New at Roth IRA-Investment Help

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lotr61671
Posts: 12
Joined: Wed Oct 03, 2018 2:36 pm

New at Roth IRA-Investment Help

Post by lotr61671 » Wed Oct 03, 2018 2:40 pm

uyiyuu
Last edited by lotr61671 on Fri Oct 12, 2018 11:58 am, edited 1 time in total.

bloom2708
Posts: 4797
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Location: Fargo, ND

Re: New at Roth IRA-Investment Help

Post by bloom2708 » Wed Oct 03, 2018 3:22 pm

Welcome.

Where did you open your Roth IRA at? Vanguard, Fidelity, Schwab, T Rowe, etc?

Most firms offer Total Market funds for US stocks, International stocks and US Bonds.

Which index fund did you use? You want very low expense ratio. No transaction fees or additional costs. If you don't get those, consider moving to Vanguard or Fidelity.

Do you have a workplace 401k/403b? I like to recommend keeping Roth all stocks (US and International).

Put all your bonds (if possible) in your 401k/403b/Traditional/Rollover IRAs.

You can edit your post (pencil icon) and add details (brokerage, fund names, ticker, expense ratio) to help.
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lotr61671
Posts: 12
Joined: Wed Oct 03, 2018 2:36 pm

Re: New at Roth IRA-Investment Help

Post by lotr61671 » Thu Oct 04, 2018 8:04 am

uyiiuyi
Last edited by lotr61671 on Fri Oct 12, 2018 11:58 am, edited 1 time in total.

bloom2708
Posts: 4797
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: New at Roth IRA-Investment Help

Post by bloom2708 » Thu Oct 04, 2018 8:12 am

If you are paying any loads or sales charges, it is too much.

At Vanguard, there are no trade fees, sales loads or any other charges to purchase their Mutual Funds and ETFs. The same would be true at Fidelity.

If you are interested in Vanguard funds like the Total International fund, then moving your Roth IRA makes sense. The earlier you save those fees/charges, the better. Any loads/sales charges/transaction fees is money that does not stay in your accounts and cannot grow.

If you have reasonable expense ratios in your 403b, it is a good place to hold your bond allocation. Interest from bond funds is 100% ordinary income in a taxable account. By placing your bonds in your 403b, there are not extra tax costs. Tax is deferred until in your 60s you need to start withdrawing the money for income.

Keeping stock funds (Total US and Total International) in Roth keeps your highest growth funds in Roth. Total US and Total International are also tax efficient and work great when you add a taxable brokerage account.

We have everything at Vanguard except our current 401k/403b. Taxable, Roths, Rollover IRAs from previous careers. It allows us to track our mix of stocks and bonds easier. We can avoid having duplication of funds where possible. Super low cost and we trust Vanguard will continue to be the leader in keeping costs low. You can likely say the same about Fidelity and Scwhab. Many choose those firms as well.

Spend a bunch of time here and you will boost your knowledge tremendously. :D
Where to spend your time: | 1. You completely control <--spend your time here! | 2. You partially control <--spend your time here! | 3. You have no control <--spend no time here!

lotr61671
Posts: 12
Joined: Wed Oct 03, 2018 2:36 pm

Re: New at Roth IRA-Investment Help

Post by lotr61671 » Thu Oct 04, 2018 11:00 am

yuiyuiuiyui
Last edited by lotr61671 on Fri Oct 12, 2018 11:58 am, edited 1 time in total.

bloom2708
Posts: 4797
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: New at Roth IRA-Investment Help

Post by bloom2708 » Thu Oct 04, 2018 11:10 am

lotr61671 wrote:
Thu Oct 04, 2018 11:00 am
Thank you for the info! Switching sometime soon is something I will look into and possibly do.
Based on my employer's offerings, I think I will look into creating a 403b account with Fidelity for bond allocation (Fidelity I think is the best of the 3 providers, the others being TIAA and VALIC).
I chose TD Ameritrade based on: All no-load funds trade at $49.99, while Schwab charges $76 and Vanguard I believe was around $60 as well.
Is this fee minimal in choosing a broker? All the other fees (Stock & ETF, options) all seem pretty relative to each other, although TD is $2.00 higher per stock trade and 10 cent higher for options cost.
Are you outside of the US?

I have a taxable account at Vanguard, 2 Roth IRAs (wife and I), 2 Rollover Traditional IRAs (wife and I). I've never paid a trade fee.

