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Suggestion for a fund for my grandson?



  • @JoJo26 and @msf

    Being curious, I charted the "total return" of both of the indexes mentioned previous. The difference being .13% over the term of the compare.

    Compare of FZROX and FSKAX from inception of the Fido Zero fund.
  • Hi Donna,
    First, you need to know that I am biased to Fidelity. Schwab would be my next choice; but I/we have no need to transition.
    As to T.R. Price and Vanguard; recent discussions here indicate Price is mostly, if not all their mutual funds and if I recall, no brokerage that is a full direct integration of everything or no brokerage at all (can't recall). Price also has charges and fees for trading that are not part of the "modern" retail invest world, IMHO. Also reported here is that Vanguard, remains "clunky" but attempting to modernize.
    Fidelity remains forward thinking and very competitive. For the most part, for all the normal functions a retail investor needs, there are no charges/fees for their products. The E.R. (expense ratio) for their products are not out of line, and very inexpensive for indexes and some etf's. Fidelity's available group of mutual funds, indexes and etf's cover a lot of investor ground for choices. Past these/this a very large chunk of the global investment world is available; and surely more than enough to satisfy a normal investor to achieve decent returns over time.
    And of high importance, is that I have never had a problem with obtaining an answer to any question presented to Fidelity.

    I've just started assisting a niece and nephew with Fidelity Roth's account set up. They're both in their 30's, but have started thinking more about their monetary futures.

    Your grandson will not be disappointed with Fidelity.

    My 2 cents worth.
  • Two words. Vanguard Wellington. For hobbiests like us it's great to talk about funds but for making money over a lifetime while doing very little VW is the way to fly. Keep adding as he goes and he will retire a very rich man.
  • Hi @wxman123
    I can't dismiss the outstanding performance of VWELX and agree with you.
    As this fund is closed for the most part to many; my question is whether an individual Vanguard account holder may place new money into this fund or only add if one already has a position in the fund? The other constraint for Donna's grandson is that it appears the minimum investment still is $3,000. If so, his $1,000 start money wouldn't allow for this fund purchase.
    Those with knowledge of Vanguard's operation may be able to clarify.
    I had a Vanguard account for many years, but only for the purpose of a 401k. That money was rolled to an IRA at Fidelity many years ago.
  • msf said:

    See this

    click Maximum

    Fido index is included, then add FSKAX

    Right idea. Unfortunately that only gets one half way. The only benchmark on the page is for FZROX. To see the FSKAX benchmark one needs to start with an FSKAX chart.
    There is your problem…… M*
  • Vanguard Wellington VWELX is open to those who invest directly with the fund. They are also able to make additional purchases.

    From July 1, 2020, prospectus:
    Important Note Regarding Vanguard Wellington Fund
    Vanguard Wellington Fund will be closed to all prospective financial advisory,
    institutional, and intermediary clients (other than clients who invest through a
    Vanguard brokerage account).
    The Fund will remain closed until further notice and there is no specific time
    frame for when the Fund will reopen. During the Fund’s closed period, all current
    shareholders may continue to purchase, exchange, or redeem shares of the
    Fund online, by telephone, or by mail.
  • To clarify: "all current shareholder may continue to purchase ... shares", not just those who invest directly with the fund.

    However, when investing directly through Vanguard, all Vanguard funds except Star have a $3K (or higher) initial min, which puts this fund out of reach of the grandson.

  • I'd say PRBLX as a blended growth/value fund or TRBCX for pure growth.

