Need advice on my roth IRA

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SiR99
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Joined: Mon Mar 20, 2017 12:22 pm

Need advice on my roth IRA

Post by SiR99 » Mon Mar 20, 2017 12:34 pm

Hi everyone,

I am a resident physician that recently opened a roth IRA with vanguard. I will have $11,000 to invest, but I don't know which funds to buy and no one is really giving me clear advice. I would like to spend time reading about it but I just don't have the time right now and I would like to get it started right away since I have been postponing this for a while (and when I get more free time I will continue to read about it).

Someone has said that this early on, my primary assets should be low-cost stock index funds, like total stock market and S&P 500 funds, but I don't know how much of each I should buy.

Should I invest all my money in a S&P 500 fund or a Total stock market fund or go 50/50? What about admiral funds?

I would like to get advice from people with more experience on what and how much of each I should buy.

I appreciate any insight anyone can give.

Thanks

retiredjg
Posts: 29745
Joined: Thu Jan 10, 2008 12:56 pm

Re: Need advice on my roth IRA

Post by retiredjg » Mon Mar 20, 2017 1:06 pm

The Total Stock Market contains the 500 Index so there is no reason to use both. You will get Admiral Shares if you buy enough of a fund to get Admiral Shares.

If this is your only investment and if you don't have enough time to learn some basics right now, I'd just buy the Vanguard Target 2060 fund (90% stock and 10% bonds) and let it cook until you have time to learn more. The target funds don't come in admiral shares, but the fund is cheap enough that you don't really need to worry about that at this point.

Rupert
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Joined: Fri Aug 17, 2012 12:01 pm

Re: Need advice on my roth IRA

Post by Rupert » Mon Mar 20, 2017 1:12 pm

So you're making your 2016 and 2017 contributions at the same time, or you're married and making the investment for you and your spouse? I'm trying to work out how you're getting to $11,000, as that would affect my answer. Assuming you're making 2016 and 2017 contributions at once, I'd just put the entire amount in total stock market admiral shares. Invest next year's contribution in total international stock market. Hold bonds in tax-deferred accounts. It's okay that you're not diversified when just starting out. Diversify over time as your balance grows.

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WallStreetPhysician
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Re: Need advice on my roth IRA

Post by WallStreetPhysician » Mon Mar 20, 2017 1:36 pm

Stick it in a Total Stock Market Index fund (VTSAX). You can always change your mind later since it's in a Roth IRA.

As you begin to read more about investing, you can tweak your allocation to your liking. You may end up just leaving it as it is for a while, though.

Good luck, future/current interventional radiologist (if I'm reading your SIR handle correctly).

SiR99
Posts: 2
Joined: Mon Mar 20, 2017 12:22 pm

Re: Need advice on my roth IRA

Post by SiR99 » Wed Mar 22, 2017 1:10 pm

Yes, I will be making both my 2016 and 2017 contributions at the same time.

Thank you to everyone that replied, I appreciate your advice!

gclancer
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Joined: Sat Apr 27, 2013 10:34 am

Re: Need advice on my roth IRA

Post by gclancer » Wed Mar 22, 2017 1:21 pm

You asked for recommendations, so here are mine. If you're committed to learning more about investing, I would invest:

$5,000 in Total Stock Market (VTSMX)

$3,000 in Total International (VGTSX)

$3,000 in Total Bond (VBMFX)

If you're more of a set-it-and-forget-it guy, invest:

$11,000 in LifeStrategy Growth (VASGX)

VASGX is really the better option, but starting with a 3 fund portfolio will help get the ball rolling on your "investor education" which should pay dividends in the long run.

Rupert
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Joined: Fri Aug 17, 2012 12:01 pm

Re: Need advice on my roth IRA

Post by Rupert » Wed Mar 22, 2017 2:39 pm

I just re-read my prior answer and wanted to make a correction. I said hold bonds in tax-deferred accounts. Well, of course a Roth IRA is a tax-deferred account. :oops: What I meant to say was hold bonds in a non-Roth tax-deferred account, such as your 401k. Better to hold investments with high growth potential, i.e., equities, in a Roth because that growth will never be taxed. It's not wrong to hold bonds in a Roth; it's just generally recommended to hold bonds in a 401k or 403b, etc., if you have decent bond options there.

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