We buy Vanguard total market index funds. Total US stock index, Total International stock index, Total US bond index. At one point we had Int-Term Tax-Exempt bond index in taxable. No trade fees on any of the Vanguard mutual funds that I know of.

There is a trade fee if I were to buy an individual stock or a fund outside of the Vanguard funds.

I can only help with what I know. If you invest $1,000 and pay a $60 trade fee, that is a 6% haircut before you even start investing. Now you have to make 6% to get back to zero. Not good.
Where to spend your time: | 1. You completely control <--spend your time here! | 2. You partially control <--spend your time here! | 3. You have no control <--spend no time here!

lotr61671
Posts: 12
Joined: Wed Oct 03, 2018 2:36 pm

Re: New at Roth IRA-Investment Help

Post by lotr61671 » Thu Oct 04, 2018 11:50 am

yuiytyiuyiti
Last edited by lotr61671 on Fri Oct 12, 2018 11:58 am, edited 1 time in total.

Living Free
Posts: 91
Joined: Thu Jul 19, 2018 7:31 pm

Re: New at Roth IRA-Investment Help

Post by Living Free » Thu Oct 04, 2018 12:47 pm

does TD charge you to purchase mutual funds in an IRA? I would transfer that IRA elsewhere if that is the case. I'd recommend vanguard or fidelity or schwab. All should allow you to purchase mutual funds and ETFs in your IRA without a charge for the purchase (vanguard does charge $7 to me if I purchase an individual stock; I own one share of BRK-B to try to get tickets to the shareholder meeting)(I have an IRA for me and wife at Vanguard and for the wife at Fidelity; never paid a fee for a mutual fund purchase yet). I mean, for someone investing a regular amount each month into an IRA that $50 transaction fee could add up quickly. $600 per year is a steep price for nothing.

lotr61671
Posts: 12
Joined: Wed Oct 03, 2018 2:36 pm

Re: New at Roth IRA-Investment Help

Post by lotr61671 » Tue Oct 09, 2018 10:43 am

I had found out what I had done with TD; I purchased an index mutual fund that was not offered as a "non=transaction fee" fund, although it is a good one (Schwab). TD Ameritrade refunded this purchase fee to me since I did not fully understand, which was nice customer service and made me happy I chose them for the time being.

I wanted to ask more advice on bond allocation in my employer's 403b?
Currently I have a Roth IRA with SWPPX and PRGSX mutual funds to start. I want to keep my portfolio about 70-80% stock with the remainder in bonds for balance, while I am younger and can take the associated risks.
@bloom2708 mentioned that bond allocation in a 403b is a good option for some tax benefits; could anyone flesh this out some? All my employer's 403b providers (Fidelity, VALIC, and TIAA) either just want to sign me up or don't deal with the 403bs in their local offices so I have not been able to get any good answers from them.

Thank you!

Living Free
Posts: 91
Joined: Thu Jul 19, 2018 7:31 pm

Re: New at Roth IRA-Investment Help

Post by Living Free » Wed Oct 10, 2018 7:29 pm

lotr61671 wrote:
Tue Oct 09, 2018 10:43 am
I had found out what I had done with TD; I purchased an index mutual fund that was not offered as a "non=transaction fee" fund, although it is a good one (Schwab). TD Ameritrade refunded this purchase fee to me since I did not fully understand, which was nice customer service and made me happy I chose them for the time being.

I wanted to ask more advice on bond allocation in my employer's 403b?
Currently I have a Roth IRA with SWPPX and PRGSX mutual funds to start. I want to keep my portfolio about 70-80% stock with the remainder in bonds for balance, while I am younger and can take the associated risks.
@bloom2708 mentioned that bond allocation in a 403b is a good option for some tax benefits; could anyone flesh this out some? All my employer's 403b providers (Fidelity, VALIC, and TIAA) either just want to sign me up or don't deal with the 403bs in their local offices so I have not been able to get any good answers from them.

Thank you!
There are two reasons that you'd want bonds preferentially in the 403b. One is https://www.bogleheads.org/wiki/Tax-eff ... _placement. The other is that you want to favor growth in your Roth IRA more as you would presumably use those funds later in retirement than your 403b, so you want assets that will have higher expected growth (and you can probably tolerate more volatility there as you'll have a longer time-frame).

You can post your 403b fund options here and get some advice. I'd recommend you consider the asking portfolio questions format viewtopic.php?f=1&t=6212 as it will allow everyone to better understand your circumstances and give better advice.

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