    I avoid index funds b/c market-cap weightings skew their performance toward just how a handful of big names fluctuate which move the index. But if you want to get cheap passive market returns, I guess they're ok.
  • I would do as I did with my two youngest kids. Set up a brokerage account, making it a Uniform Gift to Minors if the child is under 21. Try to explain that you are putting in some dough and that additional deposits should represent 50% of the child’s earnings, even if minimal. An adult child should be shown how to pay him/herself first. Invest the parent or grandparent contribution in a good growth fund (AKREX) and a dividend growth ETF (VIG). If only $1K is available, use ETFs for both positions, using QQQ (or similar) for the growth portion. Try to get the kid to see how the account works and how money can grow if it’s added systematically. At 21, the kid’s in charge and you hope you’ve been a good teacher. Offer advice when it’s sought.
  • edited July 2020
    So many great suggestions. My thoughts, overall, are that the hands-on experience grandson will enjoy with his initial nest-egg will motivate him to engage in financial conversation and study on his own. Books? I get lots from folks around the holidays. Seldom do I ever read any of them, as I’d rather “set my own (reading) table“ so to speak. Plus, many loving relatives (nieces, nephews, etc.) don’t realize that 90% of my reading today is on tablet devices and most of the rest thru audiobooks. Because of my ancient and grizzled appearance, younger people who don’t know me very well must assume I still read paper books. Excuse the digression. But, often telling someone they should read a particular book (or do anything else) achieves the opposite effect..

    @MikenM (and perhaps others) referenced technology as an inviting investment. Not a bad thought. However, tech is very diverse area. Some “hot” areas from the not too distant past like hand-held calculators, VHS players, Commodore computers and “cordless“ (land-line) phones are nearly extinct. My guess is in 30 years, when grandson turns 50, the really hot areas will be lunar and interplanetary mining (and related services), infrastructure for underwater habitat, and solar powered autos & trucks. So don’t get too wedded to any single technology. Truth be told - it’s hard to remember when “technology” in some form wasn’t in vogue. Likely, the horse-drawn plough underwent many “technological improvements” during its time. And, as broken arms and fingers testified, the advent of battery powered self-starting farm tractors and autos was a huge technological leap.
  • Yes, so many great suggestions. I have a lot to read and research for him. And then he’ll read and research too. Thank you ALL for all of your valuable input!
  • @hank - Currently (but subject to change as you noted) there's an investment vehicle for that and one I've been using. ARKK - Technology Innovators Fund.
  • @Mark; I was wondering at what point in time you started to invest in ETF. I see it's up over 60% YTD !
  • @Derf - May 12 at $58.50. Haven't added to it since but wish I had.
  • That’s a great idea, @Mark. A buy-and-hold fund that could keep up with innovation and buy the companies profiting from same would be a jewel to give a kid. I fully expect that in 20 or so years the portfolio of such a fund might not resemble today’s « tech » fund.

  • That reminds me of the idea behind the now-defunct Stein Roe Young Investors Fund. The fund held a bunch of companies that kids in the 80s were into -- from clothing to toys to fast food. But these days a decent tech/growth fund would probably suffice and cover the same general things -- as I suggested earlier, PRBLX or TRBCX are solid choices.
    BenWP said:

    That’s a great idea, @Mark. A buy-and-hold fund that could keep up with innovation and buy the companies profiting from same would be a jewel to give a kid. I fully expect that in 20 or so years the portfolio of such a fund might not resemble today’s « tech » fund.

  • @rforno - maybe the same only different. You probably have a better memory than me but I see to recall that the Stein Roe fund was populated with more established companies. I'm more than willing to admit I'm off base.
  • Agreed. Back then there weren't too many high-flying companies of interest to young'uns like there are today.
    Mark said:

    @rforno - maybe the same only different. You probably have a better memory than me but I see to recall that the Stein Roe fund was populated with more established companies. I'm more than willing to admit I'm off base.

  • A bit about my grandson, and myself. I'm familiar with investing; I've always done the investing for my husband's 401k, now an IRA since he's retired. My father died about 6 years ago, a multimillionaire (none of us knew!). My and my sister's inheritance is managed/invested by a reputable wealth management firm. My grandchildren will inherit from me, but my grandson wants to start investing on his own, and good for him I tell him. He will graduate this year as a biomedical engineer. He's very smart, and will be quick to learn about investing. I will match his $1000 investment; he has more money than that, but that's what he wants to start with. I imagine he'll open an account with Fidelity or T Rowe Price, one single fund, for now. I know I could've just called the firm that manages my money for suggestions, but I wanted to hear from experienced investors here, and once again I thank you all so much for taking the time to respond.
  • Since you’re matching, maybe you can help him get to the $3k minimum for Vanguard. In a Roth you can go after yield - check out VHYAX.
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