Author Topic: Quick IRA Question  (Read 1478 times)

Marko34

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Quick IRA Question
« on: April 22, 2015, 09:35:38 PM »
Just opened my first IRA, went with Vanguard and bought VTSMX.  I'm 27, is there an argument for going with a time targeted Vanguard Retirement Index for 2050? Or should I just stick to VTSMX?

Thanks

BlueHouse

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Re: Quick IRA Question
« Reply #1 on: April 22, 2015, 09:44:00 PM »
Vtsmx IS 100% stocks. Most people allocate some portion of their portfolio to bond and international stocks.  If you want to reduce volatility of your portfolio, allocate across these asset classes and rebalance on an annual or semi annual basis. If you don't want to have to do that, then a target date fund is better because they do that for you, based on an age appropriate allocation. The age appropriateness though is based on normal retirement age.

Edited: isn't to is.
« Last Edit: April 23, 2015, 05:19:14 AM by BlueHouse »

MDM

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Re: Quick IRA Question
« Reply #2 on: April 22, 2015, 10:18:11 PM »
Vtsmx isn't 100% stocks.
Not sure you meant to say that...?

The rest of the post seems good advice.

GreenPen

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Re: Quick IRA Question
« Reply #3 on: April 22, 2015, 11:01:59 PM »
The Target Retirement funds are good in themselves, but once you start to have multiple retirement accounts, it will be more difficult to keep track of your asset allocation (unless you have Target Retirement funds in all of your accounts).

It sounds like your next step should be deciding what you want your asset allocation to look like (and your first decision is what percentage of your portfolio you want in bonds). If you decide to go the Target Retirement route, first decide what percent you want to hold in bonds, and use that to choose your fund. In other words, don't choose the Target Retirement fund based on the date that you think you will retire.

BlueHouse

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Re: Quick IRA Question
« Reply #4 on: April 23, 2015, 05:17:43 AM »
Not sure you meant to say that...?

The rest of the post seems good advice.
Oh wow, thanks for catching that. Thumb typing isn't my thing!  I'll edit the original
« Last Edit: April 23, 2015, 06:08:10 AM by BlueHouse »