Aggressive Roth IRA fund suggestions

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Topic Author
Prahasaurus
Posts: 151
Joined: Fri Mar 29, 2019 1:02 am

Aggressive Roth IRA fund suggestions

Post by Prahasaurus » Fri May 24, 2019 4:14 am

I am making some changes to my portfolio, with a view towards simplicity. All of my money is at Vanguard. I use a 3 fund portfolio for my taxable accounts:

World Stock (VTWAX)
Municipal Bonds (VWIUX)
Total Bonds (VBTLX)

For tax deferred, I use VBTLX, with the exception of my Roth IRA. I need some help with my Roth IRA strategy. I would like to choose a fairly aggressive fund.

To give a bit of context, I previously used only VTSAX (Total US market) in my Roth. About six months ago, I started to invest in individual stocks. While this worked out fairly well financially, I've realized it's just too stressful for me. And because I own a small consulting company, I don't have the time to monitor these companies, something that is a must. My energy needs to go into my clients, not following a handful of complex investments. So I've sold everything in my Roth IRA and am currently sitting on cash. I want to invest asap. I could just go back to VTSAX, or change to VTWAX. But I'm thinking the nature of a Roth IRA should call for a riskier strategy.

I'm thinking a mid-cap (VIMAX) or small-cap (VSMAX) fund would be a bit more aggressive, and more appropriate for my Roth. Any other suggestions?

I'm about 12 years from retirement, but hoping not to tap into the Roth for much longer. So perhaps a 20 year horizon. I have a 70-30 (stocks to bonds) allocation across all investments. Thanks!

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Wiggums
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Re: Aggressive Roth IRA fund suggestions

Post by Wiggums » Fri May 24, 2019 4:59 am

I like VSMAX if you want to add a tilt of more than 5%. The mid cap fund is also a good one but I think most with a tilt go small cap.

Topic Author
Prahasaurus
Posts: 151
Joined: Fri Mar 29, 2019 1:02 am

Re: Aggressive Roth IRA fund suggestions

Post by Prahasaurus » Fri May 24, 2019 6:58 am

Wiggums wrote:
Fri May 24, 2019 4:59 am
I like VSMAX if you want to add a tilt of more than 5%. The mid cap fund is also a good one but I think most with a tilt go small cap.
I would imagine my Roth will be around 5% of my total portfolio.

rkhusky
Posts: 7586
Joined: Thu Aug 18, 2011 8:09 pm

Re: Aggressive Roth IRA fund suggestions

Post by rkhusky » Fri May 24, 2019 7:14 am

Emerging Markets.
Small Emerging Markets.
Small Value US.
Small Value Emerging Markets.
Health Care.
Mining and Oil.

Topic Author
Prahasaurus
Posts: 151
Joined: Fri Mar 29, 2019 1:02 am

Re: Aggressive Roth IRA fund suggestions

Post by Prahasaurus » Fri May 24, 2019 11:15 am

rkhusky wrote:
Fri May 24, 2019 7:14 am
Emerging Markets.
Small Emerging Markets.
Small Value US.
Small Value Emerging Markets.
Health Care.
Mining and Oil.
I already have enough of China in VTWAX. So not really interested in emerging markets. I think healthcare is going to really suffer in the coming decade, as the US inevitably moves to a single payer system (don't want a political discussion, if you disagree, fine). Not a fan of mining and oil.

Small Cap Value looks very interesting, however. We may have a winner... :-)

lakpr
Posts: 3076
Joined: Fri Mar 18, 2011 9:59 am

Re: Aggressive Roth IRA fund suggestions

Post by lakpr » Fri May 24, 2019 11:37 am

Prahasaurus wrote:
Fri May 24, 2019 11:15 am
Small Cap Value looks very interesting, however. We may have a winner... :-)
There is no difference in either returns or risks between Small Cap Index fund or Small Cap Value fund. Better to stick to the index fund.

Note the CAGR figures and sortino ratio in the portfolio visualizer comparison below


https://www.portfoliovisualizer.com/bac ... 0&total3=0

CommitmentDevice
Posts: 68
Joined: Tue Apr 02, 2019 3:25 am

Re: Aggressive Roth IRA fund suggestions

Post by CommitmentDevice » Fri May 24, 2019 11:57 am

I think that your biggest investment opportunity is to upgrade your investment strategy and stick to it.

