Big Law associate savings and investment options Forum

[Anonymous User]

I'm a mid-level Big Law associate. I've been saving a lot, and don't have many expenses beyond basics (I don't do much eating out or buy fancy stuff, biggest expense is I do pay a lot in rent in NYC). Between savings, end of year bonus, special bonus, and a recent lateral bonus, I've got a non-insignificant chunk of money. I need to put it somewhere other than a savings account, where it currently is, where inflation/opportunity cost will really cut into future earnings.

I saw a thread here a while back about how ETFs like VOO or VTI are good. That sounds right to me. I know nothing about finance and don't have the time/ability to do much research. I'm also not very risk tolerant (I help support older parents so I don't want to be too risky with investments). That said, I won't need this money any time soon.

Question: do folks around here use robo-advising services like Wealthfront? It has an advisory fee of .25% (PLUS the expense ratio or cost of whatever underlying fund you buy into), whereas VOO/VTI only has the latter, and no advisory fee. From what I understand, the only difference with Wealthfront is that it helps you tax-harvest. Is that right? Is there something I'm missing, such that a robo-adviser with a fee would still be better than purely passive ETFs like VOO?

If I'm hesitant/scared of a market crash, would parking the money in a 1-year CD like Goldman's new "Marcus" branch be a decent alterative?

(I understand any responses are not professional investment advice and this is all just Big Law folks shooting around ideas/all the other usual caveats. I'm just not too financially literate and my brain freezes up when it comes to these kinds of things so I appreciate all advice or even just other people's thoughts!)

[lawstudent212]

Open up a vanguard, TD or Schwab account and buy a few broad ETFs like VTI and HDV. I don't think that roboadvisors are worth paying the fee for.

[Anonymous User]

Are you maxing out your tax-advantaged savings? You should be contributing $20,500 to your 401(k) in 2022 and making an annual $6,000 back door Roth contribution. Here's an article on the back door Roth that walks you through it/explains why it's helpful: https://www.whitecoatinvestor.com/backd ... -tutorial/

Wherever it is that you're putting money, VTI and VOO are great investments. I wouldn't worry about a market crash - there's no way to predict them in advance, and research has shown that you're better off maximizing the amount of time your money spends in the market instead of trying to wait for the right moment to invest. Here's two good articles on that:

https://www.whitecoatinvestor.com/shoul ... friday-qa/

https://www.mrmoneymustache.com/2012/05 ... etirement/

[Anonymous User]

I had money in wealthfront for a while. They've changed the tax loss harvesting algorithm, as far as I can tell, and it now harvests much less in my experience.

It has a number of other drawbacks. The smart beta stuff is not great, same for risk parity. They're trying to differentiate themselves, but it hasn't been working well.

Wealthfront also doesn't let you transfer shares for charitable donations, which I find very obnoxious.

In addition, you can't choose tax lots to sell if you need liquidity, so you don't know the capital gains hit until they've already sold.

I spent a while with about a half million in WF, but don't expect to put any money back in in the future.

One thing to look into is series I and EE savings bonds. Their rates represent pretty significant arbitrages right now.

[papermateflair]

I set up a Betterment (a robo-advisor) account ages ago, and the fees are high and it doesn't do as well as my Vanguard account. I'm not sure why I still have it. I would just stick with Vanguard index funds if I was starting again, but it seems like too much effort to unwind the Betterment account

[Anonymous User]

If you're opening an account with Vanguard to invest in low cost index funds, and if you aren't interested in setting up a three-fund portfolio, then is there a consensus around which fund it makes sense to invest in? If there isn't a consensus, then is there any significant difference among the most popular few options? Thanks!

[Anonymous User]

If you're opening an account with Vanguard to invest in low cost index funds, and if you aren't interested in setting up a three-fund portfolio, then is there a consensus around which fund it makes sense to invest in? If there isn't a consensus, then is there any significant difference among the most popular few options? Thanks!

VT. It gets you a good blend of US and international stocks. If you don't want the international exposure, get VTI.

If you want international exposure but don't like the amount you get with VT, than hold VTI and VXUS in whatever proportion you want.

Really any total stock market fund with a low expense ratio is good if you just want to hold one fund.

[Sackboy]

If you're opening an account with Vanguard to invest in low cost index funds, and if you aren't interested in setting up a three-fund portfolio, then is there a consensus around which fund it makes sense to invest in? If there isn't a consensus, then is there any significant difference among the most popular few options? Thanks!

