How to setup a Vanguard Target fund (beginner)

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How to setup a Vanguard Target fund (beginner)

Post by Dindin13 » Wed Nov 21, 2018 12:18 am

Hi guys
I want to open a Vanguard Roth IRA and invest in a Vanguard Target Retirement 2050 Fund (I'm 32 years old) but I am a first time investor here and I need step by step help. I've read a few books and have lurked on the forums here and I think I'm ready to take the next step but I just need help with actually setting the account up (I've never invested before).

Q. What are the next steps I need to take?

Q. What should I be cautious of? I don't want to make any bonehead mistakes or missing anything obvious (i.e. any tax considerations, legalities, protections I should be aware of / have in place before moving ahead?)

Q. I'm planning to invest by the end of this year, is that a good time or should I wait till the new year?

Q. I plan to invest the max $5500/year, if I invest in November of this year when is the earliest that I can invest again next year?

May sound like a simple / dumb question but I prefer to ask my 'online advisors' before making a big financial decision.
thank you for your advice!

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Re: How to setup a Vanguard Target fund (beginner)

Post by MJW » Wed Nov 21, 2018 12:32 am

It's pretty easy to get signed up. You will need to open an account with Vanguard, indicate you want a Roth IRA, and buy the 2050 fund. I don't remember the exact process but it was pretty self-explanatory. Worst case scenario you need to call Vanguard for help, but if you managed to make it to this forum to ask your questions, you can probably walk yourself through the process of signing up for an account.

If your plan was to contribute the max for 2018 upon signing up you might as well do that. You have until the tax deadline to contribute for 2018 but I don't know why you would want to wait if you are able to part with the money now. You can contribute the max for 2019 as soon as the calendar rolls over to the new year.

I can't think of anything off the top of my head to caution you about, provided you've read the introductory information on the Boglehead Wiki. Throw your money in the 2050 fund and walk away. :)

Does your employer offer a retirement plan?

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Re: How to setup a Vanguard Target fund (beginner)

Post by pkcrafter » Wed Nov 21, 2018 1:02 am

Dindin, a target fund is a good choice for a first fund, but some here would not recommend 90% stock for a new investor as downside swings in account balance can be alarming when you're not used to it. I would suggest a target fund with no more than 80% stock. In other words, choose the fund by asset allocation, not date. 80% stock could potentially get you a 40% loss. Are you OK with that?

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.

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