Please Help with my 1st Roth IRA

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Please Help with my 1st Roth IRA

Postby BrianJone » Mon Mar 18, 2013 5:33 pm

I have been on here for a little while and from talking and learning from great people, I have decided to invest in a Roth IRA (for 2012 and 2013), but have never done any investing like this so I am hoping to get some help. I am 30 years old and at this time am single but will be getting married this Fall. I will be selling the few stocks I have soon, and that will result in me owning $0 in stocks. I do have bonds but they are savings bonds purchased from family members. Other than that, I have an emergency fund but no other savings.

I was suggested using Vanguard, and they sound like a good option, though I am open to other ideas. The two funds that were mentioned to me in another forum post were:
Vanguard LifeStrategy Growth Fund (VASGX) (80/20 atock/bond allocation)
Vanguard LifeStrategy Moderate Growth Fund (VSMGX) (60/40 stock/bond allocation)

What are your thoughts on one or both of these above and would you suggest something different? I am also interested in learning about "why" so if you would share reasoning for your oppinion I would appreciate that also. Thank you in advance for any help you can offer and if you have any more questions for me, please ask.
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Getting started.

Postby Taylor Larimore » Mon Mar 18, 2013 5:55 pm

Brian:
It was suggested using Vanguard, and they sound like a good option, though I am open to other ideas. The two funds that were mentioned to me in another forum post were:
Vanguard LifeStrategy Growth Fund (VASGX) (80/20 atock/bond allocation)
Vanguard LifeStrategy Moderate Growth Fund (VSMGX) (60/40 stock/bond allocation)


Deciding to start an IRA is a very important decision for nearly every wage earner.

Your most important portfolio decision is your stock/bond allocation. Use this Vanguard tool for assistance:

https://personal.vanguard.com/us/funds/ ... mmendation

Once you have decided your stock/bond allocation, pick a Vanguard Life Strategy (4 choices) or Target Retirement Fund (11 choices) with the stock/bond allocation you want.

Don't worry about exact funds. You can exchange later without cost. The important thing is to get started. April 15 is the deadline for your 2012 contribution. Use this link:

Open an Account

Best wishes.
Taylor
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Re: Getting started.

Postby BrianJone » Mon Mar 18, 2013 6:51 pm

Taylor Larimore wrote:Brian:
It was suggested using Vanguard, and they sound like a good option, though I am open to other ideas. The two funds that were mentioned to me in another forum post were:
Vanguard LifeStrategy Growth Fund (VASGX) (80/20 atock/bond allocation)
Vanguard LifeStrategy Moderate Growth Fund (VSMGX) (60/40 stock/bond allocation)


Deciding to start an IRA is a very important decision for nearly every wage earner.

Your most important portfolio decision is your stock/bond allocation. Use this Vanguard tool for assistance:

https://personal.vanguard.com/us/funds/ ... mmendation

Once you have decided your stock/bond allocation, pick a Vanguard Life Strategy (4 choices) or Target Retirement Fund (11 choices) with the stock/bond allocation you want.

Don't worry about exact funds. You can exchange later without cost. The important thing is to get started. April 15 is the deadline for your 2012 contribution. Use this link:

Open an Account

Best wishes.
Taylor


The questions about risk are items I could use some advice with if anyone is willing to help. I realize these are personal questions but for a 30 year old starting an investment, does anyone have an opinon to share with me?
It asks if I Strongly Disagree, Disagree, Somewhat Agree, Agree or Strongly Agree with these TWO questions:
1) Generally, I prefer an investment with little or no fluctuation in value, and I’m willing to accept a lower return on this investment.
2) During market declines, I tend to sell portions of my riskier assets and invest the money in safer assets.

and then it also asks if I would want my investment to have very Little Volatility, Medium Volatility or have High Volatility? What would you suggest?

thank you.
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Re: Please Help with my 1st Roth IRA

Postby Taylor Larimore » Mon Mar 18, 2013 9:29 pm

It asks if I Strongly Disagree, Disagree, Somewhat Agree, Agree or Strongly Agree with these TWO questions:
1) Generally, I prefer an investment with little or no fluctuation in value, and I’m willing to accept a lower return on this investment.
2) During market declines, I tend to sell portions of my riskier assets and invest the money in safer assets.

and then it also asks if I would want my investment to have very Little Volatility, Medium Volatility or have High Volatility? What would you suggest?


