Ask The Readers: Favorite “Speculative” Investment Now? |
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With tax season around the corner, I finally got around to opening up a SEP-IRA at Fidelity. (I don't know what took me so long, the process was very, very quick.) For those unfamiliar with SEP-IRA's, they are a retirement vehicle for self-employed individuals (Read more about SEP-IRAs here). As income from this site counts as self-employment income, I am looking to contribute a few thousand dollars before the April 15th deadline.
I'm heavily leaning towards investing two Vanguard Exchange Traded Funds (ETFs)... VTI and VEU. The former tracks many of the stocks in the United States. The later tracks a basket of stocks from numerous places outside the US. Together, it's not a bad stock diversification for the world markets (especially considering it's two trades with very low expenses). I should note that it's worth looking into Fidelity's offerings as well - especially since I'm going to have a Fidelity account. I'll probably skew the percentage of the investment of those two 60-40 style towards the VEU... I'm already heavily invested in the US economy since 99% of my income comes from there.
That sounds all nice and good... but I love to find a bargain. I don't think either of those two represent that. So I'd like to carve out a small percentage of that money for a "speculative" investment. The kind of speculative investment that I'm looking for is not like investing in Palm (a company I love, but the world fails to see how great its products are). I'm looking more for an additional ETF... most likely a sector ETF. For instance, a few years ago, I invested in energy when it was fairly cheap. I think it has been a good investment. In 30 years from now, I still think the sector will be relevant.
So readers, I ask for your help... what sector with long term relevancy is cheap right now? Let me know in the comments.
This post deals with:etfs, fidelity vanguard
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Take a look at the equivalent Schwab funds to VTI and VEU. They are slightly cheaper, believe it or not. Long term I like small cap value– US, Int, and Emerging Markets– the third world is still rising economically.
Since you want to stick to low cost ETFs, how about the Vanguard REIT ETF (VNQ) with a 4.6% dividend yield.
If you want to go riskier, you could checkout the Vanguard Financials ETF (VFH). From it’s former highs, it’s still down 50%+. As the old saying goes, you can’t have a thriving economy without a thriving banking sector!
Telecom, particularly regional telecoms.
How is commercial property looking in the US? As bad as the headlines?
I’ve seen nice gains since I started buying in summer 09 but I’m a bit warier now and have traded in my REIT ETFs for a more obviously value-based asset-backed company (Daejan, but it’s UK-listed so probably of not much use to you, though it’s not a bad time to spend $ on £-based assets!)
It’s internal yield is equivalent to something like a 15% un-geared yield, plus it charges service charges etc. The actual dividend yield is only 3% or so, but it has gone up for 50 years.
I’d definitely at least research REITs if I were you. (Up to you though, caveat disclaimer disclaimer ;) )