Monthly Archives: June 2017

The Vanguard Star Fund (VGSTX)

Many of my friends know that I truly enjoy living a frugal life, investing, and working toward financial independence.  Most of my friends, however, do not share the same passion for personal finance the way that I do.  They all like what money provides, but they are more focused with other interests.

Over the years, people have asked me to set up their work sponsored 401K.  Others have asked for help setting up an IRA for them.  Some have even asked me if I would help their other friends or relatives with their investments.

I am not a financial professional.  When I help people, I do not receive any compensation.  I do it because I love investing and helping others.  Please read my Disclaimer page for more information about this.  I also do not work for Vanguard, but do recommend Vanguard as the best company to invest with.

When people come to me with a large sum of money, they have more options.  Most Vanguard funds have a $3,000 minimum for investor shares.  If someone comes to me with between $3,000 to $5,500, I set them up in a Vanguard Target Date fund.  We select a fund based on their age and risk tolerance for their IRA.

Many of the people who I have helped did not have a large amount of money to start investing with.  Some of these people are artists, social workers, police officers, ministers, students, or other people with limited means.  Never the less, they did want to take responsibility and start investing for their future.

The one fund that I have always defaulted to for this population was The Vanguard Star Fund (VGSTX).  Looking back, I have helped at least 10 people or more by opening an IRA with this fund.  This is a good fund to start with because it only requires a minimum of $1,000 to invest in an IRA at Vanguard.

It is a balanced fund with a somewhat conservative asset allocation of about 60% invested in stocks and 40% invested in bonds/short term reserves.  The Star Fund is a fund of funds.  It is made up of 11 different actively managed vanguard funds. The Star Funds stock allocation is well diversified with both domestic and international equities.  Within the stock allocation, it has a mix of both growth and value funds.

Allocation to Underlying Funds (as of 6-25-2017)

Vanguard Windsor II Fund Investor Shares – 13.9%

Vanguard Long-Term Investment-Grade Fund Investor Shares – 12.5%

Vanguard GNMA Fund Investor Shares – 12.3%

Vanguard Short-Term Investment-Grade Fund Investor Shares – 12.3%

Vanguard International Growth Fund Investor Shares – 9.6%

Vanguard International Value Fund – 9.6%

Vanguard Windsor Fund Investor Shares – 7.5%

Vanguard U.S. Growth Fund Investor Shares – 6.3%

Vanguard Morgan Growth Fund Investor Shares – 6.2%

Vanguard PRIMECAP Fund Investor Shares – 6.1%

Vanguard Explorer Fund Investor Shares – 3.7%

I do not own this fund.  For my own portfolio, I rather index funds because of their low fees and tax efficacy.  The Star Funds does, however, have an expense ratio of only 0.32% compared to 0.86% of the average fund in this class.  The Vanguard Star Fund has a 4 out of 5 star rating on  The Star Fund was created for IRA accounts because it is not the most tax efficient fund that Vanguard offers.  An IRA is where I suggest people to use this fund.

The Star Fund was launched in 1985.  It has historically performed well:

1-year return – 11.42%

3-year return – 5.54%

5-year return – 8.14%

10-year return – 5.93%

Since Inception on 3/29/1985 – 9.43%

Some people might feel this fund is too conservative for younger investors.  You are correct, if you follow the approach that suggests holding your age in bonds or an even more aggressive approach.  In my opinion, the Vanguard Star Fund is a good place to start for investors with limited means and investing experience.  I am comfortable recommending the Star Fund to new investors as a fund to start with in an IRA.  If they chose to have a more aggressive portfolio as they learn more about investing and risk, they can switch to a Vanguard Target Date Fund that better matches their risk tolerance once they save up over $3,000 in their IRA.

Please remember to check with a financial professional before you ever buy an investment.

