Vanguard Lowers Minimum Initial Investment On Target Retirement Funds

Image via WikipediaVanguard Group Inc. has lowered the minimum initial investment for it's popular Target Retirement Fund series from $3,000 to $1,000, effective immediately. This is great news to the many people who have been held back from investing with Vanguard because of their $3,000 minimums. Previously only the Vanguard Star Fund had a $1,000 minimum.

Also Vanguard is standardizing the minimum investment for all it's Investor Shares funds to $3,000. Before the fund minimums ran from $3,000 to $25,000. This affects the minimums investment for 15 Vanguard funds, including Wellington Fund, Windsor Fund, and the Health Care Fund.

The problem I saw with Vanguard is that if you wanted to create your own balanced Index Fund portfolio with it's mutual funds, you need an initial investment of $3,000 for each fund. My suggested portfolio of Vanguard funds is a good balance for someone my age.

• Vanguard's Total Stock Market Index 50%
• Vanguard's Total Bond Index 20%
• Vanguard's Total International Stock Index 30%

If I started from scratch I would need $9,000 to get started. A $3,000 minimum for each fund. The high minimums hold a lot of people back.

With the new lower minimum of only $1,000 I can buy the Vanguard Target Retirement 2025 Fund and get the same allocation and get started with only $1,000. Vanguard has made real progress with lowering the minimums on it's Target Retirement Funds. Many new and old investors will now not be held back and can now invest with Vanguard.

Here is a list of the funds with $1,000 minimum investments:


Vanguard Target Retirement 2010 Fund (VTENX)
Vanguard Target Retirement 2015 Fund (VTXVX)
Vanguard Target Retirement 2020 Fund (VTWNX)
Vanguard Target Retirement 2025 Fund (VTTVX)
Vanguard Target Retirement 2030 Fund (VTHRX)
Vanguard Target Retirement 2035 Fund (VTTHX)
Vanguard Target Retirement 2040 Fund (VFORX)
Vanguard Target Retirement 2045 Fund (VTIVX) 

Vanguard Target Retirement 2050 Fund (VFIFX)
Vanguard Target Retirement 2055 Fund (VFFVX)

Click Here To Go To Vanguard Target Retirement Funds

These Retirement funds are an easy way for new investors to get started in index mutual funds. Even seasoned investors will love the set it and forget it way Vanguard does the heavy lifting on asset allocation and rebalancing. With expense ratios being critical to a long term investment strategy, Vanguard comes through with expense ratios between 0.16% and 0.19%.

Vanguard, in reducing it's minimums, has improved it's prospects of attracting new investors who used to be unable to meet the higher minimums to start investing. But with a larger number of smaller accounts, it could be setting itself up for higher costs and turnarounds. That's why investors with larger accounts are charged lower fees.

This is the second major change in Vanguard's fee structure. In October, the company reduced fees for customers by lowering investment minimums needed to qualify for its lowest cost Admiral shares of mutual funds. The minimum for Admiral Shares dropped from $100,000 to $10,000.

These kind of changes do not effect your upper level investors. Both these changes by Vanguard are a benefit to the small and beginner investor. These customers are the ones that need this help. I'll be watching Vanguard for further innovative changes in the future.

How To Avoid The Dreaded 6% Real Estate Commission

Image via WikipediaThe prices of homes may rise and fall, and housing bubbles may grow and and bust, but one little number continues to live on, the 6 percent real estate commission.

I grew up in the real estate and home building business and I have heard many, many times the irritation the 6% commission can cause. I would hear my father and grandfather complain every time they had to pay this fee. Whether the home sold for $25,000 or $250,000, it didn't matter.

It's a lot of money to pay for a service when margins can be very slim. Over the years there has been many negotiations, with brokers, to try and get it lowered. Some agents remain firm in their belief that the 6% commission is fair and well earned compensation for providing a necessary service. Real Estate offices have expenses and overhead. They pay for promotion and advertising. The legwork, phone calls, paper work, and negotiations use up a lot of time and money. Still, there are alternatives.

• Before settling in on an agent ask if they will accept a lower commission, maybe 3 or 4 percent. Even a reduction to 5% would save you a lot of money.
• If the buyer does not have an agent, your selling agent does not have to split the commission, so they may be more inclined to reduce their commission. Of course, negotiate this point before hand.
• If the agent that sells your home will also help you find another home to purchase you will be able to negotiate a even lower commission because of two home sales.
• Most real estate offices are quite large and must split the commission with the broker or even a home office, in case of it being a large franchise company. So it would be a good idea to find a smaller real estate company that would be more willing to take a reduced commission.
• Find a real estate office that will list your home for a flat rate. If your willing to do all the work in selling your home you could find a company that will just put your home listing in a multiple listing service. Companies that offer fewer services may just be willing to charge you a couple hundred dollars for using the Multiple Listing Service(MLS).
• If you have a real estate license for your state, whether you are buying or selling, you are entitled to half the commission. Check this for your own state. 
• Sometimes the negotiation process is at an impasse, it may break the impasse if the broker takes a percent off his commission to entice the seller to close the deal. 

