Author Topic: The right Vanguard fund for this situation?  (Read 2870 times)

Argyle

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The right Vanguard fund for this situation?
« on: March 26, 2015, 11:14:53 PM »
I have an inherited IRA, which includes compulsory distributions, and I need to figure out which Vanguard index fund to put it in.  I am normally a bit on the risk-averse side, though I've been taking more financial risks recently.

Rough stats:
age 58, not looking to FIRE but want to optimize finances
annual income $70,000-$95,000 (depends on many variables); of that I save a minimum of $24,000
House valued at $330,000, remaining mortgage is $95,000 at 3%, 12 years to go, payment $650 per month
Social Security will be around $2000 per month

My total assets are around $1,100,000 plus the house.  At the moment 20% is in CDs paying 2%, 10% is in dividend-paying individual stocks, and 70% is in stock index funds.

I'm not interested in shifting any of that around.  The question is what to do with an inherited IRA of $150,000, which I want to put in a Vanguard index fund.  Ideally some balance of stocks and bonds in the same fund, but the funds I've been looking at seem to come under a lot of criticism.

What fund would you go for?  Thoughts?

mveill1

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Re: The right Vanguard fund for this situation?
« Reply #1 on: March 27, 2015, 02:49:50 AM »
If you want exposure to stocks and refuse to take a directional view, then go for VTWSX. It invests in the global stock market in proportion to market capitalization.

Personally, I've decided to invest this way going forward. Life is too short to try and outsmart the market with comparatively no resources.

Scandium

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Re: The right Vanguard fund for this situation?
« Reply #2 on: March 27, 2015, 11:39:19 AM »
Lacking context. What is this money for?

Do you need it? Is it just to leave leave in your will? Do you have kids you want to give some to? Once you have a goal then decide which fund


Argyle

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Re: The right Vanguard fund for this situation?
« Reply #4 on: March 27, 2015, 11:51:12 AM »
It will form part of my retirement assets.  Retirement is not that far away (maybe 7 years), though I'm pretty well set up apart from this money.  It's a funny situation because I am already taking required distributions.  These will vary according to the size of the asset: so if I have to take 12% per year, 12% will be smaller if the asset is worth less, and larger if it's worth more.  That said, obviously I'd rather the amount increased in value over the longer term, rather than decreased.

Mveilli1, what does "refuse to take a directional view" mean?  I'm confused.

mveill1

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Re: The right Vanguard fund for this situation?
« Reply #5 on: March 30, 2015, 09:02:13 AM »
It means you don't want to make a call on where stocks will go, which ones will go well. So you invest in the total market. My point is why not take this to its logical conclusion and invest in the whole world, not just the UK...

forummm

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Re: The right Vanguard fund for this situation?
« Reply #6 on: March 30, 2015, 06:11:39 PM »
It will form part of my retirement assets.  Retirement is not that far away (maybe 7 years), though I'm pretty well set up apart from this money.  It's a funny situation because I am already taking required distributions.  These will vary according to the size of the asset: so if I have to take 12% per year, 12% will be smaller if the asset is worth less, and larger if it's worth more.  That said, obviously I'd rather the amount increased in value over the longer term, rather than decreased.

Mveilli1, what does "refuse to take a directional view" mean?  I'm confused.

Even though you are already taking required distributions, you can invest in 100% equities in this account, and then invest with your remaining funds to whatever ratio to get you to the total percent of stocks/bonds that you are interested in. That way if the market goes up--great! If the market goes down, then you're paying lower income tax on that amount when you withdraw it. You can always purchase in a taxable account what you're selling in the IRA to withdraw.