Brian: Only YOU can answer these questions which relate to YOUR risk-tolerance.

These are very important questions for two primary reasons:

1. It is important that you not panic and sell stocks during the next bear market.
2. It is important that your portfolio lets you sleep well without worry.

Make a decision and move on.

Best wishes.
Taylor
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Re: Please Help with my 1st Roth IRA

Postby BrianJone » Mon Mar 18, 2013 9:37 pm

Taylor Larimore wrote:
It asks if I Strongly Disagree, Disagree, Somewhat Agree, Agree or Strongly Agree with these TWO questions:
1) Generally, I prefer an investment with little or no fluctuation in value, and I’m willing to accept a lower return on this investment.
2) During market declines, I tend to sell portions of my riskier assets and invest the money in safer assets.

and then it also asks if I would want my investment to have very Little Volatility, Medium Volatility or have High Volatility? What would you suggest?


Brian: Only YOU can answer these questions which relate to YOUR risk-tolerance.

These are very important questions for two primary reasons:

1. It is important that you not panic and sell stocks during the next bear market.
2. It is important that your portfolio lets you sleep well without worry.

Make a decision and move on.

Best wishes.
Taylor



I would not panic and sell, so that portion I can answer myself.
but as for the risk level, I am not going to be checking it every day so i will not worry about sleeping, I plan to invest the money and then check on it rarely but just to make sure the money is still in the account. At my age and in my situation, would there be an oppinon that you or others may suggest about the high or low risk level a person "like me" should take with their investment? If you dont want to make the decision for me specifically, what about a person similar to how the first post was described?
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Re: Please Help with my 1st Roth IRA

Postby LadyGeek » Mon Mar 18, 2013 9:58 pm

Here's the guidance you're looking for: Rules of thumb It's called "roughly your age in bonds." You don't need to go into any more precision than the nearest 5 %.

So, for someone 30 years old, you need 30% bonds. That means 70% stocks / 30% bonds will work. If you get nervous when the market runs through some large market swings, then crank it down a bit to perhaps 60% stocks / 40% bonds and call it done.

The stock/bond ratio is a very important starting point and highlighted in the wiki: Risk and return (Asset allocation)

Wiki wrote:Asset allocation is one of the most important decisions that investors can make. In other words, the importance of an investor's selection of individual securities is insignificant compared to the way the investor allocates their assets to stocks, bonds, and cash equivalents.
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Re: Please Help with my 1st Roth IRA

Postby BrianJone » Fri Mar 22, 2013 2:13 pm

In addition to the Life Sttrategy funds mentioned in the original post, I found this as an option. Can anyone offer their suggestion or advice in this investment which does not include global index funds? I would enjoy hearing from this experts as this is my start of investing. Thank you.

It is the Wellington fund from Vanguard
https://personal.vanguard.com/us/funds/ ... IntExt=INT
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Re: Please Help with my 1st Roth IRA

Postby Brian2d » Fri Mar 22, 2013 2:42 pm

The Wellington fund differs from the 2 others you mentioned in 2 ways.

1. It is an actively managed fund
2. It does not invest in international stocks
3. Of US Stocks, Wellington is focused more on larger stocks, and does not invest in smaller cap stocks.
4. Wellington has somewhat of a value tilt.

Not sure how different the bonds in the two funds are, someone else can contact

Generally the negatives of actively managed funds are as follows:
1. Higher expenses
2. Tax consequences
3. Turnover rate leading to bid-ask spread costs.

#2 is irrelevant in an IRA.
#1 is of relatively minimal importance here, as the fee is .27%, still quite low
#3 Wellington has a turnover rate of 35%. By contrast, total stock market and total international are less than 3%. Will this have a major impact? My guess would be no.