The consensus is that it really doesn't matter as long as you pick one of the big popular ones that tracks the S&P 500, Russell 1000, or the total stock market (i.e. some large quantity of companies). That could be VTI (total stock market), VOO (S&P 500), VONG (Russell 1000), or several others (e.g. QQQ for tech). Do a little research and just commit to one. They all have similar returns, and you can't predict how they'll perform in the future so don't spend 3 days agonizing over one having an 8% and another having an 8.5% long-term return (or whatever). That 0.5% can be meaningful over time, but the whole point of this exercise is (1) putting your money somewhere that you're comfortable with, and (2) increasing financial resources meaningfully over a prolonged period, which you would do in either scenario. Cash in savings accounts is a bust right now. I got a higher % return in just dividends this year than I would have in a money market account, and this is before the much more considerable returns in ETF share growth.

[Anonymous User]

If you're opening an account with Vanguard to invest in low cost index funds, and if you aren't interested in setting up a three-fund portfolio, then is there a consensus around which fund it makes sense to invest in? If there isn't a consensus, then is there any significant difference among the most popular few options? Thanks!

VT. It gets you a good blend of US and international stocks. If you don't want the international exposure, get VTI.

If you want international exposure but don't like the amount you get with VT, than hold VTI and VXUS in whatever proportion you want.

Really any total stock market fund with a low expense ratio is good if you just want to hold one fund.

Thanks a ton. This is really helpful. I don't have any particular thoughts about international exposure. Do most people in our position include or exclude international exposure? Is there a one- or two-sentence summary that captures who may or may not be the best fit for that approach? If relevant, I'm a healthy and single biglaw associate in my late 20's that doesn't plan on using this money for 15+ years, and would like to just keep things limited to a single low-cost Vanguard fund.

[Anonymous User]

If you're opening an account with Vanguard to invest in low cost index funds, and if you aren't interested in setting up a three-fund portfolio, then is there a consensus around which fund it makes sense to invest in? If there isn't a consensus, then is there any significant difference among the most popular few options? Thanks!

VT. It gets you a good blend of US and international stocks. If you don't want the international exposure, get VTI.

If you want international exposure but don't like the amount you get with VT, than hold VTI and VXUS in whatever proportion you want.

Really any total stock market fund with a low expense ratio is good if you just want to hold one fund.

Thanks a ton. This is really helpful. I don't have any particular thoughts about international exposure. Do most people in our position include or exclude international exposure? Is there a one- or two-sentence summary that captures who may or may not be the best fit for that approach? If relevant, I'm a healthy and single biglaw associate in my late 20's that doesn't plan on using this money for 15+ years, and would like to just keep things limited to a single low-cost Vanguard fund.

I don't see any obvious reason to exclude international stocks, unless you think you know something the market doesn't.

The simplest advice is to hold absolutely everything in proportion to its market value. Here's a good start for the numbers: https://www.sifma.org/wp-content/upload ... -SIFMA.pdf. People get in fights about leverage, and that's fair, but this is the most basic starting point.

Basically half the world's assets are stocks, the other half bonds. For each, the US is about 40%, other developed markets about 40%, emerging markets about 20%. Other investments (PE/VC, crypto, etc.) are comparatively very small.

Vanguard total international stock and bond funds will do the job.

[Anonymous User]

If you're opening an account with Vanguard to invest in low cost index funds, and if you aren't interested in setting up a three-fund portfolio, then is there a consensus around which fund it makes sense to invest in? If there isn't a consensus, then is there any significant difference among the most popular few options? Thanks!

VT. It gets you a good blend of US and international stocks. If you don't want the international exposure, get VTI.

If you want international exposure but don't like the amount you get with VT, than hold VTI and VXUS in whatever proportion you want.

Really any total stock market fund with a low expense ratio is good if you just want to hold one fund.

Thanks a ton. This is really helpful. I don't have any particular thoughts about international exposure. Do most people in our position include or exclude international exposure? Is there a one- or two-sentence summary that captures who may or may not be the best fit for that approach? If relevant, I'm a healthy and single biglaw associate in my late 20's that doesn't plan on using this money for 15+ years, and would like to just keep things limited to a single low-cost Vanguard fund.

VT is about 45% international, 55% US. VTI is 100% US. VXUS is 100% international.

