Vanguard Roth IRA Consideration

[ComebackKid]

I have been thinking about opening a Roth IRA with Vanguard. I just turned 30 and thought it would be a great gift to myself. I obviously misunderstood, but I didn't realize that in order to invest in VBMFX, VTSMX, and VGTSX, it would cost $3K each (total of $9K). I, for some reason, had thought I could spread my $3K amongst all of them and then begin monthly contributions. That said, since I don't have $9K at the moment to invest (we just bought a house), is it recommended that I invest in one of their target funds? If so, can I invest in a target fund until I reach a total investment of $9K, and then move all of that into the three funds I listed above? If so, are there lots of extra fees for doing so? What do you guys recommend?

[Johm221122]

Life strategy
https://personal.vanguard.com/us/funds/ ... rategyList
Or retirement funds
https://personal.vanguard.com/us/funds/ ... rementList
No extra fees,do you have a 401 or other investments,try posting this way
viewtopic.php?f=1&t=6212
John

[dailybagel]

Investing in a TR fund would be fine. Take a look at the graphs of growth to get a feel for their behavior during up and down markets. The closer date funds e.g. TR 2020 will have less volatility than the further-dated funds.

Your plan to move into different mutual funds when you have sufficient funds (dollars) is also fine, although I didn't look up the ticker symbols you listed. You will not pay fees for doing that.

I suggest you edit your post and list the fund names -- that may get people to comment on your specific choices, if that is what you're looking for.

[NYBoglehead]

Many would advocate putting whatever you've got in a Target Date Fund until you've got enough to spread out the money into the 3-fund portfolio.

In my humble opinion, I see nothing wrong with getting started with each of the individual funds as you are able and adjusting your AA as you go. Nothing wrong, especially at 30 years old, with starting off with TSM and then adding TISM and TBM as the money becomes available in subsequent years.

[Johm221122]

I see you only got 1 reply on former post in July

viewtopic.php?f=1&t=99800&p=1443474#p1443474
Using this link
viewtopic.php?f=1&t=6212
I would post again updating information, you need to think of your portfolio as one
John

[ComebackKid]

I currently have $21,244 invested in my 401K at the moment, 100% in a target fund (Schwab Index Ret Trust 2045). 10 months ago, in order to catch up, I upped my savings rate to 17%. So I'm putting about $7,500 a year into my 401K. Like most people, I would love to retire early (if possible) and comfortably. Just based on this information, any advice?

Any assistance on changing my 401(k) funds would also be appreciated, as I'm not really comfortable with a Target Fund.

Schwab Indexed Retirement Trust Fund 2045 (Schwab Indexed Retirement Trust Fund 2045) (0.18%)

Emergency funds = about 8 months

Debt: Purchased our first house in late August for $215,000 home with 20% down

Tax Filing Status: Married for 3 months so we'll be filing jointly for the first time

Age: 30

SIRT 2045
21.06% International Equity
2.76% Commodities
4.57% Global REIT's
63.17% Domestic Equity
8.43% Fixed Income

Other 401K Options:
T. Rowe Price Mid-Cap Growth (RPMGX) 0.80%
Artio Total Return Bond I (JBGIX) 0.44%
Artisan Mid Cap Value Investor (ARTQX) 1.20%
Dodge & Cox International Stock (DODFX) 0.64%
Federated Total Return Govt Bd Inst (FTRGX) 0.31%
Galliard Retirement Income Fund Class 60 0.60%
Lazard Emerging Markets Equity Inst (LZEMX) 1.12%
PRIMECAP Odyssey Growth (POGRX) 0.67%
Royce Low Priced Stock Instl (RLPIX) 1.19%
Schwab Inst LC Val Trust Fd Cls R 0.63%
Schwab S&P 500 Index (SWPPX) 0.09%
Vanguard Wellington Adm (VWENX) 0.19%

[ComebackKid]

While I'm seeking recommendations for Roth IRA's and my 401(k) investments, I have another question: What is the best company to go through for purchasing individual stocks as part of your Roth IRA portfolio? Any assistance is appreciated. Thanks.

[Johm221122]

I would use 401 for 500 index and federated total return bond
I would use Roth for total international index an extended market index
If you have rebalancing problems you could add (Dodge and Cox international in 401) or ((total bond index in Ira)
John

[ComebackKid]

Thanks Johm.

Would the allocation for the 401K between two you mentioned be 80/20?, or would that be too risky?

[Johm221122]

Thanks Johm.

Would the allocation for the 401K between two you mentioned be 80/20?, or would that be too risky?

If I'm understanding right 3k for Roth and 21k 401
Roth 3k international
401 /500 index 14k
401/federated bond 7k
And add extended market index when you have more assets
OR
Roth 3k extended market index
401
500 index/8k
Federated bond /7k
Dodge and Cox international /6k
The most important part now is adding more money and staying the course
john

[ComebackKid]

Johm221122,

From what you've suggested, how does the rebalancing work? I'm familiar with rebalancing when they're all under one umbrella and it's easy to just transfer funds, but I'm less familiar with how it could be accomplished when investments are spread out between a 401(k) and a Roth. I'm somewhat new to all of this, so any additional explanation will be appreciated. Thanks.

[WHL]

Many would advocate putting whatever you've got in a Target Date Fund until you've got enough to spread out the money into the 3-fund portfolio.

In my humble opinion, I see nothing wrong with getting started with each of the individual funds as you are able and adjusting your AA as you go. Nothing wrong, especially at 30 years old, with starting off with TSM and then adding TISM and TBM as the money becomes available in subsequent years.

This is exactly what I did with my 29 year old brother yesterday. We sold his terrible, terrible Waddell and Reed fund and put the ~2200 into his 2012 Roth IRA. Unfortunately, he doesn't make enough money to contribute much, so he likely won't be maxing it any time soon.

[Johm221122]

Johm221122,

From what you've suggested, how does the rebalancing work? I'm familiar with rebalancing when they're all under one umbrella and it's easy to just transfer funds, but I'm less familiar with how it could be accomplished when investments are spread out between a 401(k) and a Roth. I'm somewhat new to all of this, so any additional explanation will be appreciated. Thanks.

At this time having an exact AA is going to be hard.As your assets build up you will be able to have more options. Just keep investing new money towards the asset classes that need them.The easy thing would to pick retirement fund and just let it do the work, but you say your uncomfortable with them.There is no reason to be uncomfortable with them,they are just basic fund selection your looking for.You can always switch to individual funds when balance grows
John