Milestone in my Taxable Account

I finally hit a milestone in my taxable account: enough money to buy into a mutual fund.

I had previously been buying ETFs 1-2 shares at a time, leaving anywhere from $20-$80 in cash, and not really working for me.  Today, I deposited enough to bring me above the magic $2,500 for FSTMX.  I left my two “raw” stocks (MCD, ADM) invested because they would cost me ($7.95 each trade) to get rid of them, and they’re throwing off (small) dividends.

At the end of the day, Fidelity will have me owning just over $2600 in FSTMX.  I’ve changed my auto-transfer from my bank account to an auto-purchase of the fund as well, so that’ll continue to keep growing. The auto-investment ability into the mutual fund is what decided me.  I can “set it and forget it” to a certain extent.

I had a devil of a time picking between FSTMX and FUSEX. Similar expense ratios (0.10% gross, .10% and .095% net), FUSEX throws off more dividends, but it’ll mean the difference of $10/year for me at my level).  What really made the decision for me was that FSTMX is total market rather than just S&P500, and FSTMX only has 1% turnover vs the 3% of FUSEX.  In a taxable account, that can be a big difference.

This money is nominally earmarked for retirement, but could be used for other goals as they come up.  The goal is to build this account up enough to survive from when we retire at about 50 to 59.5 when we can start withdrawing from our tax-advantaged accounts without penalty – we have a long way to go!

Next milestone?  $10,000 to get into the advantage class of shares (FSTVX)!

Do you tend to invest in mutual funds or ETFs?  Why?

4 thoughts on “Milestone in my Taxable Account

  1. donebyforty

    Nice! Hitting those milestones can save you some coin in expense ratios.

    We use mutual funds, mostly for the ease of purchasing in the dollar amounts that we wish to, instead of buying whole shares. I tried ETFs for a while and the process of trying to buy into the funds according to our asset allocation was too much of a pain.

    Reply
    1. Mom Post author

      I was buying index fund ETFs, so the expense ratios were about the same (As were the indexes they were tracking vs the mutual fund I chose). I just didn’t want to worry about having to go into my account every month and trying to buy the right amount. With the mutual fund, I just say give me $250 of FSTMX every month.

      Reply
    1. Mom Post author

      I’m also fundamentally lazy 🙂 The index fund is the easiest option for automatic investing – once I had enough in there to take advantage of it. I like the dividends, but I’m not a big fan of the research needed to buy individual stocks. I’ll keep playing with them a little bit in my loyal3 account, but it doesn’t get much inflow at the moment.

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