18 Year Old - Starting Investment

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sansc
Posts: 6
Joined: Sat Sep 09, 2017 5:57 pm

18 Year Old - Starting Investment

Post by sansc » Tue Oct 17, 2017 2:25 pm

Hi all --

My younger sibling, 18 years old this month, has listened to my advice of starting his investments early in life. He's worked and saved about $10,000 and I was leaning towards advising the opening of a Vanguard Roth-IRA Target Fund. Opening the account with $3k and making monthly contributions.

Any one have thoughts on that approach or do you feel there might be a better vehicle for a young investor?

Feedback is appreciated in advance!

PFInterest
Posts: 393
Joined: Sun Jan 08, 2017 12:25 pm

Re: 18 Year Old - Starting Investment

Post by PFInterest » Tue Oct 17, 2017 2:53 pm

mathematically total stock would be better (younger, growth, etc).
i dont know how this particular 18yo will respond when half his money disappears.
either way, would pick most aggressive TDF which is about 10% bonds.

TheAncientOne
Posts: 68
Joined: Wed Jul 19, 2017 8:53 pm

Re: 18 Year Old - Starting Investment

Post by TheAncientOne » Tue Oct 17, 2017 3:20 pm

I agree that a low cost index fund, 100%, makes the most sense for someone this young. If you can convince him to fund a Roth IRA with half his savings, that would be great. Alternatively if your parents are in a position to fund it for him (which is what we did with our kids), he can get off to a great start by the time he finishes college. I have a friend who matched his daughter's IRA contribution 50-50, which is another way to do it.

mervinj7
Posts: 370
Joined: Thu Mar 27, 2014 3:10 pm

Re: 18 Year Old - Starting Investment

Post by mervinj7 » Tue Oct 17, 2017 3:29 pm

Put $3k into a Vanguard 2060 Fund (VTTSX) if he earned at least that much in the current tax year. If you or your parents can match his contribution up to the $5500/year limit, he will be quite well set. No need to worry about re-balancing, asset classes, or expense ratios for now. Revisit after finishing college and starting new job.
https://personal.vanguard.com/us/funds/ ... IntExt=INT

Indexboss
Posts: 33
Joined: Wed May 10, 2017 10:50 pm

Re: 18 Year Old - Starting Investment

Post by Indexboss » Tue Oct 17, 2017 4:20 pm

I agree with the others- Vanguard Target 2060. Tell him to ignore that money and stay the course, it will pay off greatly.

I wish I could give advice to my 18 year old self.....

Helo80
Posts: 436
Joined: Sat Apr 29, 2017 8:47 pm

Re: 18 Year Old - Starting Investment

Post by Helo80 » Tue Oct 17, 2017 5:13 pm

Heads up, the Vanguard 2065 exists... probably very little difference with 2060, but hey... TR 2065 exists and probably would be like 3 mm ahead of the TR2060 fund.

If your son has a high risk tolerance and can appreciate that the market may go up or down by a lot or a little on any given day, tell him to go TSM. Also, he can the $3k now and then the remaining 2.5k now or by April 2018 tax filing.

sansc
Posts: 6
Joined: Sat Sep 09, 2017 5:57 pm

Re: 18 Year Old - Starting Investment

Post by sansc » Tue Oct 17, 2017 7:41 pm

Thank you all for sharing your insight. It's much appreciated!

tigerdoc93
Posts: 90
Joined: Wed Oct 07, 2015 8:50 pm

Re: 18 Year Old - Starting Investment

Post by tigerdoc93 » Tue Oct 17, 2017 10:17 pm

It may be state specific but Vanguard would not allow my 18 year old son to open a Roth IRA. I had no issues opening one at Fidelity. YMMV.

jasg
Posts: 67
Joined: Wed May 08, 2013 7:10 pm

Re: 18 Year Old - Starting Investment

Post by jasg » Tue Oct 17, 2017 10:21 pm

Show him this to reinforce his wise decision.

http://www.darwinsfinance.com/start-inv ... y-amazing/

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