I'm seeing dramatic swings in your underlying investment strategy... In the past six months you've sold your 3-fund portfolio, bought individual stocks, realized you didn't want to be buying individual stocks, and cashed out everything so you're now all cash. Now you're looking for advice on how to get into very aggressive investments.

These swings in investment strategy are unlikely to play out well for you. This is also the case with trying to time the market or beat the market by picking winners. You could get lucky but the odds are stacked against you.

So again - I believe that the biggest things you can do to increase your returns are to (a) stop trying to beat the market and (b) stick to that strategy.

asif408
Posts: 1822
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Location: Florida

Re: Aggressive Roth IRA fund suggestions

Post by asif408 » Fri May 24, 2019 12:23 pm

CommitmentDevice wrote:
Fri May 24, 2019 11:57 am
I think that your biggest investment opportunity is to upgrade your investment strategy and stick to it.

I'm seeing dramatic swings in your underlying investment strategy... In the past six months you've sold your 3-fund portfolio, bought individual stocks, realized you didn't want to be buying individual stocks, and cashed out everything so you're now all cash. Now you're looking for advice on how to get into very aggressive investments.

These swings in investment strategy are unlikely to play out well for you. This is also the case with trying to time the market or beat the market by picking winners. You could get lucky but the odds are stacked against you.

So again - I believe that the biggest things you can do to increase your returns are to (a) stop trying to beat the market and (b) stick to that strategy.
+1. You also seem to be performance chasing, as small and mid cap stocks have beaten large cap stocks over the last decade, and poo-pooing emerging markets, energy and mining, which have done horrible this past decade.

Personally, I think CommitmentDevice is on the right track, but if you are absolutely set on going for a higher risk/higher reward strategy, you should consider investments that have done poorly over the last decade, not ones that have been the best. That would mean tilting to International over US stocks, value over growth stocks, and large over small stocks.

zimmer0
Posts: 223
Joined: Wed Oct 29, 2014 3:15 pm

Re: Aggressive Roth IRA fund suggestions

Post by zimmer0 » Fri May 24, 2019 12:28 pm

I have some allocation in both POGRX ( PRIMECAP Odyssey Growth) and VDIGX (Dividend Growth) with positive results thus far.

panine
Posts: 71
Joined: Wed Jul 29, 2015 2:32 pm

Re: Aggressive Roth IRA fund suggestions

Post by panine » Fri May 24, 2019 12:39 pm

asif408 wrote:
Fri May 24, 2019 12:23 pm
CommitmentDevice wrote:
Fri May 24, 2019 11:57 am
I think that your biggest investment opportunity is to upgrade your investment strategy and stick to it.

I'm seeing dramatic swings in your underlying investment strategy... In the past six months you've sold your 3-fund portfolio, bought individual stocks, realized you didn't want to be buying individual stocks, and cashed out everything so you're now all cash. Now you're looking for advice on how to get into very aggressive investments.

These swings in investment strategy are unlikely to play out well for you. This is also the case with trying to time the market or beat the market by picking winners. You could get lucky but the odds are stacked against you.

So again - I believe that the biggest things you can do to increase your returns are to (a) stop trying to beat the market and (b) stick to that strategy.
+1. You also seem to be performance chasing, as small and mid cap stocks have beaten large cap stocks over the last decade, and poo-pooing emerging markets, energy and mining, which have done horrible this past decade.

Personally, I think CommitmentDevice is on the right track, but if you are absolutely set on going for a higher risk/higher reward strategy, you should consider investments that have done poorly over the last decade, not ones that have been the best. That would mean tilting to International over US stocks, value over growth stocks, and large over small stocks.
The investments that have done poorly over the last decade could continue to do poorly for two more decades, and the ones that have done well could continue to do well for two more decades, though (fairly unlikely, but still). Or worst for 1 year then best for 1 year, back and forth and so on.

asif408
Posts: 1822
Joined: Sun Mar 02, 2014 8:34 am
Location: Florida

Re: Aggressive Roth IRA fund suggestions

Post by asif408 » Fri May 24, 2019 12:45 pm

panine wrote:
Fri May 24, 2019 12:39 pm
The investments that have done poorly over the last decade could continue to do poorly for two more decades, and the ones that have done well could continue to do well for two more decades, though (fairly unlikely, but still). Or worst for 1 year then best for 1 year, back and forth and so on.
True, but it doesn't change my advice. There are no guarantees in investing, but the probabilities are better going forward when you pick the investments that have done the most poorly over the last decade or two rather than than those that have done the best over the last decade or two.

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