Going all-in on the US is slightly riskier than going with a fully global portfolio, but that risk comes with an opportunity for greater returns. Might be a good choice for you in your 20s, and then you might want to revisit it as you get closer to retirement.

Personally, I think the US market is probably still going to grow faster than the rest of the world for the foreseeable future, but I don't like having all my eggs in one basket. So I'm more or less doing a two fund portfolio: VTI (US market) at 80%, VXUS (international market) at 20%.

[jotarokujo]

If you're opening an account with Vanguard to invest in low cost index funds, and if you aren't interested in setting up a three-fund portfolio, then is there a consensus around which fund it makes sense to invest in? If there isn't a consensus, then is there any significant difference among the most popular few options? Thanks!

VT. It gets you a good blend of US and international stocks. If you don't want the international exposure, get VTI.

If you want international exposure but don't like the amount you get with VT, than hold VTI and VXUS in whatever proportion you want.

Really any total stock market fund with a low expense ratio is good if you just want to hold one fund.

Thanks a ton. This is really helpful. I don't have any particular thoughts about international exposure. Do most people in our position include or exclude international exposure? Is there a one- or two-sentence summary that captures who may or may not be the best fit for that approach? If relevant, I'm a healthy and single biglaw associate in my late 20's that doesn't plan on using this money for 15+ years, and would like to just keep things limited to a single low-cost Vanguard fund.

Most people in our position who don't want to use their brain or think about investments every day include international exposure. the easiest way to do that is put a ton into VT and forget about it. it's simpler than holding VTI and VXUS in various amounts.

[Anonymous User]

So it sounds like no one is in favor of the idea of setting aside some (e.g., 20%) of the money I want to take out of my savings account and parking it in a 1-year CD, just to get more comfortable with the risk of putting a lot of it in the stock market?

[Anonymous User]

So it sounds like no one is in favor of the idea of setting aside some (e.g., 20%) of the money I want to take out of my savings account and parking it in a 1-year CD, just to get more comfortable with the risk of putting a lot of it in the stock market?

EDIT: I think I misread this. If you want to invest 80% and save the rest in a CD to give you a bit of a safety net for a year, that's fine.

A CD isn't exposed to any market risk - they're going to pay you exactly what's listed on the page when you deposit the money.

If you want to dip your toe into market investing with something super conservative before committing all your savings, open an account at Vanguard and buy BND. That's the total bond market, and it is extremely stable. You can check its price over time to check me on this - Google provides it in a useful graph if you just search BND.

[Anonymous User]

Given OP’s experience level and lack of any need for cash short term, I’d just invest in one of the Vanguard target retirement date funds that’s age appropriate (2055?). These will be automatically balanced between bonds/equities to account for proper asset allocation as you age. Will be composed of low-cost Vanguard assets. It’s sort of a low-fee generalist solution, but it’s also set-it-and-forget-it easy.

(Just my two cents. The advice to young lawyers was a little different in 2013, so I was also hesitant to dip my toes in and focused on paying off student loan debt instead. In hindsight, going harder into my investment account would have been wise.)

[Anonymous User]

If you're opening an account with Vanguard to invest in low cost index funds, and if you aren't interested in setting up a three-fund portfolio, then is there a consensus around which fund it makes sense to invest in? If there isn't a consensus, then is there any significant difference among the most popular few options? Thanks!

VT. It gets you a good blend of US and international stocks. If you don't want the international exposure, get VTI.

If you want international exposure but don't like the amount you get with VT, than hold VTI and VXUS in whatever proportion you want.

Really any total stock market fund with a low expense ratio is good if you just want to hold one fund.

Thanks a ton. This is really helpful. I don't have any particular thoughts about international exposure. Do most people in our position include or exclude international exposure? Is there a one- or two-sentence summary that captures who may or may not be the best fit for that approach? If relevant, I'm a healthy and single biglaw associate in my late 20's that doesn't plan on using this money for 15+ years, and would like to just keep things limited to a single low-cost Vanguard fund.

I don't see any obvious reason to exclude international stocks, unless you think you know something the market doesn't.

The simplest advice is to hold absolutely everything in proportion to its market value. Here's a good start for the numbers: https://www.sifma.org/wp-content/upload ... -SIFMA.pdf. People get in fights about leverage, and that's fair, but this is the most basic starting point.

