Newbie: Roth IRA rebalance

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Lolar44
Posts: 8
Joined: Wed Feb 10, 2016 4:58 pm

Newbie: Roth IRA rebalance

Post by Lolar44 » Wed Mar 25, 2020 9:37 am

I am 33 yrs old, and I am wondering if this is a good time to rebalance my Roth IRA which has ~$40k in 100% VTSAX. Honestly, I opened it about 6 years ago and just kind of left it to do its thing and it's not done too bad.

But now, given whats happening with the stock market, I am thinking it is a better idea to make it a 3 fund i.e. add VTIAX and VBTLX to make it 70% VTSAX, 20% VTIAX and 10% VBTLX. I'm just not sure about the buying and selling process given the volatility of the market. Any tips on minimizing losses during the trade, or is this just not a good time?

Sorry if this is a silly question, but the most I know about the stock market is how to buy. I've never sold, rebalanced, TLH or anything by myself. Thanks in advance :)

bloom2708
Posts: 7454
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Newbie: Roth IRA rebalance

Post by bloom2708 » Wed Mar 25, 2020 9:43 am

Do you have a workplace 401k/403b/457/Thrift Savings Plan?

Many like to keep their Roth all stocks because growth is tax free way down the road.

If you can have bonds in your workplace plan, then you can keep Roth Total US and Total International.

We would need to know all your accounts 401k/Roth/Taxable to give the best advice.

I'd probably stay all stocks in Roth for now. It has been rough, but hopefully this is a speed bump 30 years from now.
Last edited by bloom2708 on Wed Mar 25, 2020 9:49 am, edited 1 time in total.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead

avidlearner
Posts: 27
Joined: Tue Mar 19, 2019 7:51 am

Re: Newbie: Roth IRA rebalance

Post by avidlearner » Wed Mar 25, 2020 9:46 am

What is causing you to rebalance? Do you have an IPS https://www.bogleheads.org/wiki/Investm ... _statement? I would suggest not make any rash decisions right now and read and educate yourself about the fundamentals.

ROTH IRA withdrawls are tax free when you retire and you are young so you want assets that have higher growth potential in there and your 100% VTSAX looks ok to me see https://www.bogleheads.org/wiki/Tax-eff ... _placement.

If you want to rebalance due to your IPS then do you have any 401K or other tax deferred place where you can move to bonds?

mega317
Posts: 3740
Joined: Tue Apr 19, 2016 10:55 am

Re: Newbie: Roth IRA rebalance

Post by mega317 » Wed Mar 25, 2020 9:47 am

If your Roth is the only money you have, as implied by your post, then you're not suggesting a rebalance but rather changing your asset allocation. It's not recommended to make a large change based on "what's happening" now. Though I guess your proposal isn't really a large change. When we say rebalance we mean making trades to get back to a previous allocation that is still desired but has drifted due to market changes.

To answer your specific question, if you exchange mutual funds you'll get the price of all funds at the close of the day so you won't have a loss in the way I think you're asking about.

You'll get the best advice by editing your post to follow the format in my signature. Before even doing that you might want to do some reading ahead of time such as on the Bogleheads wiki.
https://www.bogleheads.org/forum/viewtopic.php?t=6212

Topic Author
Lolar44
Posts: 8
Joined: Wed Feb 10, 2016 4:58 pm

Re: Newbie: Roth IRA rebalance

Post by Lolar44 » Wed Mar 25, 2020 10:20 am

Thanks everyone for the reassurance! I have no reason to rebalance/re-allocate other than thinking I should (from reading my groupchat and hearing other people talking about it), so all of this is really just FOMO.
I will leave it at 100% VTSAX for now, and stop reading group chats.

PS (to those who asked): I do have a 401k invested in a Vanguard 2050 Target fund, and I also have a taxable account which is managed by a roboadvisor.

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