Vanguard Mut funds(Admiral) VS Van ETFs vs Target REtirement

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cat5
Posts: 16
Joined: Mon Oct 14, 2013 12:01 pm

Vanguard Mut funds(Admiral) VS Van ETFs vs Target REtirement

Post by cat5 »

Hello,

I have 400,000 to invest. I have a taxable acct with Vanguard that has 109,000, a roth IRA with 42,000 and the rest of the money in savings accts that can be transferred to vanguard. I am 35 years old,married with 2 children, age 2 and 2 mos. The received the money from a inheritance and my husband and I would like to use it to fund our retirement savings. I will not have a need for this money for at least 20 years or more.

I was thinking of getting started using the 3 fund portfolio, but was wondering whether to use the Admiral shares Mut fund, or the equivalent ETFs, or the target retirement funds.

I have invested in the past and have incurred considerable losses that I can use to offset capital gains, if I make any. Which funds do you think I should invest in?

I would like to do the least rebalancing as possible and to add to my investment holdings monthly rather than investing a lump sum.

Please advise. Thank you.
cat5
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SpringMan
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Location: Michigan

Re: Vanguard Mut funds(Admiral) VS Van ETFs vs Target REtire

Post by SpringMan »

Not knowing more details, I would first max out tax advantaged accounts if not already doing so, both your Roth IRAs and any 401(k)s etc. this year and years going forward. With the taxable money you might consider a Vanguard tax managed fund or municipal bond fund. Tax Managed Balanced fund is good. You also have to consider paying down any debt. Chances are paying down your mortgage might result in saving more than you could get in fixed income like bonds or CDs right now. Target funds are best if held in tax advantaged accounts. Good luck.
Best Wishes, SpringMan
livesoft
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Re: Vanguard Mut funds(Admiral) VS Van ETFs vs Target REtire

Post by livesoft »

This is simple: Use admiral shares in the taxable account. Do not use Target Retirement. Instead, take the funds found in target retirement (you can look them up) and put the equity funds in your taxable account funded by the inheritance money and put the bond funds in your IRA funded by your IRA money. It will look like a target retirement split across 2 or more accounts.
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RyeWhiskey
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Re: Vanguard Mut funds(Admiral) VS Van ETFs vs Target REtire

Post by RyeWhiskey »

What livesoft said seems most reasonable. Please see the Wiki on Tax Efficient Fund Placement. Then place the Admiral Share funds accordingly and add according to the weight stipulated in your IPS. If you don't have one, that'd probably be a good place to start (making an Investment Policy Statement). Pretty sure the wiki covers that as well. Also, don't forget to make out your tax shelters before contributing to the taxable accounts. :beer
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PatrickJ
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Joined: Wed Oct 09, 2013 9:33 am

Re: Vanguard Mut funds(Admiral) VS Van ETFs vs Target REtire

Post by PatrickJ »

You say, "I have invested in the past and have incurred considerable losses that I can use to offset capital gains, if I make any."
Since you have considerable losses from the past, I hope you have already been taking the $3000.00 allowable deduction in each tax year over and above any capital gains you may have had since the losses.
countdown
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Re: Vanguard Mut funds(Admiral) VS Van ETFs vs Target REtire

Post by countdown »

Hi Cat5. I actually have more practical thoughts. You are 35 with two very young children. I tend to lean toward Spring Man's questions.

Do you own your home? Mortgage? Amount? Is there a good chance you will stay in this home/area?
If so, and depending on amount, the freedom from that payment could give you incrdible flexibility raising your children, etc.

Do you have any other debt? I would definitely pay it all off first.

Take some time and think about your options before you do anything. Retirement accounts may be the right answer for you, but you have a lifetime.

Bonne chance!
Topic Author
cat5
Posts: 16
Joined: Mon Oct 14, 2013 12:01 pm

Re: Vanguard Mut funds(Admiral) VS Van ETFs vs Target REtire

Post by cat5 »

Thank you, everyone, for your helpful responses.

To answer a few questions, we do not plan to stay in this house for more than 5 years. The mortgage is manageable and my husband is taking care of that. This money is meant to be used for our retirement. We have no outstanding debts and live well within our means. We have been able to afford everything we need. We live modestly, though comfortably. I forsee, however, there will be some pressures on our finances as the children get older. Preschool is very expensive, 7-10K in this area and who knows what high school and college will cost. Nonetheless, we are trying to earmark this money strictly for retirement.

I will look into the IPS. I never heard of it before. I'm planning to purchase shares in the 3 fund Admiral portfolio systematically over time, rather than purchasing in a lump sum.

Thank you again for giving me clear straightforward direction.

Sincerely,
cat5
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