Author Topic: Where to invest $3000 and $5000 with Vanguard?  (Read 2065 times)

TryingToBeAGoodDad

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Where to invest $3000 and $5000 with Vanguard?
« on: February 10, 2018, 07:17:43 AM »
Hello all, I moved some funds from Waddell & Reed to Vanguard and I have $3000 in brokerage account and another $5000 in a rollover IRA brokerage account, both currently sitting in a Vanguard Federal Money Market Fund. Looking for recommendations on what funds to purchase. I plan to continually add to these funds annually. Thanks in advance to the MMM community!

Radagast

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Re: Where to invest $3000 and $5000 with Vanguard?
« Reply #1 on: February 10, 2018, 07:48:40 PM »
Vanguard Target Retirement with a year around your 70th-80th birthday is a good choice for IRA, unless you have better ideas. Lifestrategy Growth is also a great choice. VTSMX, VGTSX, VBMFX are nice too.

For taxable brokerage accounts, it depends on your tax situation. Total US, Total International, and Total World stock indexes are never bad choices. If you want bonds available in taxable space it depends. Generally once you start getting into 30%+ marginal rates municipal (tax exempt) bonds make more sense than other bonds.

TryingToBeAGoodDad

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Re: Where to invest $3000 and $5000 with Vanguard?
« Reply #2 on: February 13, 2018, 11:16:58 AM »
Why not use VTSAX for an IRA bucket?

dandarc

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Re: Where to invest $3000 and $5000 with Vanguard?
« Reply #3 on: February 13, 2018, 11:26:05 AM »
Why not use VTSAX for an IRA bucket?
$10K minimum.  Of course, VTSMX is a good choice as well, although the expense ratio is similar to the Target Retirement or Lifestrategy funds mentioned up thread, so if OP wants some bonds as well, those are good places to start.

TryingToBeAGoodDad

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Re: Where to invest $3000 and $5000 with Vanguard?
« Reply #4 on: February 13, 2018, 11:52:19 AM »
I can shift all of this into the IRA and add some cash to get to $10k for VTSAX. I'm late to the investing game so time to catch up!

dandarc

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Re: Where to invest $3000 and $5000 with Vanguard?
« Reply #5 on: February 13, 2018, 11:53:31 AM »
Do it before 4/17 and count it for 2017 (assuming you haven't made your 2017 IRA contributions yet).

TryingToBeAGoodDad

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Re: Where to invest $3000 and $5000 with Vanguard?
« Reply #6 on: February 13, 2018, 11:54:35 AM »
That is the plan!

MustacheAndaHalf

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Re: Where to invest $3000 and $5000 with Vanguard?
« Reply #7 on: February 13, 2018, 08:59:38 PM »
If you get indecisive, invest in your first choice (S&P 500) and then consider what to do.  Otherwise you're deciding on cash by default - don't let perfection prevent picking a reasonable fund that you can change later.

With smaller amounts, you might consider ETFs.  Vanguard's ETFs have the exact same contents as the mutual fund equivalents, but they can be purchased in smaller amounts.  They trade on the stock market, so for example "VOO" is Vanguard S&P 500 ETF and "VTI" is Vanguard's Total Stock Market ETF.  Vanguard allows you to buy it's ETFs for $0/trade.

There's a few main benefits to ETFs.  The expense ratio is lower than the investor shares, so you'll keep a bit more of your money.  You don't have the minimums, either, because you could buy just 1 share.  For example, VTI costs $136/share, so you could invest $136 in the total stock market.  Or if you wanted $2500 invested, you would buy 18 shares ($2448) and have $52 left over.  Vanguard also has bond funds (BND, Vanguard Total Bond Market) and tax-exempt bond funds (VTEB, Vanguard Tax-Exempt Bond) available to round out your choices.  Most ETFs have lower prices, so you probably won't have $52 left over.

Here's an example, let's say you want 10% bonds, 60% US, 30% international with $3000:
US total stock, "VTI", $136.45/share x 13 shares = $1773.85
$3000 - $1773.85 = $1226.15 remaining

Total International, "VXUS", $56.40/share x 16 shares = $902.40 invested
$1226.15 - $902.40 = $323.75 remaining

US Bond Market, "BND", $79.66/share x 4 shares = $318.64 invested
$323.75 - $318.64 = $5.11 in cash left over

Got lucky on that one, with $5 in cash, but you see how the ETF purchases can achieve 60%/30%/10% allocations with only $3000 to invest.  Most funds have minimums, and you might only be able to buy one fund.  ETFs are probably the only way to grab a 10% bond allocation while meeting the minimums.
« Last Edit: February 13, 2018, 09:02:06 PM by MustacheAndaHalf »

TryingToBeAGoodDad

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Re: Where to invest $3000 and $5000 with Vanguard?
« Reply #8 on: February 22, 2018, 09:37:55 PM »
Thanks for the info. @MustacheAndaHalf !

TryingToBeAGoodDad

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Re: Where to invest $3000 and $5000 with Vanguard?
« Reply #9 on: May 18, 2018, 06:26:31 AM »
I moved my Waddell & Reed funds to Vanguard and they were held in a VANGUARD FEDERAL MONEY MARKET FUND (Settlement Fund) for a bit. One was a 'brokerage' account ($3K) and the other was 'rollover IRA brokerage' ($5k). I moved the $3k into the $5k account as a contribution as well as another $2K in cash I had. I then bought $10k in VSTAX admiral shares. It felt good to finally get that accomplished.

NewDay1

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Re: Where to invest $3000 and $5000 with Vanguard?
« Reply #10 on: May 18, 2018, 11:45:14 AM »
Thanks for sharing your journey!  I'm curious if you ever considered VBINX or is that too conservative a fund?

TryingToBeAGoodDad

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Re: Where to invest $3000 and $5000 with Vanguard?
« Reply #11 on: May 18, 2018, 12:30:47 PM »
I did not consider it. I'm a newbie index fund investor, but did want to be a bit more aggressive.