New Investor

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New Investor

Postby snowss21 » Mon Mar 25, 2013 3:14 am

Hello, I have been vigorously researching investing recently. I feel completely lost in the water when it comes to investing in index funds right now. I have been eyeing vanguard and some of their growth funds. This will be my first investment ever, and I am looking for suggestions on whether or not to open up an IRA account with Vanguard, or if it would be wiser to open one up with a discount brokerage company like E*Trade, etc., and the difference between these. Will it be the same thing if I open one up with E*Trade and invest in a Vanguard fund? Or should I stick to opening one up with Vanguard and investing in their fund through them?

Basically any basic tips and/or pointers on how to get into this cleanly would be great!
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Re: New Investor

Postby ruralavalon » Mon Mar 25, 2013 8:32 am

Welcome to the forum :) .

Since you want Vanguard funds its best to have the IRA account at Vanguard. Theres no benefit to using a discount brokerage in that situation.

Start here -- Wiki article link: Getting Started .

For a way to begin and the ultimate in simplicity, look at using one of Vanguard's all-in-one LifeStrategy funds.
"Everything should be as simple as it is, but not simpler." - Albert Einstein
Wiki article link:Getting Started
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Re: New Investor

Postby Twins Fan » Mon Mar 25, 2013 12:18 pm

snowss21 wrote:Basically any basic tips and/or pointers on how to get into this cleanly would be great!


Call up Vanguard, tell them you want to open an IRA, and pick a fund.... about as clean as it gets. :happy

I kid, but it's really that simple. It seems you are thinking of "investing" as it is all like day trading/Wall Street type of stuff? Don't think that way. Think more "buy and hold" style. Where you buy a fund, add to it as you go, and let it do it's thing. The LifeStrategy or Target Retirement funds (Vanguard) are good for this, and for someone just starting out.

Some more information would be needed, as to whether a Traditional or Roth IRA would be better. Do you have any kind of retirement account available to you through work (401, 403, 457...)?
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Re: New Investor

Postby Default User BR » Mon Mar 25, 2013 1:58 pm

Twins Fan wrote:Call up Vanguard, tell them you want to open an IRA, and pick a fund

When I opened accounts, I did it all online. I generally find that to be quicker and easier than relaying information to someone on the phone while they enter it into the form.


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Re: New Investor

Postby snowss21 » Mon Mar 25, 2013 8:00 pm

Thank you for the speedy replies! When I mentioned "investing" I was definitely thinking the buy and hold type you mentioned, especially being new to it. I currently do not have a retirement account available to me, as I have not started my career or even finished college yet. Im just looking to get started saving my money, and letting it "work for me".
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Re: New Investor

Postby pingo » Tue Mar 26, 2013 12:06 am

Welcome!

Definitely look at the recommended reading list to get familiar with some of the generals of investing.

snowss21 wrote:I have been eyeing vanguard and some of their growth funds.


For what it's worth, we tend to shun "growth" funds around here, although there can be exceptions. Growth funds invest in growth companies, which are only one side of the coin—the flipside being value stocks. Be warned: growth stocks don't necessarily make your money grow the most. Broad index funds arguably hold the maximum amount of growth stocks one should have. In fact, a broad equity index fund effectively covers all your bases: large, mid, small; growth, core, value. Easy!

By contrast, a growth portfolio isn't about stock investment style; it refers to one's asset allocation (i.e. stocks vs. bonds), which is a good thing. A growth portfolio is just fine if it is in line with one's willingness, need and tolerance for risk. When Vanguard's LifeStrategy options use the word "growth" in the title it is merely to give you an idea of its asset allocation (i.e. aggressive vs. moderate vs. conservative growth). Keep in mind that each LifeStrategy Fund is actually a complete portfolio of broad VG index funds that has been expertly-structured and wrapped in a box to make investing easy.

My vote is that you open your IRA directly at Vanguard and select one of those tasty LifeStrategy Growth funds portfolios, or a Target Retirement fund portfolio. The number of ways to do better are few (and cannot be known ahead of time). The number of ways to do worse are infinite.

:beer
Last edited by pingo on Tue Mar 26, 2013 7:06 pm, edited 11 times in total.
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Re: New Investor

Postby Novine » Tue Mar 26, 2013 12:33 pm

It should be noted that to contribute to an IRA, you have to have earned income. That can be income earned from flipping burgers. But if you're still in school and not working for a paycheck, you won't be able to contribute to any form of IRA. If that's the case, there are ways to get invested that are low-cost and as easy to get started as opening an IRA. Let us know your situation.
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Re: New Investor

Postby snowss21 » Wed Mar 27, 2013 5:30 pm

wow absolutely great advice. I am currently in college right now, and I am planning on getting my portfolio started this summer when I begin my job. From then on I plan to have an income, but we'll see down the road if I decide to do a graduate program. So taking this into consideration, I will most likely open an IRA this summer When I gain an actual income. Also, I will most definitely set my sights on a growth allocation portfolio. Again, great advice and thank you.

EDIT: One more quick question. A comment about the IRA and having to actually have an income, does this mean if I were to say not work for 6 months to focus on school I would have to cancel my IRA? As in do you need a steady stream of income being put into it?
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Re: New Investor

Postby pingo » Thu Mar 28, 2013 2:50 pm

You don't have to have a steady stream. The IRS only wants to be sure that you earned money for the year that you contribute and that you're paying you're fair share of taxes for that year. So amount you earned (or will earn) for that year must be at least as much as the contribution.
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