Setting Up Roth IRA with Vanguard - Please Help

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Zach3859
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Joined: Wed Jan 09, 2013 12:45 pm

Setting Up Roth IRA with Vanguard - Please Help

Post by Zach3859 » Wed Jan 09, 2013 1:18 pm

Hello everyone, I'm new to Boglehead and would greatly appreciate advice on setting up my Roth IRA. I plan on using Vanguard, but I'm not sure which fund to use. I've researched the target fund as well as various index funds. I am 26 years old, recently paid off all debts, set up a sizable emergency fund, and now I would like to make a lump sum contribution to a Roth IRA for the tax year ending in 2012. Which Vanguard fund would you recommend, considering my situation? Thanks for your assistance.

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Duckie
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Re: Setting Up Roth IRA with Vanguard - Please Help

Post by Duckie » Wed Jan 09, 2013 5:22 pm

Zach3859, given your circumstances I recommend (VTHRX) Vanguard Target Retirement 2030 Fund (0.18%). It has roughly 80% stocks, 20% bonds, with 30% of stocks in international. It is a diversified, inexpensive three-fund portfolio.

However, if you have a retirement plan at work, that might change the answer. Do you?

livesoft
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Re: Setting Up Roth IRA with Vanguard - Please Help

Post by livesoft » Wed Jan 09, 2013 5:26 pm

Generally, the forum participants would like to know more about your situation before making recommendations. That's why there is this requested format for your question: viewtopic.php?f=1&t=6212
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Zach3859
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Re: Setting Up Roth IRA with Vanguard - Please Help

Post by Zach3859 » Wed Jan 09, 2013 5:49 pm

Emergency Fund: Yes
Debt: $0
Single
State & Tax Rate: TX and 22%
Retirement: Currently nothing set up

My company does not provide a 401K but offers a one-time bonus at the end of each year in the amount of $5,500 to fully fund Roth IRA. Thanks for the help.

livesoft
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Re: Setting Up Roth IRA with Vanguard - Please Help

Post by livesoft » Wed Jan 09, 2013 5:51 pm

Vanguard Target Retirement 2040
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Zach3859
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Re: Setting Up Roth IRA with Vanguard - Please Help

Post by Zach3859 » Thu Jan 10, 2013 12:57 pm

Anyone else have any input?

stingray5688
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Re: Setting Up Roth IRA with Vanguard - Please Help

Post by stingray5688 » Thu Jan 10, 2013 1:04 pm

Since the limit is $5000, you're best doing a target date/lifestyle fund. The minimum on most of the individual funds is $3000, so the only way to get a diverse/3 fund portfolio with funds is using a 'fund of funds'. Or you could use ETFs, but have read it is cumbersome through vanguard (no experience).
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Confused
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Re: Setting Up Roth IRA with Vanguard - Please Help

Post by Confused » Thu Jan 10, 2013 2:34 pm

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nwffdiver
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Re: Setting Up Roth IRA with Vanguard - Please Help

Post by nwffdiver » Thu Jan 10, 2013 2:42 pm

The target retirement fund is a great place to start. You're young, great to see you thinking about the future. I wish I would have at 26. Put the 5k for 2012 in a TR or LS fund. Then put in 5.5k next year then you'll have enough to exchange into a Total Stock, Total International stock, and a Total Bond market for your 3 fund portfolio.


Again. Congrats on getting a start young!! :happy

JS in SC
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Re: Setting Up Roth IRA with Vanguard - Please Help

Post by JS in SC » Fri Jan 11, 2013 5:43 pm

Don't mean to hijack the thread but I'm looking at doing something similar and was considering the Vanguard STAR fund. I would be interested in hearing any thoughts on using it.

The expense ratio is 0.34% for the STAR fund and 0.16% for the TR. But STAR's 1/3/5/10 trailing returns are slightly better for STAR vs. TR.

Thanks,

John

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