IRA Funds Selection Assistance (Updated)

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SUP3RMAN 131
Posts: 12
Joined: Mon Mar 30, 2015 8:06 pm

IRA Funds Selection Assistance (Updated)

Postby SUP3RMAN 131 » Tue Apr 18, 2017 12:35 pm

***Updated Question: I have decided to go with VFFUX (Vanguard Target Retirement Date 2055). I placed my buy at 4:35PM on 4/19/2017 and the trade still has not been executed. Is that normal with mutual funds and with Vanguard? Sucks that I missed a .72% up day.***


I've finally gotten around to signing up for an IRA and have funded it with $5,500 (2016 contribution). Before now, my only retirement funds were from a company 401k. I'm feeling slightly overwhelmed with the options that are available.

Background:

Age: 25
Emergency funds: $25,000 in 3% AFCU 7 year CD
Additional funds: $20,000 in 1% Ally (earmarked for house DP in 3-5 years)
Debt: $4,500 car loan @ 1.989% (building credit which is why it is not paid off)
Tax Filing Status: Single
Tax Rate: 15% Federal, 4.25% State
State of Residence: MI
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 15% of stocks

Current Retirement Accounts:

Traditional 401(k) - $10,000

10% - Vanguard Total Bond Market Index Fund (VBMPX - 0.04%)
45% - Vanguard Institutional Index Fund (VINIX - 0.04%)
30% - Vanguard Extended Market Index Fund (VIEIX - 0.07%)
15% - Vanguard FTSE All-Wld ex-US Index Fund (VFWSX - 0.10%)

*I switched to Traditional recently as I'm close to going into the 25% tax bracket. With my annual raise (in June) I'd get pushed into it. To much risk? (30% in VIEIX?)

Roth IRA - $5,500

**Currently sitting in Vanguard money market account***

I've been looking at the STAR fund (VGSTX - 0.32%) and Target Retirement 2055 Fund (VFFVX - 0.16%) due to my limited dollar amount in the IRA. It looks like since the inception of the Target Fund it has outperformed the STAR fund which makes sense due to the concentration in bonds. My main concern is the underlying funds in the Target Retirement is slanted more to international than I'd like (35%). Are there any other suggestions in funds that are less slanted to international but have a minimum under $5,500?


Is it advisable to put my $5,500 into the market in segments like $2,500 now, $1,500 in 3 months and $1,500 in another 3 months?
Last edited by SUP3RMAN 131 on Thu Apr 20, 2017 6:24 pm, edited 2 times in total.

User avatar
flamesabers
Posts: 353
Joined: Fri Mar 03, 2017 12:05 pm
Location: Rochester, MN

Re: IRA Funds Selection Assistance

Postby flamesabers » Tue Apr 18, 2017 1:21 pm

If you have the money, you could make your 2017 IRA contribution now so that you'll have more money to work with as far as reaching your desired asset allocation. With $11k, you could easily invest your IRA in 3 funds of your choosing.

SUP3RMAN 131
Posts: 12
Joined: Mon Mar 30, 2015 8:06 pm

Re: IRA Funds Selection Assistance

Postby SUP3RMAN 131 » Wed Apr 19, 2017 12:55 pm

flamesabers wrote:If you have the money, you could make your 2017 IRA contribution now so that you'll have more money to work with as far as reaching your desired asset allocation. With $11k, you could easily invest your IRA in 3 funds of your choosing.


I'd have a hard time parting with an additional $5,500 right now. I would much prefer to do 2017's contribution over the course of the year. I do have the cash ($20,000 in Ally) but really want to start getting my down payment started ($50-60k needed).

retiredjg
Posts: 28547
Joined: Thu Jan 10, 2008 12:56 pm

Re: IRA Funds Selection Assistance

Postby retiredjg » Wed Apr 19, 2017 1:37 pm

Consider holding the LifeStrategy Growth Fund which is 80/20. If it makes you feel better, reduce (and maybe eventually eliminate) the international allocation in the 401k.

SUP3RMAN 131
Posts: 12
Joined: Mon Mar 30, 2015 8:06 pm

Re: IRA Funds Selection Assistance

Postby SUP3RMAN 131 » Thu Apr 20, 2017 6:14 pm

SUP3RMAN 131 wrote:I've finally gotten around to signing up for an IRA and have funded it with $5,500 (2016 contribution). Before now, my only retirement funds were from a company 401k. I'm feeling slightly overwhelmed with the options that are available.

Background:

Age: 25
Emergency funds: $25,000 in 3% AFCU 7 year CD
Additional funds: $20,000 in 1% Ally (earmarked for house DP in 3-5 years)
Debt: $4,500 car loan @ 1.989% (building credit which is why it is not paid off)
Tax Filing Status: Single
Tax Rate: 15% Federal, 4.25% State
State of Residence: MI
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 15% of stocks

Current Retirement Accounts:

Traditional 401(k) - $10,000

10% - Vanguard Total Bond Market Index Fund (VBMPX - 0.04%)
45% - Vanguard Institutional Index Fund (VINIX - 0.04%)
30% - Vanguard Extended Market Index Fund (VIEIX - 0.07%)
15% - Vanguard FTSE All-Wld ex-US Index Fund (VFWSX - 0.10%)

*I switched to Traditional recently as I'm close to going into the 25% tax bracket. With my annual raise (in June) I'd get pushed into it. To much risk? (30% in VIEIX?)

Roth IRA - $5,500

**Currently sitting in Vanguard money market account***

I've been looking at the STAR fund (VGSTX - 0.32%) and Target Retirement 2055 Fund (VFFVX - 0.16%) due to my limited dollar amount in the IRA. It looks like since the inception of the Target Fund it has outperformed the STAR fund which makes sense due to the concentration in bonds. My main concern is the underlying funds in the Target Retirement is slanted more to international than I'd like (35%). Are there any other suggestions in funds that are less slanted to international but have a minimum under $5,500?


Is it advisable to put my $5,500 into the market in segments like $2,500 now, $1,500 in 3 months and $1,500 in another 3 months?



I ended up going with VFFVX (Vanguard Target Retirement 2055) for the full $5,500. My only issue is that I put in my buy at 4:34PM on 4/19/2017 and it still hasn't been executed. Is this normal with Vanguard? I only have ever had a TD Ameritrade account which I bought individual stocks and the time between my request and the execution was minimal. Missing out on the .72% gain today is sad.

retiredjg
Posts: 28547
Joined: Thu Jan 10, 2008 12:56 pm

Re: IRA Funds Selection Assistance (Updated)

Postby retiredjg » Thu Apr 20, 2017 6:34 pm

When buying mutual funds, it does not happen during the trading day. It happens after hours. It sounds like you may have put in your order after hours which means the "buy" happens after hours the following market day.

This is not a Vanguard thing but a mutual fund thing. Stocks and ETFs work differently. Don't worry about missing a gain. It won't even be a fraction of a drop in the bucket when the time comes for withdrawal.


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