Author Topic: Question about opening traditional IRA's?  (Read 705 times)

Bootlip

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Question about opening traditional IRA's?
« on: August 07, 2017, 08:45:20 AM »
My wife and I are currently maxing out our 401K's and we'd like to open up traditional IRA accounts at Vanguard for each of us. The ultimate goal is for us both just to hold VTSAX in both our accounts. Before that we'd just hold VTSMX until we reach the 10,000ea to convert to VTSAX.

Here's the issue, we have been putting off opening these accounts because we don't have the $6000 to meet the minimum it takes to open two accounts holding VTSMX. So in an attempt to get the ball rolling could we open two traditional IRA's and just buy whatever we can afford of the ETF VTI. Then when we reach balances of $3000+ sell it and buy VTSMX? Is there any negatives with this approach I'm missing?

Thanks!

kenaces

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Re: Question about opening traditional IRA's?
« Reply #1 on: August 07, 2017, 12:02:04 PM »
Any low ER fund/ETF is fine i.e. I own SCHB which has lower ER than both vanguard funds.

Bootlip

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Re: Question about opening traditional IRA's?
« Reply #2 on: August 07, 2017, 09:01:11 PM »
So if I do VTI (ETF) in a traditional IRA I have to buy whole shares not fractional shares. But in a traditional I'd have to set up automatic deposits being its pre tax money, right? How would that work being its unlikely that the amount I assign to be deposited wouldn't buy an exact even number of shares??

MDM

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Re: Question about opening traditional IRA's?
« Reply #3 on: August 07, 2017, 10:57:13 PM »
Alternatively, buy $1K each of VTTSX (target date 2060 fund; 90/10 stock/bond) or similar.  It's a different asset allocation than VTSMX, but a defensible one nonetheless.