Among active funds Wellington would be a good choice, but the greater diversification (including smaller caps and international) of the life strategy funds would make me inclined to choose one of those.
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Re: Please Help with my 1st Roth IRA

Postby BrianJone » Fri Mar 22, 2013 7:43 pm

Thank you Brian. Do you have an opinion between the two index funds for someone just starting their IRA?
Last edited by BrianJone on Sat Mar 23, 2013 8:09 pm, edited 1 time in total.
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Re: Please Help with my 1st Roth IRA

Postby LadyGeek » Fri Mar 22, 2013 7:51 pm

Just in case, have you seen the wiki article? Vanguard LifeStrategy Funds
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Re: Please Help with my 1st Roth IRA

Postby Brian2d » Fri Mar 22, 2013 8:31 pm

So you're saying you want something closer to 70%, rather than the 60% or 80% of those two funds? If I'm misunderstanding the question, please let me know.

Assuming your contribution from both 2012 and 2013 totals more than $6,000, you could always split it 50/50 between the two funds. If not, it's your call which way to go.

One way to look at it is:

In 2008-2009 did you:
a. Want to invest in the stock market because it was cheap and wish you had the money to do so
b. Glad you weren't losing money in the stock market and would likely have sold stocks if you had them

If the answer is A, choose the growth fund. If the answer is B, choose the moderate growth fund.

Another way:
The Vanguard 2045 retirement fund has a 90/10 stock/bond allocation. The growth fund would be closer to that one.
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Re: Please Help with my 1st Roth IRA

Postby BrianJone » Fri Mar 22, 2013 9:56 pm

LadyGeek wrote:Just in case, have you seen the wiki article? Vanguard LifeStrategy Funds


I did not yet see this article but I will read it now.
thank you for sharing!
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Re: Getting started.

Postby abuss368 » Fri Mar 22, 2013 10:38 pm

Taylor Larimore wrote:Brian:

Deciding to start an IRA is a very important decision for nearly every wage earner.

Your most important portfolio decision is your stock/bond allocation. Use this Vanguard tool for assistance:

https://personal.vanguard.com/us/funds/ ... mmendation

Once you have decided your stock/bond allocation, pick a Vanguard Life Strategy (4 choices) or Target Retirement Fund (11 choices) with the stock/bond allocation you want.

Don't worry about exact funds. You can exchange later without cost. The important thing is to get started. April 15 is the deadline for your 2012 contribution. Use this link:

Open an Account

Best wishes.
Taylor



Hi BrianJone,

Taylor has provided excellent advice. I would strongly consider investing in a LifeStrategy or a Target Retirement Fund. The most important part is to get started by opening the ROTH IRA account and funding it.

Best.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!"

Disclosure: Three Fund Portfolio + REITs
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Re: Please Help with my 1st Roth IRA

Postby LadyGeek » Fri Mar 22, 2013 10:50 pm

^^^ which brings up another thing to read: LifeStrategy Funds vs Target Retirement Funds :)
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Re: Please Help with my 1st Roth IRA

Postby BrianJone » Sat Mar 23, 2013 7:58 am

LadyGeek wrote:^^^ which brings up another thing to read: LifeStrategy Funds vs Target Retirement Funds :)


Another great article to read, and with this information I have decided to stay with the Life Strategy funds......which now has me deciding between Growth and Moderate Growth. The Growth Fund (on vanguard) is listed at a risk level of 4 (from 1-5) and Moderate is 3. Does that mean neither of these are conservative? I am okay with taking calculated risks, but I am doing my homework on this forum and other places to avoid taking bad risks.

At my age, and knowing I will hold this Roth IRA for 30+ years before even thinking of taking any money out, the Growth (80% stocks) would likely be the better direction for me to go, is that what others here would suggest? Thanks.
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Choice of two funds?

Postby Taylor Larimore » Sat Mar 23, 2013 8:11 am

At my age, and knowing I will hold this Roth IRA for 30+ years before even thinking of taking any money out, the Growth (80% stocks) would likely be the better direction for me to go, is that what others here would suggest? Thanks.


Brian:

An 80% stock portfolio should be expected to decline at least 40% during the next bad bear market. If you can see your portfolio decline in half without selling or losing sleep, the Growth fund should be fine--otherwise select the Moderate Growth fund.

