in the fund slowly over time, which means we’ll benefit from stock market dips.

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Roboticus Aquarius
Roboticus Aquarius
2 months ago

VT is a great fund for all ages and many different investors.

One of my sons started working at 15. We opened a Roth IRA for him, and 2/3 of his portfolio is in VT.

It’s also easy to skew US vs Int’l to your preference. Most of the rest of his portfolio is in an S&P 500 Index fund, so his portfolio composition is roughly 70% US and 30% International. (He will ostensibly retire in the US, I wanted him to have greater exposure to the US than international.)

R Quinn
R Quinn
2 months ago

I am in a similar position except I’ve gotten past the investing what we don’t need to spending it on major home improvement projects. Social Security has gone into a travel fund for eleven years.

David Powell
David Powell
2 months ago

Love that one. Use it for small, simple savings buckets just like yours.

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