Description: The article is about vanguard login. The author introduces an investment account which can be opened for people who is under 18. He also mentions some tips that you need to notice when you are doing an investment in the market.
Today I’m going to talk to you about opening an investment account if you’re under the age of 18. I’m age 16. It is the only way that I can invest in the stock market. Today what I am going to talk about is opening a custodial account and I choose to do this through the broker Vanguard.
The type of account I decide to open called a universal transfer to minor act account. It also known as a universal gift to minor account. This is generally considered to be a college savings account. But there are no penalty for using the funds,for general savings or pulling that out early. It’s a joint account with you and one of your parents names on it.
This account is special because it allows beneficiaries to gift me money without paying a gift tax on the money. This covers up to fourteen thousand a year. It also allows multiple beneficiaries to contribute to your account. As I mentioned earlier there are no penalty.
There are a few things you’ll need. The first thing is you must be US citizen. I am US citizen but I am living in Singapore. I am able to open this account. You must donate twenty to thirty minutes of your time. You have to do this with a parent because it’s a custodial account and their permission are needed to open this account. You need a US billing address.
I’m overseas so I can use my grandparents address. You can use a friend’s or somewhere to be able to send the paperwork. The Social Security number both for the parent and the child are also needed. Banking information needs a valid bank account in the US and you need to know the routing and account number.
For the fund I choose to invest,I need $1,000 initial minimum investment and $100 for any subsequent investments. There are different funds on Vanguard that require more money to invest into. The minimum is $1,000. To get started,you can go ahead and type Vanguard into Google and you should pop up the first result. Once you get to the personal investor site,you can go ahead to the top right and click open an account.
The instructions are self-explanatory. But it is the first step that you need to choose,it’ll ask you individual or joint account. You’re going to go ahead and choose joint account. Then choose the college and UTMA or UGMA account. Then you can follow the simple steps outlined here. It should take about 20 to 30 minutes. At any time you can contact the investor services and client information at this number. If you live outside the USA like me,you can call this number. They have a feature called secure email where you can enter some information and send them by an email. They will sent the email back within one business day.
Once your account is open,you’ll need to buy a fund. The minimum initial investment is a thousand dollars. The minimum additional investment is a hundred dollars. You can do these few methods. You can go ahead and start your fund in the top right hand corner and you can search any type of fund.
You should keep in mind that it’s not a brokerage account. It’s a separate account and you can only invest in Vanguard mutual funds. It means you can’t invest in a stock such as Walmart or other funds outside the company. One thing I’m going to talk about is how this account matures.
Once you turn the age of 18 or 21,you can ASSU. It’s called the age of majority and all the assets and the account are transferred over into the child’s name. For example,I live in Ohio in those summers,so once I turned 21,the account will be in my name and the assets are mine to do with. Once you turn 18,you’re allowed to open a brokerage to your account.
It means you can invest directly into index funds or stocks or anything on the NewYork stock exchange. With the custodial account,you can only buy Vanguard mutual funds which is advantageous because they don’t charge you. There’s no fee for trading them. There are many options of funds to buy. I choose to invest in the target retirement 2060 fund. The ticker symbol is VTTSX.
I choose this fund because at age 16 I can afford a fairly risky portfolio. I am planning on investing for long term. The makeup of this fund is ten percent bond index, 27 percent international stock and 62 percent stock index. An index fund tracks the performance of a large amount of companies all in one. The total US stock market index would be made of any community such as Apple,Walmart,small growth companies and large growth companies.
The bond market index fund is an index fund made of a bunch of different bond funds. The reason I chose to be fairly aggressive of my stock allocation is that I’m young and historically over time. The US stock markets in 25 to 30 year period. It can return between eight and ten percent.
I’m planning on investing over a long time so I can absorb this risk and have greater returns in the long run. Another fund that I would suggest investing in is called the star fund. This would be a more conservative approach if you’re more afraid of losing money. It’s more conservative because it’s made of about 40% bond index or 40% bond funds.
