Helping a friend move retirement $ to Vanguard

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bcboy57
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Helping a friend move retirement $ to Vanguard

Post by bcboy57 » Wed Apr 12, 2017 12:16 pm

A friend is moving all his retirement $ from Edward Jones to Vanguard and asked me questions.

He is 61 years old , has a good amount of money he transferred to Vanguard which is now in their retirement money market which he plans to put in a Target fund eventually.

He is healthy and well compensated financially at work and plans to work till age 70.

He is concerned about a correction coming soon in the stock market. Originally I told
him to dollar cost average into the planned Target fund. But thinking it over, maybe he should get that money to work right now and just put all now into his fund. We talked a lot about being unable to time the market etc.

How would you folks advise him ? Thanks as all ways.... Doug

traveltoomuch
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Joined: Fri Mar 15, 2013 5:48 am

Re: Helping a friend move retirement $ to Vanguard

Post by traveltoomuch » Wed Apr 12, 2017 12:28 pm

First, only use target date funds in tax-advantaged accounts, like an IRA.

Second, do not allow the change in custodian to change the asset allocation. If he was 60/40 at EJ, put him in 60/40 at vanguard until he figures out what asset allocation he wants going forward. It's unlikely that the bulk change from invested to not invested and then to invested again is in anyone's interest.

Rainmaker41
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Re: Helping a friend move retirement $ to Vanguard

Post by Rainmaker41 » Wed Apr 12, 2017 12:29 pm

His money at Edward Jones was (presumably) *already invested* (probably in a vaguely appropriate for his age target date fund). He has sold that investment for cash, which is now in a Vanguard IRA (is that correct?).

The question he needs to ask is not what investment he should get into, but rather why he got out of whatever investment he was in before.

This is really a question of overall asset allocation, but...

With that in mind, with about 9 years to retirement at age 70, he should consider Vanguard Target 2025, if he is committed to not selling or changing his investment.

https://personal.vanguard.com/us/funds/ ... IntExt=INT

If he is more conservative, the LifeStrategy Conservative Growth or Target Retirement Income Funds are options.

https://personal.vanguard.com/us/funds/ ... undId=0724

https://personal.vanguard.com/us/funds/ ... undId=0308
My username is not about money, but is my old online gaming username. I can't say that I make a great deal of money; I just hate spending it. Married the most loving woman in the world October 2017.

Vanguard Fan 1367
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Joined: Wed Feb 08, 2017 3:09 pm

Re: Helping a friend move retirement $ to Vanguard

Post by Vanguard Fan 1367 » Wed Apr 12, 2017 1:57 pm

bcboy57 wrote:A friend is moving all his retirement $ from Edward Jones to Vanguard and asked me questions.

He is 61 years old , has a good amount of money he transferred to Vanguard which is now in their retirement money market which he plans to put in a Target fund eventually.

He is healthy and well compensated financially at work and plans to work till age 70.

He is concerned about a correction coming soon in the stock market. Originally I told
him to dollar cost average into the planned Target fund. But thinking it over, maybe he should get that money to work right now and just put all now into his fund. We talked a lot about being unable to time the market etc.

How would you folks advise him ? Thanks as all ways.... Doug

I have heard Bogle say that you might as well go ahead and invest it all because he doesn't know nor does he know anybody who knows about market timing. I have heard some others, maybe Malkiel or Ellis recommend considering dollar cost averaging. Personally a couple of years ago I put some funds to work immediately rather than dollar cost averaging and it has worked out very well.

MarvinK
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Location: DC

Re: Helping a friend move retirement $ to Vanguard

Post by MarvinK » Wed Apr 12, 2017 9:57 pm

This recent article makes a case for investing in lump sum...but also tips their hat to scenarios when dollar cost averaging makes sense (risk averse, comfort/emotions)
http://time.com/money/4668059/why-dolla ... -strategy/

Your friend probably already knows what he/she is comfortable with. Let them decide the number of equal investments (whether 1 to 12) and support the execution of the plan.

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