Best wishes.
Taylor
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Re: Please Help with my 1st Roth IRA

Postby Regal 56 » Sat Mar 23, 2013 8:23 am

BrianJone wrote:At my age, and knowing I will hold this Roth IRA for 30+ years before even thinking of taking any money out, the Growth (80% stocks) would likely be the better direction for me to go, is that what others here would suggest?


I'll briefly stick my nose in this thread to offer one bit of advice. It seems you're looking to make a perfect choice. Be assured that this is impossible. No matter what fund or funds you choose, a few years down the road you'll find you could've done better with a different choice. Count on it. This doesn't mean you're doomed. It simply means you can't predict the future, and nor can anyone else.

Good investing isn't a matter of trying to predict the future. (That's gambling, and presumably you're not interested in gambling your life savings.) Rather, good investing is a matter of recognizing what you can and can't control. You can't control what the market will do—that's out of your hands. But you can control costs, and you can control your own behavior. Doing those two things will go a long way to making you a successful investor.

There's an oft-quoted saying around here: "Perfect is the enemy of good." Rather than suffer analysis-paralysis in trying to make a perfect choice, be satisfied with good enough and move on. You're starting at 30, which is better than most. (I wish I'd started at 30.) So you're already ahead of the game. Make your best decision and go with it. You can always tweak your portfolio later as you get a better handle on your risk tolerance.
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Re: Please Help with my 1st Roth IRA

Postby epictetus » Sat Mar 23, 2013 8:29 am

I would suggest reading Mr. Bogle's "Little Book of Common Sense Investing." It will help you understand the reasoning behind the responses you are receiving.

it will also help you develop a plan you can stick with. if your stock allocation is too aggressive it is easier said than done to stay with the plan when the stock market drops 50%.

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Re: Please Help with my 1st Roth IRA

Postby bberris » Sat Mar 23, 2013 8:47 am

I didn't think you could trade savings bonds.
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Re: Please Help with my 1st Roth IRA

Postby fulltilt » Sat Mar 23, 2013 9:59 am

BrianJone wrote:
LadyGeek wrote:^^^ which brings up another thing to read: LifeStrategy Funds vs Target Retirement Funds :)


Another great article to read, and with this information I have decided to stay with the Life Strategy funds......which now has me deciding between Growth and Moderate Growth. The Growth Fund (on vanguard) is listed at a risk level of 4 (from 1-5) and Moderate is 3. Does that mean neither of these are conservative? I am okay with taking calculated risks, but I am doing my homework on this forum and other places to avoid taking bad risks.

At my age, and knowing I will hold this Roth IRA for 30+ years before even thinking of taking any money out, the Growth (80% stocks) would likely be the better direction for me to go, is that what others here would suggest? Thanks.

If you can swing it, buy a 50/50 mix and be done with it. If you rebalance every year to keep the proportion of bonds at roughly your age, and you contribute to your Roth automatically each payday in whatever amount you can afford, then that is all there is to it. The key is to start now and make it automatic. Until your portfolio gets huge, the main driving force in portfolio growth is how much you sock away.
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Re: Please Help with my 1st Roth IRA

Postby pkcrafter » Sat Mar 23, 2013 11:30 am

Brian, there are a few contradictions and concerns in your discussion on risk tolerance. For instance, you said:
Generally, I prefer an investment with little or no fluctuation in value, and I’m willing to accept a lower return on this investment.

Nothing wrong with that, but it suggests you would be more comfortable with less risk and less allocation to equity.

During market declines, I tend to sell portions of my riskier assets and invest the money in safer assets.

You must avoid doing this, so again, it indicates a lower equity allocation.

In contrast to the above, you also said:
I would not panic and sell, so that portion I can answer myself.
but as for the risk level, I am not going to be checking it every day so i will not worry about sleeping, I plan to invest the money and then check on it rarely but just to make sure the money is still in the account.

Is this based on past actions, or is it just something you've decided you will do? If you have not held a high equity allocation through a market crash, then for now a lower allocation to equity is probably prudent.