Basically half the world's assets are stocks, the other half bonds. For each, the US is about 40%, other developed markets about 40%, emerging markets about 20%. Other investments (PE/VC, crypto, etc.) are comparatively very small.

Vanguard total international stock and bond funds will do the job.

The reason to exclude international stocks is because they haven't had the returns that the US market has had over the past 15 or so years. With population decline in many European and East Asian countries, it is not unreasonable to think that those markets will experience greater stagnation than the U.S. (i.e. it's difficult to grow with shrinking consumer base in your domestic country and you have to be able to effectively sell to international markets in order to grow on the same scale as countries with population growth).

Betting on VTI is betting on America, which I feel is a better bet vs. other mature markets for the next 20-30 years. I also have small exposure to developing markets, but of course those are riskier than VTI so I don't put a lot in there.

Edit: Reading through the comments/OP's comments - I agree, put your money in a target retirement fund (VFFVW for target retirement in 2055 or VFIFX for target retirement in 2050, depending on your age). You seem really cautious/worried about picking the correct allocation, so I think it would probably be best to have auto-balancing that becomes increasingly more conservative the older you get. It'll save you time and worry.

[Anonymous User]

Given OP’s experience level and lack of any need for cash short term, I’d just invest in one of the Vanguard target retirement date funds that’s age appropriate (2055?). These will be automatically balanced between bonds/equities to account for proper asset allocation as you age. Will be composed of low-cost Vanguard assets. It’s sort of a low-fee generalist solution, but it’s also set-it-and-forget-it easy.

(Just my two cents. The advice to young lawyers was a little different in 2013, so I was also hesitant to dip my toes in and focused on paying off student loan debt instead. In hindsight, going harder into my investment account would have been wise.)

Anon who originally suggested VT here: I totally agree. If all this talk about international exposure is confusing or overly complicated, just buy the target date fund that matches when you plan to retire. It'll do great for you. You can find a list of them here:

https://investor.vanguard.com/investmen ... ment-funds

[Anonymous User]

Any particular reason to pick VTI over VTSAX if you plan to hold for 30 years?

[Anonymous User]

Any particular reason to pick VTI over VTSAX if you plan to hold for 30 years?

Honestly no, not really. VTI has an ever-so-slightly lower expense ratio, but it won't make much of a difference over time.

[Anonymous User]

If you're opening an account with Vanguard to invest in low cost index funds, and if you aren't interested in setting up a three-fund portfolio, then is there a consensus around which fund it makes sense to invest in? If there isn't a consensus, then is there any significant difference among the most popular few options? Thanks!

VT. It gets you a good blend of US and international stocks. If you don't want the international exposure, get VTI.

If you want international exposure but don't like the amount you get with VT, than hold VTI and VXUS in whatever proportion you want.

Really any total stock market fund with a low expense ratio is good if you just want to hold one fund.

Thanks a ton. This is really helpful. I don't have any particular thoughts about international exposure. Do most people in our position include or exclude international exposure? Is there a one- or two-sentence summary that captures who may or may not be the best fit for that approach? If relevant, I'm a healthy and single biglaw associate in my late 20's that doesn't plan on using this money for 15+ years, and would like to just keep things limited to a single low-cost Vanguard fund.

I don't see any obvious reason to exclude international stocks, unless you think you know something the market doesn't.

The simplest advice is to hold absolutely everything in proportion to its market value. Here's a good start for the numbers: https://www.sifma.org/wp-content/upload ... -SIFMA.pdf. People get in fights about leverage, and that's fair, but this is the most basic starting point.

Basically half the world's assets are stocks, the other half bonds. For each, the US is about 40%, other developed markets about 40%, emerging markets about 20%. Other investments (PE/VC, crypto, etc.) are comparatively very small.

Vanguard total international stock and bond funds will do the job.

The reason to exclude international stocks is because they haven't had the returns that the US market has had over the past 15 or so years. With population decline in many European and East Asian countries, it is not unreasonable to think that those markets will experience greater stagnation than the U.S. (i.e. it's difficult to grow with shrinking consumer base in your domestic country and you have to be able to effectively sell to international markets in order to grow on the same scale as countries with population growth).

Betting on VTI is betting on America, which I feel is a better bet vs. other mature markets for the next 20-30 years. I also have small exposure to developing markets, but of course those are riskier than VTI so I don't put a lot in there.