Knoebels Amusement Resort

If you live in the Northeast and enjoy amusement parks, you should consider visiting Knoebels Amusement Resort.  My wife and I recently had the opportunity to visit this gem of a park located in Elysburg, Pennsylvania for a family outing.  Knoebels Amusement Resort is a wonderful park nestled in the Endless Mountains in Central, Pennsylvania.  Knoebels is located about 13 miles off Interstate-80.  It is about a 3-hour drive from New York City, a 2-hour drive from Philadelphia, a 4.5-hour drive from Washington D.C., and a 6-hour drive from Boston.

Most amusement parks are no longer a frugal option for families to enjoy.  The average cost for a general admission ticket to enter a popular theme park ranges from $80 to well over $100.  Some parks now require reservations to go on rides.  They charge to park, there are extra costs for shows, and the prices for refreshments are astronomically expensive.

Knoebels Amusement Resort is a throwback to the amusement parks of the past.  It is the largest free-admission park in America.  You can buy tickets for the rides that you want to go on or you can buy a pass that allows unlimited access to all the parks rides.  Parking is free.  All the many different shows and exhibits are also free.


There is a picnic grove that is free to use if you decide to bring your own food.  The picnic grove has free electricity.  There are coin operated gas stove tops to rent or you can bring your own grill.  Refrigeration is available if reserved.  Pets are allowed.  Coolers are allowed.  Alcohol is not allowed at the picnic grove because it is a family friendly environment.

There are many different dining options.  The Alamo Restaurant offers entrees, sandwiches, and gluten free options.  The Nickel Plate Bar & Grill serves alcoholic beverages as well as great burgers and hot wings.  There are also many different snack stands around the park if you want to grab something quick to eat while you are on the move.  There is a Nathans Hotdog Stand, Cesari’s Pizza, an ice cream shop, and even a Starbucks.

The cost of food sold at the park is reasonable as well as very tasty.  The New York style pizza at Cesari’s was delicious.  A large cheese pizza only cost $17.


Knoebels opened in 1926.  It has been family owned for over 90 years.  Many of the rides at Knoebels have won awards.  Knoebels was voted by The Travel Channel as one of the Top-10 family friendly parks in America.  Knoebels currently has a 4.5-star rating based on over 1,800 reviews on

There is no shortage of rides at Knoebels.  There are currently more than 60 rides.  New rides are added almost every year.

There are rides for every age group.  There is a carousel from 1913 that is fun for almost everyone.  There is a spooky, yet family friendly Haunted Mansion Dark Ride that was featured on the Discovery Channel.  Knoebels is also famous for its two wooden roller coasters named the Twister and the Phoenix.  The Phoenix wooden roller coaster is consistently ranked by Amusement Today magazine as one of the best wooden roller coasters.  I found the Phoenix to be intense.

My wife and I are not hard-core when it comes to rides.  Our favorite ride is the Scenic Skyway.  The Scenic Skyway is a 14-munute ski-lift that climbs a mountain next to the park.  This ride is great if you are into seeing panoramic mountain views.  It is a nice ride to take some photographs.


Knoebels has a large campground with a few options.  The campground is ideal for visitors who want to stay and enjoy the park for more than one day.  There are campsites for tents as well as campers.  There are also rustic Cozy Log Cabins as well as the Eagles Roost Units that offer more amenities.   The campground is open from April 15th to November 1st.


If golf is your game, a quarter of a mile from the park is the Three Pond Golf Course.  The Three Pond Golf Course is an 18 hole, par-71 course, that is broken into two 9-hole courses.  There is a discount to play this course for those who are staying at Knoebels Campground.


If you want a break from the great rides, go for a swim to cool down.  There is the gigantic Crystal Pool as well as a kiddie pool if you want to swim or relax poolside.  You can purchase a daily pass or even a pass for the whole season.  Group discounts are also available.


If shopping is your passion, there are many different shops to browse around in.  There is the General Store that specializes in old fashion country charm.  The park has a variety of different apparel shops that specialize in Knoebels hats, shirts, and other souvenirs. There are even different media stores to have custom photos and videos made from your visit.


Knoebels has other fun attractions.

