Author Topic: Vanguard IRA Star Fund  (Read 427 times)

alexabreana

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Vanguard IRA Star Fund
« on: October 11, 2017, 09:35:47 AM »
Hello,
I just opened a Roth IRA at Vanguard. I am new to investing. I ended up putting $1500.00 into the star mutual fund. Was wondering if you guys can give me input on this fund.

Kristina
« Last Edit: October 11, 2017, 09:38:01 AM by alexabreana »

JumpInTheFIRE

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Re: Vanguard IRA Star Fund
« Reply #1 on: October 11, 2017, 11:34:41 AM »
First off, congratulations!  It's often the first step that is hardest.  That fund is not terrible (it is Vanguard after all!) but with that expense ratio (.32%) it seems to be a little expensive.  How old are you?  Generally a high bond allocation is for people with significant stashes who are more concerned about wealth preservation than rate of return.  That fund is 40% bonds, it will be more stable than something like a total stock market fund but will not make the same returns.  If you do want a lower cost fund that will give higher returns (with the associated higher risk, no such thing as a free lunch) then the total US stock market funds might be better for you - VTSAX (.04% expense ratio) or VTSMX (same fund, lower minimum, .15% expense ratio). 

I would recommend reading the Bogleheads page on crafting an Investment Policy Statement (https://www.bogleheads.org/wiki/Investment_policy_statement) and determine what your risk tolerance is and what asset allocation would suit your investment style.  Many of the younger people on this board use an allocation of 100% stocks but only you know what your risk tolerance is so it is up to you what your allocation should be.

Acastus

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Re: Vanguard IRA Star Fund
« Reply #2 on: October 11, 2017, 11:51:52 AM »
STAR is a nice all around fund with 60/40 stocks and bonds, plus large, small, and international stocks. That is good diversification between several investment classes. It is one of the few funds that require less than $3k to open it, so that is probably why Vanguard put you there. A 60/40 split may be conservative, depending on your age. You may also consider a target date fund until you learn enough about investing to decide what asset allocation you want. Target funds automatically adjust their mix to be age appropriate for some theoretical average investor.

alexabreana

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Re: Vanguard IRA Star Fund
« Reply #3 on: October 11, 2017, 01:08:07 PM »
Thank you for your advice,  I just turned 50 and should retire at 65 so I have 15 yrs more to go.. Should I keep it or move it.. I am ok with taking risk
 

Kristina

Acastus

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Re: Vanguard IRA Star Fund
« Reply #4 on: October 11, 2017, 02:14:47 PM »
It is in the ballpark of where your asset allocation should be. As you read more about how to invest, you may decide you want a different mix, or you may be happy with it. Keep adding new money as you can. You will have more options as your nest egg grows.

fuzzy math

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Re: Vanguard IRA Star Fund
« Reply #5 on: October 11, 2017, 02:29:16 PM »
The star fund is one of the 2-3 options you have with that little invested at vanguard. Once you put more $$ in you can switch to something with a lower expense rate and maybe higher earnings... I had a rollover Roth with a low amount in it and carried the star fund for a long time for that very reason! Once you're over $3k I think most options open up.

Louisville

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Re: Vanguard IRA Star Fund
« Reply #6 on: October 11, 2017, 02:34:22 PM »
It is in the ballpark of where your asset allocation should be. As you read more about how to invest, you may decide you want a different mix, or you may be happy with it. Keep adding new money as you can. You will have more options as your nest egg grows.
Depends on how big a ballpark we're talking. Around here, most would say STAR is too conservative for someone at the tender age of 50. Needs more stocks. However, as Acastus says, you'll need to do your own research and soulsearch to come up with your appropriate asset allocation. Any target retirement fund pointing 15 years out is going to be more aggressive than STAR.

Acastus

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Re: Vanguard IRA Star Fund
« Reply #7 on: October 13, 2017, 09:04:15 AM »
Louisville,

My rule of thumb is  to recommend 110 - age = %stocks to a newbie investor. I personally use 120 - age, but I know I can tolerate that risk. I helped my mother with asset allocation, and she insisted that old people take too little risk. She chose too much risk and panicked in a downturn. You really need to know yourself, and you won't really know until the market tanks.