Author Topic: Should I open up a Vanguard?  (Read 1925 times)

RH

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Should I open up a Vanguard?
« on: September 12, 2014, 01:39:52 PM »
Just planning my next financial step. Wife and I have the following assets

401K - $225K.
Roth IRA - $20K
HSA (in investment acct) - $20K
Rental Prop Equity - $190K, 3.5% fixed interest. Mortgage balance is $109K
Primary Residence Equity - $140K, 3.65% interest, Mortgage balance is $260K
Credit Card Debt - Zero
Car Debt - Zero
Savings in bank - $40K
TOTAL = $635K

After our monthly expenses (we're about 95% mustachian) , max 401K contriubtions, etc.., we typically have $3,000K left at the end of each month. I typically try to pay down the principal of the primary residence. However, now I think it could be good to open a vanguard and start building that up a bit so that I can tap into that before the 401K.
Is that the correct strategy? When we retire early, we could live off $25K/yr.

viper155

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Re: Should I open up a Vanguard?
« Reply #1 on: September 12, 2014, 03:19:48 PM »
Minus 369k for outstanding mortgage balance and all the interest you will pay on that. But yes, go for the VG acct after you pay off the rental property. JMHO

TomTX

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Re: Should I open up a Vanguard?
« Reply #2 on: September 12, 2014, 08:26:55 PM »
Minus 369k for outstanding mortgage balance and all the interest you will pay on that. But yes, go for the VG acct after you pay off the rental property. JMHO

Eh? The interest rate on both properties is quite low.  Market returns should be substantially higher (on average, long term.)

I would simply open the Vanguard account for the extra $3k.

Chrissy

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Re: Should I open up a Vanguard?
« Reply #3 on: September 13, 2014, 11:09:45 AM »
Vanguard.  Do it.

Ybserp

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Re: Should I open up a Vanguard?
« Reply #4 on: September 13, 2014, 01:47:37 PM »
Yes. I'd open a taxable account with Vanguard in your shoes.

VTSMX - Vanguard Total Stock Market Index Fund - (min $3k starting balance) is a good place to start. After four months of contributions even in a flat market you'd be over $10k and be able to convert the VTSMX shares into VTSAX - the Admiral shares version of VTSMX, meaning the exact same thing at a lower expense ratio.

After you reach $10k, you may want to expand your funds to make your the taxable portion of your portfolio balance with your asset allocation in your 401k and IRA. VGTSX can give you international stock exposure in a low fee index fund. VBMFX gives you high quality bonds.

[Disclosure: I use VTSAX and VGTAX holdings for part of my US stock / International stock asset allocation. I do not currently own any VBMFX shares. I have chosen to keep all my bond holdings in a tax advantaged account and none in taxable accounts.]