Have you ever seen a Bald Eagle?  There are currently two at the Bald Eagle Preserve.  There are daily educational sessions at 2 pm.

Knoebels also has a few museums.  There is a Carousel Museum with 50 carousel figures that date back to 1870.  The mining museum has tools and artifacts from Pennsylvania’s rich mining history.  There is even a Knoebels Museum that provides a detailed history on the park.

If you are looking for a cool place to hang out, enjoy a round miniature golf under the shaded pine trees.

There are also many arcades, a Laser Command game with a full obstacle course, multiple theaters, and other fun activities.


There is truly something for everyone at Knoebels Amusement Resort.  We had a great day.  The rides were fun and reasonable.  The food was tasty and affordable.  The park was not overly crowed like many of the big theme parks.  It is simply a nice park that provides affordable family fun.  In our group, everyone from the kids, to the parents, to the seniors had a great time at the park.

Have you ever been to Knoebels Amusement Resort?  If you have, please share your experience in the comment section.

The Power of a Dual Income Couple

Albert Einstein said that compound interest is the 8th wonder of the world.  He who understands it will earn it, and he who doesn’t will pay it.  If compound interest is the 8th wonder of the world, then I feel that the power of a dual income couple is the 9th.  Being in a dual income couple can be a powerful wealth building partnership if managed correctly.

At my first full-time job, I worked with a guy named John.  John trained me when I first started at the company.  He and I became friends and we would often have conversations during lunch hour.

John was more than 20 years older than me.  He and I would talk and he would give me advice about life.  He told me that his wife was a stenographer and they lived off her salary.  They used her salary to pay their mortgage, car payments, buy groceries, and all their other expenses.  He said that they saved all the money he earned from his position.  They invested all his earnings and were planning on retiring in 20 years when they were both age 60.

I was a young man at the time and never heard of living off one salary.  This was just around the time that I was getting interested in personal finance.  It truly did sound like an ingenious plan.

When my wife and I got married, this was the basic strategy that we planned on using.  In my own experience, I have found that being in a two-income household has many financial advantages.  Here are some tips on structuring a plan to get the most out of a dual income household:


Start by analyzing both salaries and identify the higher of the two.  Use the higher of the two salaries for paying all the reoccurring monthly expenses including housing, food, insurance, recreation, miscellaneous expenses, and child care if you have children.  Set a goal of one day being able to use the lower of the two salaries to pay these expenses.  This can be done by focusing on reducing expenses, career growth, and even side jobs.

You might be thinking that living on one salary would be impossible.  It might not be easy, but it is defiantly doable.  Check out the Story about Liz who was featured on  Liz provides for a family of five people while also saving to reach early retirement (FIRE).  Liz is also the author of the blog


Before you start savings and investing, you want to analyze your debt.  If you are part of a dual income couple that has a debt, first work on paying that down.  If need be, take a few years of using the lesser of the two salaries to pay down your debt.  Start by paying off all credit cards, auto loans, and any personal loans that you might have.

Next, pay down your student loans and mortgage.  Once you are left with only student loans and a mortgage, pay them down to debt-to-income ratio (DTI) of under 15%.  After your debt-to-income level (DTI) is at a manageable level of under 15%, the higher of the two earners can work towards reducing the (DTI) even further.

To calculate your Debt-to-Income Ratio, see the formula below:

Debt-to-Income Ratio = Monthly Debt Payments/Monthly Income x 100

Example: $1000 in Monthly Debt Payments/$4000 in Monthly Income x 100 = DTI of 25%


When you are in the paying down debt stage, you should also contribute to a 401K if there is an employer match.  You want to contribute to get the max amount of what your employer is matching.  To do otherwise would be to refuse compensation.

Now it is time to start saving and investing.  First establish an emergency fund of 3-6 months of expenses in a FDIC insured savings account.  Second, max out both 401K accounts to take advantage of tax deferred savings.  Third, max out both Roth IRA accounts to grow that portion of your savings in a tax-free account.  Forth, use any additional savings to invest in broad market ETFs in a taxable account.


