New Roth IRA

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Topic Author
Eye On the Prize
Posts: 9
Joined: Thu Oct 17, 2019 1:24 pm

New Roth IRA

Post by Eye On the Prize » Thu Nov 07, 2019 4:04 pm

I apologize if this topic has already been addressed somewhere else. I have completed several google searches trying to understand how this process should work, but I was unsuccessful. I just opened a new Roth IRA with Vanguard with $3k. I am planning to add another $3k over the next 2 months. The initial $3k shows as pending activity. On the same screen there is a section that says funds available to trade: $3k.

I am simply planning on purchasing VTSAX.

Questions:
Do I have to wait for the funds to no longer be pending before trading? If so, is that really 7 days?
When the funds are no longer pending, are they automatically placed in the Vanguard Federal Money Market Fund (Settlement fund)?

I am just a bit confused on the process that I should be following. Is this the process I will have to follow each time I add money to my Roth? Sorry for my ignorance. This is the first brokerage account that I have ever opened. I currently have been saving for retirement using my employer 401K.

Thanks in advance!

HomeStretch
Posts: 2647
Joined: Thu Dec 27, 2018 3:06 pm

Re: New Roth IRA

Post by HomeStretch » Thu Nov 07, 2019 4:20 pm

If the $3k shows as available to trade, you should be able to buy VTSAX now. Go into your Roth IRA and select “Buy/Sell/Exchange”.

In the future, you can make and invest your contribution in one step. First, (in your Vanguard account) you link the funding account (for example, your bank checking account) to your Vanguard account. It initially takes 7-10 days for the link to be verified and become active. After that, in your Vanguard Roth account you can make the contribution (buy the mutual fund of your choice) by pulling the money from the linked funding account. If you buy a mutual fund before the close of business, you will be invested in the fund at that day’s closing price. Even though it may take 1-2 business days for the money to be transferred from your bank account.

It’s also possible to automate transfers from linked accounts. For example, you can elect to contribute to your Roth IRA and buy VTSAX on the first of every month for $500.

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