Does that mean neither of these are conservative? I am okay with taking calculated risks, but I am doing my homework on this forum and other places to avoid taking bad risks.

At my age, and knowing I will hold this Roth IRA for 30+ years before even thinking of taking any money out, the Growth (80% stocks) would likely be the better direction for me to go, is that what others here would suggest?


Conservative is a relative term and is viewed differently by each investor, but 80% stock is as high as many posters here would recommend for any investor, and that would be for those pretty insensitive to large market fluctuations. For you, it does not sound appropriate.

The reasons you have trouble with the Vanguard analyzer tool is why I don't like risk questionnaires.

Maybe this will give you a little different perspective on risk...

http://investingroadmap.wordpress.com/2011/02/25/205/

As for the fund to choose, Wellington has been a great fund, but it's not as diversified as a Lifestrategy or TR fund. In the LS series you could choose 60% equity or 40% equity as the only reasonable options. TR 2015 would give you a 54/46 allocation. With the TR fund you would have to change your selection at some point because equity allocation will get lower with time. The LS funds hold their allocations, so no reason to have to change unless you wanted a different AA.

Paul
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Re: Please Help with my 1st Roth IRA

Postby sometimesinvestor » Sat Mar 23, 2013 1:11 pm

BrianJone wrote:
LadyGeek wrote:^^^ which brings up another thing to read: LifeStrategy Funds vs Target Retirement Funds :)


Another great article to read, and with this information I have decided to stay with the Life Strategy funds......which now has me deciding between Growth and Moderate Growth. The Growth Fund (on vanguard) is listed at a risk level of 4 (from 1-5) and Moderate is 3. Does that mean neither of these are conservative? I am okay with taking calculated risks, but I am doing my homework on this forum and other places to avoid taking bad risks.

At my age, and knowing I will hold this Roth IRA for 30+ years before even thinking of taking any money out, the Growth (80% stocks) would likely be the better direction for me to go, is that what others here would suggest? Thanks.

Yes neither fund is very conservative but they do represent what many consider prudent risk.
I think you have so far received very good advice . .There have been a number of threads discussing asset allocation. I was convinced by the studies suggesting an 80-20 allocation until one is around 50 and then increasing bonds gradually BUT , as suggested by Taylor investing in an 80-20 requires that you do not panic and sell. One posibility that will represent a little more work on your part but could prove helpful is to put 90% in the 80-20 fund and 10% in. a short term bond fund. That will give you roughly a 70-30 split BUT if you read the stock market is down 20% you have a fund source (the bond fund) to enable you to invest more into stocks at a possibly low point .That decision might or might not work out well but you will feel you have attempted to help recover the value of your portfolio.Thinking of doing this in part represnts your view of "don't just sit there do something' but in this case what you are doing is making your portfolio more risky because you think its a good idea to do so.
Good luck.You may well be too young to know about this but the older folks on this forum remember Disney's version of Davy Crockett's advice,
"Be sure youre right and then go ahead."
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Re: Please Help with my 1st Roth IRA

Postby ruralavalon » Sat Mar 23, 2013 1:34 pm

BrianJone wrote:. . . . . I am 30 years old and at this time am single but will be getting married this Fall. I will be selling the few stocks I have soon, and that will result in me owning $0 in stocks. I do have bonds but they are savings bonds purchased from family members. Other than that, I have an emergency fund but no other savings.
. . . . . .
I would not panic and sell, so that portion I can answer myself.
but as for the risk level, I am not going to be checking it every day so i will not worry about sleeping, I plan to invest the money and then check on it rarely but just to make sure the money is still in the account. At my age and in my situation, would there be an oppinon that you or others may suggest about the high or low risk level a person "like me" should take with their investment? If you dont want to make the decision for me specifically, what about a person similar to how the first post was described?
. . . . . .
. . .I will hold this Roth IRA for 30+ years before even thinking of taking any money out . . . .

