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Comment by webninja | Hacker News Reader

I use Robinhood and NO ONE should use margin if they don't know what a Margin Call is.

Having understood that, the effective yearly simple interest rate on my particular Robinhood margin (extra buying power) is only 5%/year so all I have to do is earn higher than a 6% return each year. This last year, my return rate was 14%, so that margin was worthwhile.

If new to investing and you aren't sure what to invest in, I suggest investing in: VTI, VYM, or QYLD depending on your risk tolerance. I'm invested in all three.

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It is probably helpful to explain individual investment vehicles and why it is sane for someone new to invest.

VTI is an ETF that is basically representative of the entire US market. It is somewhat like holding a little bit of everything in the US market.

If you have a bunch of cash sitting in a savings account, and instead want that cash tethered to the swings of equities market, VTI is a reasonable choice.

Thanks for this, can you explain the others the parent mentions?

VYM is an index fund that tracks the FTSE High Dividend Yield Index invests in global equities (excluding REITs) with high dividend yields. About 1/3 of the current index is in 10 stocks all US: Microsoft Corp., Exxon Mobil Corp., Johnson & Johnson, JPMorgan Chase & Co., Wells Fargo & Co., General Electric Co., AT&T Inc., Procter & Gamble Co., Pfizer Inc. and Chevron Corp.

QYLD is even more exotic. It seeks to track the CBOE NASDAQ-100 BuyWrite Index. That index in turn seeks to track the performance of a theoretical portfolio of the 100 largest NASDAQ stocks on which covered calls are written with a certain formula. Covered calls are a type of options strategy.

I'm just another rando on the internet, but I would recommend neither VYM nor QYLD to people new to investing who aren't sure what to buy. VTI is a far more appropriate suggestion. As would be VT (like VTI but looking at all stock markets), BND (index fund for US investment grade bonds), and maybe BNDX (ex-US investment-grade bonds with currency hedges)

I'm just another rando on the internet, but I concur with bradleyjg. Consider reading some of John Bogle's books or reading the Bogleheads wiki page. You cannot go too wrong with (VT / (VTI+VXUS) ) + BND.

BND is composed very heavily (~66%) of US Government bonds. It's largely effectively like just buying treasury bonds. Worth considering to instead get a corporate bond index fund + muni bond fund.

> Having understood that, the effective yearly simple interest rate on my particular Robinhood margin (extra buying power) is only 5%/year so all I have to do is earn higher than a 6% return each year.

If you are planning to use margin, I dearly hope you don't use Robin Hood. You can get much cheaper margin loan from other brokerages like Interactive Brokers (less than half as much).

s/qyld/qqq/g

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