New Roth IRA @Vanguard, 80/20, which funds to choose?

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loklav
Posts: 49
Joined: Fri Nov 10, 2017 11:39 pm

New Roth IRA @Vanguard, 80/20, which funds to choose?

Post by loklav » Wed Nov 22, 2017 3:48 pm

hi,

I'm going to open a new Roth IRA at Vanguard with only $5500.
I wanted to have at least 80% stock in this rIRA and I was basically looking at a 3 funds portfolio(VTSAX/VTIAX/VFIAX)
Well I can not do it because the minimum for investing in each fund is $10,000

There is also the balanced indexed fund, VBINX, but it's more 60/40...

So what other indexed funds options do I have at Vanguard and would you recommend?

Thanks

billfromct
Posts: 520
Joined: Tue Dec 03, 2013 9:05 am

Re: New Roth IRA @Vanguard, 80/20, which funds to choose?

Post by billfromct » Wed Nov 22, 2017 4:53 pm

You can use the Vanguard Life Strategy Growth Fund (VASGX) which is 80% stocks (domestic & international)/20% bonds (domestic & international) with a $3,000 minimum.

bill

Rainmaker41
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Re: New Roth IRA @Vanguard, 80/20, which funds to choose?

Post by Rainmaker41 » Wed Nov 22, 2017 5:29 pm

I second the suggestion above of LifeStrategy Growth VASGX.
My username is not about money, but is my old online gaming username. I can't say that I make a great deal of money; I just hate spending it. Married the most loving woman in the world October 2017.

ThrustVectoring
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Re: New Roth IRA @Vanguard, 80/20, which funds to choose?

Post by ThrustVectoring » Wed Nov 22, 2017 5:33 pm

The investor grades of those funds are fine, especially since the fee difference isn't huge in absolute terms with the lower account balances. Those generally will have a minimum of $3000 at Vanguard.

Buy the biggest holdings in your desired asset allocation until your total investment is large enough to support more funds at their minimums. Suppose you wanted 80% total stock market and 20% total bond market. The minimum for the smaller bond fund is $3000, and $3000 @ 20% implies that the first time you can properly weight bonds is when you have $15000 invested. So invest everything into the total stock market until your account hits $15k, at which point you move $3000 from the stock market to open the bond fund.

The same logic/math works for more than 2 funds. If you wanted 40% of your stocks to be international, buy domestic stocks until 40% of your stocks is worth $3000, then add in the international fund.

Or you can just do LifeStrategy Growth, since it does pretty much exactly what you want.

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Artsdoctor
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Re: New Roth IRA @Vanguard, 80/20, which funds to choose?

Post by Artsdoctor » Wed Nov 22, 2017 5:37 pm

billfromct wrote:
Wed Nov 22, 2017 4:53 pm
You can use the Vanguard Life Strategy Growth Fund (VASGX) which is 80% stocks (domestic & international)/20% bonds (domestic & international) with a $3,000 minimum.

bill
This is a perfect option for you.

You can divide things up individually with ETFs since there are no minimums with those. However, you're not going to find anything easier than the Life Strategy funds.

loklav
Posts: 49
Joined: Fri Nov 10, 2017 11:39 pm

Re: New Roth IRA @Vanguard, 80/20, which funds to choose?

Post by loklav » Wed Nov 22, 2017 7:22 pm

Thanks all of you!

It looks like everybody agrees :)
The ER is 0.15 so it still looks good.

If I wanted to do 90/10 , what would you recommend me in this case?

indexlover
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Joined: Mon May 11, 2015 10:39 am

Re: New Roth IRA @Vanguard, 80/20, which funds to choose?

Post by indexlover » Wed Nov 22, 2017 7:23 pm

Not sure what % allocations OP wants between the US and the International indexes. The only issue i would have is that Vanguard changed the allocations. Vanguard LifeStrategy Growth Fund ( VASGX) used to be 56/24/30 in 2011 which is what i would prefer but in 2015 Vanguard changed it to 48/32/14/6.

Source: https://www.bogleheads.org/wiki/Vanguar ... ds#History

loklav
Posts: 49
Joined: Fri Nov 10, 2017 11:39 pm

Re: New Roth IRA @Vanguard, 80/20, which funds to choose?

Post by loklav » Wed Nov 22, 2017 7:28 pm

indexlover wrote:
Wed Nov 22, 2017 7:23 pm
Not sure what % allocations OP wants between the US and the International indexes. The only issue i would have is that Vanguard changed the allocations. Vanguard LifeStrategy Growth Fund ( VASGX) used to be 56/24/30 in 2011 which is what i would prefer but in 2015 Vanguard changed it to 48/32/14/6.

Source: https://www.bogleheads.org/wiki/Vanguar ... ds#History
I would look at 20% international, but I'm new with investing so I'm opened to any suggestion

Drew31
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Re: New Roth IRA @Vanguard, 80/20, which funds to choose?

Post by Drew31 » Wed Nov 22, 2017 10:47 pm

loklav wrote:
Wed Nov 22, 2017 7:22 pm
Thanks all of you!

It looks like everybody agrees :)
The ER is 0.15 so it still looks good.

If I wanted to do 90/10 , what would you recommend me in this case?
Peruse the Target Retirement Funds. Don't worry about matching the year to your expected portfolio, just find one that matches your desired AA. Pretty sure most of them a ways off have ~90% stocks.

The catch with these is eventually they'll adjust down, but it'd work perfect for now.

loklav
Posts: 49
Joined: Fri Nov 10, 2017 11:39 pm

Re: New Roth IRA @Vanguard, 80/20, which funds to choose?