At age 30 either 80/20 or 60/40 stocks bonds would be within reason, since it will be "30+ years before even thinking of taking any money out". Both LifeStrategy funds mentioned are very broadly diversified. Both are prudent vestments for someone like you. Since: (1) you say you don't expect that you would panic in a down turn (2) would not be checking daily or losing sleep, (4) you will be investing ~$11k from stock sales in a mutual fund in your new IRA, and importantly (4) you also have savings bonds ($7-8k per your other thread), I will suggest that the more appropriate fund would be Vanguard LifeStrategy Growth Fund (VASGX) (80/20 stock/bond allocation). 80/20 would be reasonable but a bit aggressive for your age. Given that you also have those savings bonds, that makes your overall total porfolio about 48/52 stocks bonds, which is very conservative for your age. So I would suggest that Vanguard LifeStrategy Growth Fund (VASGX) is about right for "a person similar to how the first post was described".

I will echo what others have expressed. Don't try to find the "perfect choice", don't over-analize, and its important to get started. Be sure to take advantage of the ability to make the 2012 contribution before April 15 this year.

If you later decide to change your mind, you can switch without any cost or penalty.
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Re: Choice of two funds?

Postby BrianJone » Sat Mar 23, 2013 1:45 pm

Taylor Larimore wrote:
At my age, and knowing I will hold this Roth IRA for 30+ years before even thinking of taking any money out, the Growth (80% stocks) would likely be the better direction for me to go, is that what others here would suggest? Thanks.


Brian:

An 80% stock portfolio should be expected to decline at least 40% during the next bad bear market. If you can see your portfolio decline in half without selling or losing sleep, the Growth fund should be fine--otherwise select the Moderate Growth fund.

Best wishes.
Taylor


are you also assuming the market will increase at a rate higher than the 40% decline? If so, then yes I could Sleep at night. But I may struggle sleeping if my initial investment is almost cut in half.
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Re: Please Help with my 1st Roth IRA

Postby BrianJone » Sat Mar 23, 2013 1:52 pm

Regal 56 wrote:
BrianJone wrote:At my age, and knowing I will hold this Roth IRA for 30+ years before even thinking of taking any money out, the Growth (80% stocks) would likely be the better direction for me to go, is that what others here would suggest?


I'll briefly stick my nose in this thread to offer one bit of advice. It seems you're looking to make a perfect choice. Be assured that this is impossible. No matter what fund or funds you choose, a few years down the road you'll find you could've done better with a different choice.


Thank you for the post, but I wanted to explain what I'm looking for. I am not going to look back in 5 years and judge my choice made today. But I want to use the information today and make the best possible choice. I'd rather it not be random and hope to have a reason for making one investment over the other. And I'm thankful for all the help being offered here!!
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Re: Please Help with my 1st Roth IRA

Postby BrianJone » Sat Mar 23, 2013 2:09 pm

pkcrafter wrote:Brian, there are a few contradictions and concerns in your discussion on risk tolerance. For instance, you said:
Generally, I prefer an investment with little or no fluctuation in value, and I’m willing to accept a lower return on this investment.

Nothing wrong with that, but it suggests you would be more comfortable with less risk and less allocation to equity.

During market declines, I tend to sell portions of my riskier assets and invest the money in safer assets.

You must avoid doing this, so again, it indicates a lower equity allocation.

In contrast to the above, you also said:
I would not panic and sell, so that portion I can answer myself.
but as for the risk level, I am not going to be checking it every day so i will not worry about sleeping, I plan to invest the money and then check on it rarely but just to make sure the money is still in the account.

Is this based on past actions, or is it just something you've decided you will do? If you have not held a high equity allocation through a market crash, then for now a lower allocation to equity is probably prudent.

Does that mean neither of these are conservative? I am okay with taking calculated risks, but I am doing my homework on this forum and other places to avoid taking bad risks.

At my age, and knowing I will hold this Roth IRA for 30+ years before even thinking of taking any money out, the Growth (80% stocks) would likely be the better direction for me to go, is that what others here would suggest?


Conservative is a relative term and is viewed differently by each investor, but 80% stock is as high as many posters here would recommend for any investor, and that would be for those pretty insensitive to large market fluctuations. For you, it does not sound appropriate.