It also has a decent amount of stock exposure with around 60% stocks. It consists of a lot of growth funds which are basically very rapidly growing companies such as Apple. The expense ratio for VGSTX is 0.34 percent. It’s almost half. Expense ratios are important. One reason you should invest in index funds is that they generally charge a percent or more lower that actively managed mutual funds.
You may ask why this is important. Expense ratios can cut into your earnings in long terms as demonstrated by this Vanguard chart here. So the average expense ratio of an actively managed fund US is 1.5 percent. This means that in 50 years if you invest $10,000 in, your average annual return will be 8%. You would have made a total of five hundred and forty seven thousand dollars.
However if you were only charged an expense ratio of 0.18 percent,you would have made a million dollars. You can double your investment due to this small percent change in expense ratio of fees. This is why it’s very important to look at the expense ratios when choosing a fund. One thing I decide to do is not invest all of my money at once. I have almost 3,000 total dollars that I can invest.
I invested 1141 dollars at the beginning. What I decided to do is going to the vanguard option called automatic investment. I set Vanguard for a year to invest 150 dollars every month for one year. I have started on April 9th this year and ended it on April 9th of 2014. It’s something called dollar cost averaging. Dollar cost averaging allows you to get the best average share price.
If the shares are currently around $23,then next month they will be $24 in the following month. I have made a better deal because I’m going to buy more shares when the price is lower and less shares when the price is higher. This can lead you to get a better than average price for that stock.
It can lead to better returns long term. The nice thing about the Vanguard funds is the Vanguard target retirement funds. They can rebalance themselves. They’ll sell a bunch of stocks and return the bond allocation to 10%. another benefit is as I get older the bond allocation will increase and the stock allocation will decrease. This is important because as a general rule of thumb,you need to keep your agent bonds. As I get older I’ll be closer to retire and I have less time to absorb the risk from investing in stocks.
Therefore having a larger bond Capone will make my portfolio safer. But I still have that stock components so over time I can make good returns. One important thing to mention is my teacher Mr.Hollom. He is a Canadian. He is currently working at SAS. But he doesn’t have a pension. I’m planning working for our US companies that most of them provide pensions. So I can afford to take a more slightly risk than someone who isn’t looking forward to a pension after they retire.
For example,people like Mr.Hollom will not have any income besides his investments after he retires. But I will have income from my company still. So I can afford to make my investments slightly riskier by increasing the stock allocation. One thing I would consider is once I turn the age of majority 21 and absorb the control over my own account,I would manage my own index funds.
This means that I would invest in a total stock market index fund separately from a bond market index fund and a total international stock market index fund. An advantage to this is they generally have slightly less expense ratios maybe point zero two percent. But even that small percent can make a difference as you saw earlier. At this advantage,you can be balanced by yourself.
This bond market rises a lot more than the stock you have to sell. This can also be an advantage because the mutual fund will rebalance when the managers decide to rebalance it. The stock market has going through a large crash and your bonds are suddenly worth much more than your stocks.
You would be able to rebalance multiple times that year. It allows you to sell your bonds and buy into the stock market while it’s low. This seems counterintuitive. But it makes sense because over long periods of time,the stock market will return eight to ten percent. When the stocks are cheap or when they grow later on,you can end up making more money in the long term.
You can rebalance the market crashes more than one time a year. The advantage of this is to make sure you’re not buying stocks when the stocks are too high and make sure you’re buying stocks when the stocks are low. A good thing to keep in mind is that you need to keep investing monthly.
When I make an income,I’m not going to invest all of my money at once in the end of the year. I’m going to invest over each month or every two weeks or whenever I get my paycheck. A certain percent of that will go to the invest because this will give me the lowest average cost. It is known as dollar cost averaging. One very important lesson that I’ve learned is you need to keep your emotions out of investment.
You need to set an allocation for yourself and follow it. You can’t jump in and out of the market. Studies have shown that if you miss the ten best days of the market, your returns can be significantly decreased. Jumping out of the market when the stocks are falling is a very bad idea because you’re securing in your losses. Once you’ve sold a stock there’s no way to make back those losses. A good thing to remember is that time in the market is more important than timing the market.