Post by loklav » Wed Nov 22, 2017 11:12 pm

Drew31 wrote:
Wed Nov 22, 2017 10:47 pm
loklav wrote:
Wed Nov 22, 2017 7:22 pm
Thanks all of you!

It looks like everybody agrees :)
The ER is 0.15 so it still looks good.

If I wanted to do 90/10 , what would you recommend me in this case?
Peruse the Target Retirement Funds. Don't worry about matching the year to your expected portfolio, just find one that matches your desired AA. Pretty sure most of them a ways off have ~90% stocks.

The catch with these is eventually they'll adjust down, but it'd work perfect for now.
oh ok so it would be
90/10 : VFFVX
80/20 : VTTHX

And there are also different ratio international/us!

It looks like the fees are the same...

Looks like a good option too! If I want to rebalance in different mutual funds later, are there some different tax implication compared to the proposed solution or to building my own 3 funds portfolio?

mega317
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Re: New Roth IRA @Vanguard, 80/20, which funds to choose?

Post by mega317 » Thu Nov 23, 2017 12:15 am

ThrustVectoring wrote:
Wed Nov 22, 2017 5:33 pm
So invest everything into the total stock market until your account hits $15k, at which point you move $3000 from the stock market to open the bond fund.
+1
Being off your target for a couple of years doesn't matter.

loklav
Posts: 49
Joined: Fri Nov 10, 2017 11:39 pm

Re: New Roth IRA @Vanguard, 80/20, which funds to choose?

Post by loklav » Thu Nov 23, 2017 12:20 am

mega317 wrote:
Thu Nov 23, 2017 12:15 am
ThrustVectoring wrote:
Wed Nov 22, 2017 5:33 pm
So invest everything into the total stock market until your account hits $15k, at which point you move $3000 from the stock market to open the bond fund.
+1
Being off your target for a couple of years doesn't matter.
Yep I understand.... and I should also look at it globally not specifically at this account...
I could balance with the 401k to get the allocation that I want...
Right?

mega317
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Joined: Tue Apr 19, 2016 10:55 am

Re: New Roth IRA @Vanguard, 80/20, which funds to choose?

Post by mega317 » Thu Nov 23, 2017 12:32 am

Yes.

Give us your whole portfolio and we can help more.

ThrustVectoring
Posts: 251
Joined: Wed Jul 12, 2017 2:51 pm

Re: New Roth IRA @Vanguard, 80/20, which funds to choose?

Post by ThrustVectoring » Thu Nov 23, 2017 1:00 am

loklav wrote:
Thu Nov 23, 2017 12:20 am
mega317 wrote:
Thu Nov 23, 2017 12:15 am
ThrustVectoring wrote:
Wed Nov 22, 2017 5:33 pm
So invest everything into the total stock market until your account hits $15k, at which point you move $3000 from the stock market to open the bond fund.
+1
Being off your target for a couple of years doesn't matter.
Yep I understand.... and I should also look at it globally not specifically at this account...
I could balance with the 401k to get the allocation that I want...
Right?
Oh yeah, totally. If you've got a 401k, an IRA, and a desired allocation, you should sell down the worst fund in your 401k and replace it with something from your IRA. Like, suppose your 401k has a good S&P 500 fund and a solid bond fund, but only has an expensive actively managed international fund. You'd sell the 401k international fund, and buy it in your IRA.

nura
Posts: 84
Joined: Mon Jun 27, 2016 11:24 am

Re: New Roth IRA @Vanguard, 80/20, which funds to choose?

Post by nura » Thu Nov 23, 2017 6:54 am

loklav wrote:
Wed Nov 22, 2017 3:48 pm

Well I can not do it because the minimum for investing in each fund is $10,000


Thanks
If your total investment in IRA is less than $10,000 currently, you can be 100% in VTSMX; you need worry about AA and risk management once you accumulate signficantly larger portfolio.

loklav
Posts: 49
Joined: Fri Nov 10, 2017 11:39 pm

Re: New Roth IRA @Vanguard, 80/20, which funds to choose?

Post by loklav » Thu Nov 23, 2017 6:29 pm

nura wrote:
Thu Nov 23, 2017 6:54 am
loklav wrote:
Wed Nov 22, 2017 3:48 pm

Well I can not do it because the minimum for investing in each fund is $10,000


Thanks
If your total investment in IRA is less than $10,000 currently, you can be 100% in VTSMX; you need worry about AA and risk management once you accumulate signficantly larger portfolio.
Ok, so I start with VTSMX, then I "convert" to VTSAX once i have $10.000...?

I will have access to my new 401k in a few weeks, but I didn't want to wait before doing my backdoor roth conversion and investing in some stocks... In all cases my Roth should hold stocks so I don't see any reason to wait...

I was not able to get the 401k funds details yet, do you know if there is a website accessible to anyone where we can find these info?

nura
Posts: 84
Joined: Mon Jun 27, 2016 11:24 am

Re: New Roth IRA @Vanguard, 80/20, which funds to choose?

Post by nura » Mon Nov 27, 2017 5:21 am

loklav wrote:
Thu Nov 23, 2017 6:29 pm
nura wrote:
Thu Nov 23, 2017 6:54 am
loklav wrote:
Wed Nov 22, 2017 3:48 pm

Well I can not do it because the minimum for investing in each fund is $10,000


Thanks
If your total investment in IRA is less than $10,000 currently, you can be 100% in VTSMX; you need worry about AA and risk management once you accumulate signficantly larger portfolio.
Ok, so I start with VTSMX, then I "convert" to VTSAX once i have $10.000...?
Yes, these is a option on Vangaurd's site to "upgrade" VTSMX to VTSAX once you exceed $10,000;no sale or buy of shares involved.

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