The reasons you have trouble with the Vanguard analyzer tool is why I don't like risk questionnaires.

Maybe this will give you a little different perspective on risk...

http://investingroadmap.wordpress.com/2011/02/25/205/

As for the fund to choose, Wellington has been a great fund, but it's not as diversified as a Lifestrategy or TR fund. In the LS series you could choose 60% equity or 40% equity as the only reasonable options. TR 2015 would give you a 54/46 allocation. With the TR fund you would have to change your selection at some point because equity allocation will get lower with time. The LS funds hold their allocations, so no reason to have to change unless you wanted a different AA.

Paul


Those weren't my answers. These are questions being asked on a different link and I was listing the questions and the answer choices and asking for advice. I would rather not lose my original investment (as I assume most people would agree with) but I'm okay with fluctuating and am learning that I shoul invest and leave it, so I won't be selling during a decline (this means I can time the market and if you didn't know yet, I don't have that ability) :)
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Re: Please Help with my 1st Roth IRA

Postby Novine » Sat Mar 23, 2013 3:18 pm

BrianJone, I'm a little bit confused by your perspective on this. You say you own stocks and bonds but you "have never done any investing like this". Isn't stocks and bonds "investing"?

A number of people have made good suggestions for funds that take you from an unknown level of risk, since we don't know what stocks and bonds you own, to a pretty-well defined level of risk and return. The funds that are being suggested rely on index funds which generally track the respective markets. While these funds can fluctuate up and down in response to the markets, absent a complete collapse of the financial markets, these funds will likely never go bust. Can you say the same about the companies that you currently own in stocks? You're trading a lot of unknowns for some knowns. Yet you still seem hung-up on whether this is the "right" decision. As others have noted, there's no "right" or "perfect" decision. Instead, make your decision on whether making the moves suggested puts you in a better place than you are today. All the information we have seems to say "yes" but ultimately, you are the only one who can decide that.
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Re: Please Help with my 1st Roth IRA

Postby BrianJone » Sat Mar 23, 2013 8:27 pm

Novine wrote:BrianJone, I'm a little bit confused by your perspective on this. You say you own stocks and bonds but you "have never done any investing like this". Isn't stocks and bonds "investing"?



The bonds are savings bonds that were purchased for me on birthdays and graduations. the stocks were invested through a broker. I gave some money to a family friend and he did the work on investing in a few stocks.

the reason i have not dont this before is because 1) everything else had been done for me to this point and 2) this will be an investment for my long term retirement that i will be adding to annually.
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Re: Please Help with my 1st Roth IRA

Postby pkcrafter » Sat Mar 23, 2013 9:42 pm

Brian, perhaps I got confused on your position regarding risk. I know the information you posted about judging risk was from Vanguard, but I thought it echoed your personal feelings. So, now what stock/bond allocations do you think you will use?

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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Re: Please Help with my 1st Roth IRA

Postby BrianJone » Sun Mar 24, 2013 12:19 pm

pkcrafter wrote:Brian, perhaps I got confused on your position regarding risk. I know the information you posted about judging risk was from Vanguard, but I thought it echoed your personal feelings. So, now what stock/bond allocations do you think you will use?

Paul


Before reading some of the suggested articles posted above about risk, I was leaning to the 80/20 (stock/bond) investment from vanguard.

but with all the talk about losing 50% or maybe the chance of a 90% loss, what case could be made for 80/20 (stock/bond) rather than just 100% of all Tax-Free Bonds? Can anyone offer advice on this? thank you.
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Re: Please Help with my 1st Roth IRA

Postby abuss368 » Sun Mar 24, 2013 3:17 pm

epictetus wrote:I would suggest reading Mr. Bogle's "Little Book of Common Sense Investing." It will help you understand the reasoning behind the responses you are receiving.

it will also help you develop a plan you can stick with. if your stock allocation is too aggressive it is easier said than done to stay with the plan when the stock market drops 50%.

epictetus


This is an excellent book packed with powerful investment advice. Invest your time reading this great book by Mr. Bogle.

Best.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!"

Disclosure: Three Fund Portfolio + REITs
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