Edit: Reading through the comments/OP's comments - I agree, put your money in a target retirement fund (VFFVW for target retirement in 2055 or VFIFX for target retirement in 2050, depending on your age). You seem really cautious/worried about picking the correct allocation, so I think it would probably be best to have auto-balancing that becomes increasingly more conservative the older you get. It'll save you time and worry.

Yes, that's all why I said "unless you think you know something the market doesn't." Not saying you're right or wrong, just that OP doesn't appear interested in making these sorts of directional bets .

I agree with you and everybody else that a target date fund is the way to go.

To OP, just to give you a little more comfort in doing this, I know a lot of people who manage, at varying levels of seniority, mutual funds, hedge funds, and PE funds. Pretty much all of them keep their retirement funds in very simple things like what is being described here. They're also usually required, as part of their jobs, to be invested in their own funds, but outside that they tend to own very boring stuff.

[Anonymous User]

Suggestions for green / sustainable ones that don't have huge expense ratios? Best I could find is like ICLN with .42% but that's such a huge difference from the low cost ones of general market that it's painful.

Finally getting my shit together to do this aggressively now that bonuses are in.

Edit: Found vanguard has some that are much better than what I found otherwise, but don't come up in google searches for some reason. Link below for anyone else interested. Figured it's the least I could do to offset what my job does to the planet.

https://investor.vanguard.com/investmen ... rategy=ESG

[Anonymous User]

Suggestions for green / sustainable ones that don't have huge expense ratios? Best I could find is like ICLN with .42% but that's such a huge difference from the low cost ones of general market that it's painful.

Finally getting my shit together to do this aggressively now that bonuses are in.

Edit: Found vanguard has some that are much better than what I found otherwise, but don't come up in google searches for some reason. Link below for anyone else interested. Figured it's the least I could do to offset what my job does to the planet.

https://investor.vanguard.com/investmen ... rategy=ESG

Lol, the answer always turns out to be Vanguard

[Anonymous User]

Suggestions for green / sustainable ones that don't have huge expense ratios? Best I could find is like ICLN with .42% but that's such a huge difference from the low cost ones of general market that it's painful.

Finally getting my shit together to do this aggressively now that bonuses are in.

Edit: Found vanguard has some that are much better than what I found otherwise, but don't come up in google searches for some reason. Link below for anyone else interested. Figured it's the least I could do to offset what my job does to the planet.

https://investor.vanguard.com/investmen ... rategy=ESG

Lol, the answer always turns out to be Vanguard

Ha, yeah, after googling around a bit I searched "Vanguard Sustainable" and instantly found much better rates (.09% being lowest). USSG is .10% too. Not as good as the 0% or .03% you get elsewhere, but I'll eat that difference with the hope that green / sustainable will outperform and if not, the amount difference will get me into heaven.

[Anonymous User]

Suggestions for green / sustainable ones that don't have huge expense ratios? Best I could find is like ICLN with .42% but that's such a huge difference from the low cost ones of general market that it's painful.

Finally getting my shit together to do this aggressively now that bonuses are in.

Edit: Found vanguard has some that are much better than what I found otherwise, but don't come up in google searches for some reason. Link below for anyone else interested. Figured it's the least I could do to offset what my job does to the planet.

https://investor.vanguard.com/investmen ... rategy=ESG

"least" is exactly right. As an alternative, if your stocks go up, donate some -- it's extremely tax efficient.

Btw, being careful about managing taxes will help you at least as much as the optimizations this thread is getting into, e.g. saving 30bps on fees.

[Anonymous User]

Suggestions for green / sustainable ones that don't have huge expense ratios? Best I could find is like ICLN with .42% but that's such a huge difference from the low cost ones of general market that it's painful.

Finally getting my shit together to do this aggressively now that bonuses are in.

Edit: Found vanguard has some that are much better than what I found otherwise, but don't come up in google searches for some reason. Link below for anyone else interested. Figured it's the least I could do to offset what my job does to the planet.

https://investor.vanguard.com/investmen ... rategy=ESG

"least" is exactly right. As an alternative, if your stocks go up, donate some -- it's extremely tax efficient.

Btw, being careful about managing taxes will help you at least as much as the optimizations this thread is getting into, e.g. saving 30bps on fees.

Eh, there's only so much to do on the tax front (and before you donate appreciated shares partly with an expectation of a tax deduction, make sure you're actually itemizing... which, for the most part these days, would require pretty large donations, given SALT caps).