Hi,
I wanted to check with the group if this violates Boglehead principles and would be considered timing the market.
I told an investment advisor that I align with the boglehead principles and he suggested that instead of holding one total US index fund (VTSAX) that I buy individual index funds of each group that comprise VTSAX: large cap index fund, mid cap index fund, small cap index fund, real estate index fund, international index fund, etc. Then advised to never set reinvest to auto, but instead have dividends/cap gains go to settlement account. Then at a reasonable cadence, analyze your holdings and put settlement money in whatever fund group happens to be down at the moment (buy at discount) and continue this through the accumulation phase of investing.
He also advocated for a bond ladder that comes to maturity quarterly as opposed to buying an index bond fund that never matures.
So my questions are:
1. Is this considered timing the market? Taking profits that would be auto-reinvested in itself and buying fund groups that are down.
2. Is it advantageous to break up VTSAX into its various components as individual index funds of each market group, so that you have more fine grained control over where money flows? Sounds like this would be a good idea as you have more control if question 1 is not considered timing the market -- reallocating based on whatever happens to be up/down at the moment.
3. If you have the time to manage a bond ladder, does it perform better than a mutual index bond fund VBTLX?
It seems like a good idea to me as you are just reallocating to fund groups that are down from fund groups that are up. So you are not buying more shares of an already expensive stock, but wanted to check that I was not missing something that would make this a fools errand.
Jason
I wanted to check with the group if this violates Boglehead principles and would be considered timing the market.
I told an investment advisor that I align with the boglehead principles and he suggested that instead of holding one total US index fund (VTSAX) that I buy individual index funds of each group that comprise VTSAX: large cap index fund, mid cap index fund, small cap index fund, real estate index fund, international index fund, etc. Then advised to never set reinvest to auto, but instead have dividends/cap gains go to settlement account. Then at a reasonable cadence, analyze your holdings and put settlement money in whatever fund group happens to be down at the moment (buy at discount) and continue this through the accumulation phase of investing.
He also advocated for a bond ladder that comes to maturity quarterly as opposed to buying an index bond fund that never matures.
So my questions are:
1. Is this considered timing the market? Taking profits that would be auto-reinvested in itself and buying fund groups that are down.
2. Is it advantageous to break up VTSAX into its various components as individual index funds of each market group, so that you have more fine grained control over where money flows? Sounds like this would be a good idea as you have more control if question 1 is not considered timing the market -- reallocating based on whatever happens to be up/down at the moment.
3. If you have the time to manage a bond ladder, does it perform better than a mutual index bond fund VBTLX?
It seems like a good idea to me as you are just reallocating to fund groups that are down from fund groups that are up. So you are not buying more shares of an already expensive stock, but wanted to check that I was not missing something that would make this a fools errand.
Jason
Statistics: Posted by jbogler — Sun Jan 19, 2025 2:40 pm — Replies 12 — Views 594