No matter if you are newly married or have been in a dual income couple for many years, you too can take advantage of the powerful wealth building capabilities that you have been blessed with.  My wife and I have been following this approach to reach financial independence for almost ten years.  Our savings rate is over 50% because we have learned to live on one salary.

One last note, I ran into my old co-worker John last summer after not seeing him in many years.  I was having breakfast at a local diner one Saturday morning and John was there with his wife.  We had a brief conversation.  He told me that he is retiring next year and moving from Pennsylvania to Texas where his wife has family.  It appears that he truly did follow the simple yet profound approach to reach financial independence that he introduced to me a long time ago.

Please remember to check with a financial professional before you ever buy an investment and to read my Disclaimer Page.

Investing in Your 20s – It’s the Chance of Your Lifetime

No matter how old you are, it is never too early to start investing. Whether you are in high school, college or just finished school, now is the time to start putting money toward securing your financial future. The good news is that it is easy to start investing no matter how much you have to invest, what your risk tolerance is or what your goals may be.

How Do You Start Investing?

The first step to becoming an investor is to find a broker to trade with. Most brokers allow you to make your own trades online in a matter of seconds. They will also have access to charts, analysis and news to help you make informed trading decisions.

Some brokers also offer training courses that help new investors learn the basics of investing as well as how to use the charts and tools that they offer. The broker that you choose depends partially on how much help that you want or need making investment decisions as well as how much that you have to invest at the moment.

How Much Do You Need to Start Investing?

Some brokers such as Charles Schwab will allow you to start investing with no minimum balance. Therefore, you can start contributing to an index fund with as little as $1 if that is all you had to invest or all that you wanted to put in for now.

Newer brokers such as Betterment or Motif require anywhere from $100 to $300 to get started whereas some mobile investing apps have no limits. If you invest with Fidelity, Vanguard or similar brokers, expect to need at least $1,000 to gain access to their stock or mutual fund offerings.

Why Should I Start Investing Today?

Compound interest is one of the most exciting concepts that you will ever learn. It is also the reason why you need to start putting money into the market today no matter how much or how little you have to get started with.

Let’s say that you bought stock worth $100 at age 30 and earned the historical average return of 11 percent per year. When you were 60, that $100 would be worth $2,289. However, if you put that $100 into the market when you were 20, you would have $6,500 by age 60 assuming an average 11 percent return.

What Should I Know About Broker Fees and Capital Gains Taxes ?

It is important that you account for taxes and fees whenever you make an investment decision. When you first start investing, you will likely look to buy and hold a stock or index fund for many years. This is because most brokers charge a fee of $5 to $8 for each trade that you make. If you only have $100 in an account, that $8 may represent your return for an entire year.

When it comes to taxes, it is important to note that you only pay tax on the profit that is made on a given investment. Your profit is any gains above your cost basis, which is the price of the security plus any fees paid to buy or sell it. Therefore, if you bought a stock for $10 and paid $5 to buy it, your cost basis is $15. If you sold the stock for $20, you would pay capital gains taxes on $5.

If you are in the 10 percent tax bracket, you pay nothing in federal capital gains taxes. However, you may be required to pay state taxes on all capital gains. If the money is held in a traditional IRA, you don’t pay capital gains taxes while securities are in your account. Instead, you pay ordinary income taxes on any money that you withdraw when the withdrawal takes place.

Should I Open a Roth IRA or 401k Instead of a Traditional?

When you invest in a traditional IRA or 401k, you get a tax deduction in the year that the contribution is made. However, if you choose to open a Roth account, you use after-tax dollars to contribute to your account.

The benefit is that the money in your account grows free from capital gains taxes. Furthermore, it is not subject to income taxes when it is withdrawn because the money was already taxed.

Ideally, a person will invest in both a traditional and Roth IRA or 401k to reduce their tax burden both today and in the future. As a Roth IRA is subject to income limits, it may be best to contribute to a Roth 401k as there are no income limits and contribution limits are higher. A 401k is a retirement account provided by an employer, and those who are self-employed may open one on their own.

