Help with my new Vanguard Roth IRA

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Christopher4072
Posts: 8
Joined: Wed Sep 12, 2018 9:14 am

Help with my new Vanguard Roth IRA

Post by Christopher4072 » Wed Sep 12, 2018 9:24 am

Hi Everyone,

I have started a new account with Vanguard with a Roth IRA in the past 2 months. I have bought only VOO as I wanted exposure to large CAP US stocks, and of course, I have researched Index funds and etf's exhaustively.

What do you think would be the best course of action with adding a little diversity to this portfolio? I would like exposure to foreign markets and eventually a small cap fund as well. VXUS?

Also, what are your thoughts on starting an index fund instead of buying whole ETF shares?

A few important things to mention:
1. I am 40 and have a 401K that includes a target date fund and has bonds as well- have had that for about 10 years
2. I don't plan to sell anything before age 59 1/2, to make the most of my Roth IRA.
3. I own a few individual stocks right now but do not plan on adding to any of my positions anytime soon. I just want to index consistently and make the most of my Roth

Thanks for your help!

Chris

banhbao
Posts: 45
Joined: Mon Sep 10, 2018 7:54 pm

Re: Help with my new Vanguard Roth IRA

Post by banhbao » Wed Sep 12, 2018 10:16 am

Hello Chris,

There's a lot of good information out there about the 3-fund portfolio:

https://www.bogleheads.org/wiki/Three-fund_portfolio

I also found this one with some slightly more complex scenarios:

https://www.wallstreetphysician.com/bui ... ortfolios/

Depending on your balance, you may not be eligible for admiral shares from VG ($10,000 min), but you can do equivalent ETF instead (as described in the summary of the link above).

Hope it helps!

pkcrafter
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Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
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Re: Help with my new Vanguard Roth IRA

Post by pkcrafter » Wed Sep 12, 2018 11:05 am

Welcome Chris,

First thing, consider all retirement accounts as one portfolio and maintain your target asset allocation in total. VOO is S&P 500, so it matters what's in all your other accounts such as 401k. What target date funds are you holding? Funds are fine and Vanguard's target date funds have a 1k min. Other funds are 3k min for investor shares and 10k for admiral shares. You could continue with TR funds with the Roth because it's a bit easier to maintain asset allocation than if you have a mix of individual funds and TR funds.

If you stay with individual funds in the Roth, total stock market is a little better.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

Christopher4072
Posts: 8
Joined: Wed Sep 12, 2018 9:14 am

Re: Help with my new Vanguard Roth IRA

Post by Christopher4072 » Fri Sep 14, 2018 10:42 am

The fund in my 401K is TRRDX (2040 target date retirement fund). It has a 0.74 expense ratio which is kind of high. I am wondering if I should just take 3k and open the index fund version of the VOO, instead of buying ETF shares, which are close to $300.00 a share now. I really want to have that pure S&P500 fund, at least to start.

Right now, I have about 3,000 in this Vanguard account.

banhbao
Posts: 45
Joined: Mon Sep 10, 2018 7:54 pm

Re: Help with my new Vanguard Roth IRA

Post by banhbao » Sat Sep 15, 2018 10:15 am

Christopher4072 wrote:
Fri Sep 14, 2018 10:42 am
The fund in my 401K is TRRDX (2040 target date retirement fund). It has a 0.74 expense ratio which is kind of high. I am wondering if I should just take 3k and open the index fund version of the VOO, instead of buying ETF shares, which are close to $300.00 a share now. I really want to have that pure S&P500 fund, at least to start.

Right now, I have about 3,000 in this Vanguard account.
With $3k you could invest in VFINX, the "investor shares" version of VOO:

https://investor.vanguard.com/mutual-fu ... file/vfinx

As a side note, I also recently opened a Vanguard account, and there is a handy tool for "outside investments", where you can manually input the funds that you hold in your 401k. The downside is that periodically you'll have to update the number of shares, but it's a good way to take advantage of Vanguard's "portfolio analysis" tool for your 401k. There's really a lot of tools there that I don't have access to in my 401k account.

Flyer24
Posts: 375
Joined: Sun Apr 08, 2018 4:21 pm

Re: Help with my new Vanguard Roth IRA

Post by Flyer24 » Sat Sep 15, 2018 10:29 am

Why not just invest in a target fund in your Roth? Vanguard has good target funds that are composed of index funds. As an example Target Retirement 2050 (VFIFX) has an expense ratio of only .15%.

Christopher4072
Posts: 8
Joined: Wed Sep 12, 2018 9:14 am

Re: Help with my new Vanguard Roth IRA

Post by Christopher4072 » Sat Oct 13, 2018 12:58 pm

Thanks for the feedback. I am eyeing a target date fund.

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