There are many ways to get around the 6% commission. There are many real estate offices willing because of the tough times to take a cut in commission just to make a sale. The way to get this right is to shop around until you find a broker willing to take a reduced commission.

Proposed Changes to the Mortgage Interest Deduction - Can You Live Without It?

Image via WikipediaOur friends in Washington are talking about limiting or eliminating the mortgage interest deductions. This could be disastrous to people who bought a house counting on using that deduction. This would change the equation for many families who would have to pay much more in taxes. What would be the affect on the already down housing market, would it send it even further downward?

I don't think the politicians would have the courage or political will to eliminate a deduction most home owners count on. The mortgage interest deduction is the largest deductions that people use on their tax return. But I think they will do a little tinkering with it in the years to come.

I believe the congress does feel safe to cut the deductions on the extremely rich. Today, the deduction does have limits. You only can clain mortgage deductions on mortgages up to $1,000,000. It's proposed to move that limit down to $500,000. In most of the U.S. the average house sells for $200,000, so the change wouldn't effect many people. But on the West Coast, the average house price is $600,000, so many non-rich families would be effected.

Still another proposal would eliminate the deduction all together and just issue mortgage holders a tax credit.

What To Do?

If you have a mortgage of $500,000, it looks like your safe. The deduction probably won't change but if it does, it will probably turn into some type of credit.

If you have a mortgage of more than $500,000 you may lose some of your normal deductions. You may be wise to pay down your mortgage to get you under the upper limit. On the bright side, this changing of the deduction might encourage homeowners to buy a less expensive home so as to live more within their means.

Will Renters Be effected?

If the mortgage deduction is reduced will landlords pass on the extra taxes paid, onto the tenants? Here the congress has a way to fix that problem and that is to pay the renter a renters credit to off set the additional rent charge. But hopefully the coming changes would not effect investment property.

My normal interest paid on my mortgage comes to $10,000 per year. It's my largest deduction and any change would increase how much taxes I pay.

Who Is Pushing the Hardest Against This Change?

The "NATIONAL ASSOCIATION OF REALTOR" is up in arms concerning this proposal. They claim it will drive down home prices by 15%. This drop in home values will also cause a drop in property taxes collected, thus harming local and state services. So even non-home owners will suffer from this reduction in the deduction.


We all are used to this healthy tax deduction. We all save quite a bit of money every year. The deduction is a great incentive to buying a home and even a second or vacation home. But reducing it seems to be the wave of the future. I remember when they eliminated the credit card interest deduction. The sky was supposed to fall then, it didn't. We survived and don't even miss it now or remember it. This is what will happen with the mortgage deduction, we will survive.

Toyota Giving College Graduates $1,000 Rebate On New Toyota Lease Or Purchase

Image by Getty Images via @daylifeIt's that time of year again when we are seeing many students graduating from college. As the new graduates enter the real world, a world where they are starting new jobs and money is tight. They are being offered a little extra help from our friends over at Toyota Motor Sales. Toyota Motor Sales is offering qualified college graduates a $1,000 rebate toward the purchase or lease of a new Toyota vehicle. The vehicles include the Corolla, Matrix, RAV4, Camry (excludes Camry hybrid), Tacoma and Yaris and all new Scion models when financed or leased through a participating Toyota dealer.

This promotion is being coupled with the College Graduate Finance Program (applicable for all new Toyota/Lexus/Scion models) which offers highly competitive APR/lease terms and features. The features included with this deal are: 

• No money down and no monthly payments for the first 90 days on select finance programs
• Security deposit waiver for lease
• Toyota Care: a 2-year/25,000 mile complimentary maintenance plan with roadside assistance
• The College Graduate Rebate Program for Toyota and Scion vehicles ends Jan. 3, 2012 and is available to qualified customers who graduated within the last two years, or will graduate within the next six months

What are the Conditions to qualify?

• Get that degree! To take advantage of the program you must:
• Have graduated from an accredited four-year college, university, or registered nursing degree program during the last two years or graduate from such a school/program within the next six months, or
• Have graduated from an accredited two-year college during the last two years, or
• Be enrolled in an accredited graduate degree program or have received a degree from an accredited graduate program during the last two years, or
• Have graduated during the last two years from the two-year Toyota Technical Education Network (T-TEN) Program or any other two-year post secondary automotive program accredited by the NATEF, or
• Have completed an electrician apprenticeship/cert. program during the last two years through NJATC and IBEW.
• Get a job! Show proof of present employment, or future employment with a start date within 120 days of your purchase contract date. TFS must deem your salary sufficient to cover living expenses and vehicle payments.
• Minor credit lapses allowed! All obligations paid within 60 days or less of the due date and cannot have charge-offs totaling more than $1,000 in the past 24 months.
• On approved credit through participating Toyota dealers and Toyota Financial Services. Not all applicants will qualify. Terms, conditions and restrictions apply.

This sounds like a major good deal for the new graduates to take advantage of. There are a lot of hoops to jump through but it seems like a good incentive. Remember, this deal is on top of whatever initial deal you make with the dealer.

To find a dealer or to learn more, visit www.toyotafinancial.com/collegegrad or www.scion.com/college.