If you are serious about securing your financial future, you should start investing as soon as you have a few extra dollars to do so. Those who aren’t sure what their financial goals or timelines are may benefit from speaking with a financial adviser. This person may be able to help you create short and long-term goals as well as different investment strategies to make it easier to meet them.

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Please remember to check with a financial professional before you ever buy an investment and to read my Disclaimer Page.

Giving Stocks as a Gift

When I was growing up in the 1980’s, it was common to receive an EE Government Savings Bond for a gift.  My relatives would get them for me for my birthday, when I received a sacrament at church, or for a holiday gift.  At the time, I would have much preferred a video game or almost anything other than a savings Bond.

Looking back, my relative’s choice in gifts had my best interest in mind.  An EE Government Savings Bond was a prudent gift idea at the time.  Video games, toys, or even cloths wear out.  An investment, however, will grow in value.  It will provide the recipient with an even greater gift in the future.

As a Personal Finance Blogger, I have reflected on those EE Bonds that I received and wished that they were shares of individual stocks or a S&P 500 index fund that has a historical rate of return of 10%.  Many of these EE Government Savings Bonds that were purchased for me in the 1980’s had an interest rate of 6%.  Today, however, EE Government Savings Bonds only pay 3.5% if you hold them for 20 years.  I often wondered why more people do not buy shares of stocks or mutual funds as gifts for their young relatives or even other adults?  The best answer to that question is that it was once complicated to set up an investment account for another person.

There is now an easy way to purchase shares of stocks or ETFs as a gift for other people and even children under the age of 18.  The company that made this possible is called StockpileStockpile allows people to go online and purchase a gift card that is redeemable for shares of a publicly traded stock or an ETF.

Physical gift cards are sold in values of $25, $50, and $100.  E-gift face values can be any dollar amount up to $1000.  There are gift cards for shares of Facebook, Google, Nike, Amazon, and many other companies.  My favorite option is that there are gift cards for shares of ETFs from Fidelity, Charles Schwab, and Vanguard.

There are different ways to purchase gift cards from Stockpile.  A physical gift card can be purchased online or off the gift card rack at supermarkets or other retail stores.  There is the option to purchase an e-gift.  There is also an option to purchase stocks or ETFs for yourself.

Stockpile makes it easy for a minor to be able to own shares of stock or ETF.  If a gift card is purchased for a minor, an adult must be named on the account with them.  Minors can place trade that go to a parent/adult for approval.  The minor simply is named as the beneficiary until they reach the age of 18.

After reviewing Stockpiles website, the fees are fair considering the option of being able to now give the gift of stocks to another person with ease:

For an e-gift of stock: $2.99 for the first stock + $.99 per additional stock + credit/debit card fee

For a physical gift card: $4.95 to $7.95, depending on the face value of the gift card

For yourself: If you pay with cash, trades are only $.99, If you use credit $.99 plus 3%

For those who receive the gift card: Free to redeem, link to a bank account, switching to a different stock when redeemed, or re-gifting

After doing some research, Stockpile has received mostly strong reviews.  Consumer Reports, a source that I trust, stated that merging stocks and gift cards was a good idea and that it can have an impact on Kids.  Reuben Gregg Brewer from Seeking Alpha gave Stockpile a less favorable review because of the fees compared to what brokerage houses now charge.  Those brokerage houses, however, do not offer the ease of being able to simply gift a few shares of a stock or ETF to another adult or minor.

In my opinion, I like that Stockpile makes it easy to give the gift of stocks or ETFs to others.  A close friend of mine is expecting to have his first daughter in the next few weeks.  I purchased a gift card for the Vanguard 500 ETF as a gift for his daughter.  It will not mean anything to their little girl after she is born, but I bet she will be happy when she turns 18 and takes ownership of those shares.

Please remember to check with a financial professional before you ever buy an investment and to read my Disclaimer Page.