I thought I’d poke around online and read about some ETFs today and look for a suitable one for my Ameritrade account since I am just keeping $2k in there so I can have real-time quotes (part of this month’s goal).

I have thought about investing in REITs for a while, as I don’t own a house yet and would like to have a piece of the (crazy) real estate market while I am waiting. However, I also feel that interest rates will rise sharply this year and the next, hurting potential returns. Real Estate Bubble?? Who knows, but a little diversification never hurt anyone, right?
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Here are the contents of my current E*Trade Brokerage taxable account:

20 shares of Microsoft (MSFT) bought at $25.5
35 shares of Intel (INTC) bought at $14
12 shares of Pfizer (PFE) bought at $40
11 shares of Anheuser-Busch (BUD) bought at $43.5
Rest in cash

Overall, my portfolio is about 3-4 years old and is up a grand total of +2.63% in share price and neglecting dividends. Pretty crummy, yes. This portfolio was bought with little concern over P/E ratio, PEG, Alpha, Beta, or much else but the fact that I: use a laptop powered by an Intel Pentium processor using Microsoft Windows, while taking a drug by Pfizer and drinking Budweiser on weekends. Now you see why I need mutual funds?
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A comment in my last post reminded me that one of the best ways to maximize your investment return is to avoid as much tax (legally) as possible. One way to do this is to divide your mutual funds or other investments in the most ideal place in your taxable and tax-deferred (401k, IRA, 403b, etc.) accounts. Of course, you want to keep as much of everything in tax-deferred accounts as possible, but often that is not possible. So what investments are the most tax-friendly? Below is a list compiled by Taylor Larimore on the Diehards.org forums, and it agrees pretty much with what I’ve read in books such as the Four Pillars of Investing:
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After comparing the possible combinations of mutual funds to satisfy my target asset allocation, I decided that for now, simple is better. In placing all of my IRA funds in Vanguard Target Retirement 2035 (VTTHX), I get great diversification while avoiding any minimum account or custodial fees of any kind. The fund is almost fully invested, with minimal reserve cash, and the holdings are very close to my chosen asset allocation:

Vanguard Total Stock Market Index Fund – 62.1%
Vanguard Total Bond Market Index Fund – 22.0%
Vanguard European Stock Index Fund – 10.8%
Vanguard Pacific Stock Index Fund – 4.7%
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While rooting around the Morningstar and Diehards forums, I came across an interesting idea – the Four Mutual Fund Portfolio. It consists of the following:

Money Market Fund (Cash)
Total Stock Market Index Fund (VTSMX)
Total International Index Fund (VGTSX)
Total Bond Market Index Fund (VBMFX)
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While filling out my form to process my worthless Enron stock, I came across these two choices: 1) Relinquish the security, or 2) Sell the security for $0.01 ?For the Lot.?. They sounded pretty similar to me, so I consulted Google and came across Turbotax’s FAQ on Worthless Securities. In short, proving a security to be “worthless” is a bit grey unless you actually register a sale. Therefore, E*Trade gets my 100 defunct Enron shares for the bargain price of $0.01! (I also have to pay $5 for them to process the sale.)

Well, E*Trade finally responded to my e-mail inquiry, ten days after it was submitted:

Dear Mr. [MyMoneyBlog]:

Thank you for your inquiry, Enron Corp. is currently being held in your account as a worthless security. In order to remove it from your account you must send us the Worthless Security Authorization Form. You can find this form under Accounts>Forms & Applications>Trading & Tax>Worthless Security Authorization Form. There is a $5 processing fee in order to complete your request which will be automatically debited from your account.

And they had one of those usually-annoying surveys at the end, which I gladly filled out this time. I wonder if I’ll get any response. The answer to the question was satifactory, and the fee is pretty standard. Hopefully it can be processed by the end of the year.

Me. I bought some Enron stock a bit after the crash, thinking it might go up again in the future (wrong.), but now it seems to be completely cancelled, as it is no longer even listed in the pink sheets. However, according to an article I found, it may simply be converted to some other type of equity share. I am curious about this because if indeed it is worthless, I can use it as a short-term loss to offset some short-term gains I have accrued this year. So I tried to ask E-Trade.

1st call: Estimated wait time according to the bot: Infinity. They told me to call back later and hung up on me!
2nd call: Est. wait time: 10 minutes. I waited for 20 and gave up.
3rd call. Est. wait time: 30 minutes. %^#$%^#$(&!!!

I finally tried e-mailing them. A week has passed and… nothing. Not even a “I dunno” or other canned response. If any stock-savvy people out there can help me out that would be great. Either way, I’m transferring my old IRAs to Vanguard to join my 2004/2005 contributions. See ya E-Trade.