Author Topic: VTSMX in Roth IRA vs Taxable account  (Read 4988 times)

droh82

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VTSMX in Roth IRA vs Taxable account
« on: February 20, 2014, 07:50:10 PM »
Hello all,

I am very new to investing and have so much to learn. I just opened a ROTH IRA at Vanguard and put about $3800 into VTSMX (Vanguard Total Stock Market Investor Shares) for my 2013 contribution. I plan to contribute the remaining $1700 before the April 15 deadline to max my contribution at 5500 for 2013 and then I will go on to max my 2014 contribution so I can get the Admiral Shares version (VTSAX).

I had a few questions about Vanguard and VTSMX....

1) Just as I opened my Roth IRA, I began to read that VTSMX is better suited for taxable accounts, so I began to doubt my decision to pick VTSMX for my ROTH IRA. Is VTSMX good to have in a ROTH IRA?

2) I plan to open a taxable account after I max my 2014 roth contributions and was wondering... would it be a bad idea to have VTSMX (or VTSAX) in both my ROTH IRA and taxable account? If so, how should I go about this? Have VTSMX in taxable and choose a different fund for my Roth??

3) Also, I was looking though my vanguard account and saw that my dividends and capital gains were set at "Reinvest". I can change it to transfer to bank account/ vanguard fund /mail by check but not sure which is the best option for me. Any advise or suggestion on this?



Knaak

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Re: VTSMX in Roth IRA vs Taxable account
« Reply #1 on: February 20, 2014, 11:32:03 PM »
Welcome to the forums and congratulations on opening your Roth IRA.

1.  VTSMX is great in your IRA.  It is exactly what I would pick if I just opened an IRA (my largest holding is VTSAX).

2.  Not a bad idea at all.  Whether you are comfortable or not with a 100% stock allocation is up to you.  If you want 100% stocks, then I would certainly stick with VTSMX/VTSAX.

3.  Leave them on "Reinvest."  Each time you get a payout, it will automatically buy more shares of VTSMX for you.

Do you have a 401k available through your job?  If so, does it have a company match?

For information on asset allocations, here are a couple good articles for you to read:

http://jlcollinsnh.com/2011/06/08/how-i-failed-my-daughter-and-a-simple-path-to-wealth/

http://jlcollinsnh.com/2011/06/14/what-we-own-and-why-we-own-it/

droh82

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Re: VTSMX in Roth IRA vs Taxable account
« Reply #2 on: February 21, 2014, 06:05:57 PM »
Thanks for the reply and the links Knaak! I'll definitely make sure to read them.

And yes I do have a 401K through my employer; they match at 4%. I've been maxing my 401k contributions and will max my roth then go on to open a taxable account this year.


Knaak

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Re: VTSMX in Roth IRA vs Taxable account
« Reply #3 on: February 21, 2014, 09:07:24 PM »
Glad to hear you are maxing out your 401k contributions.  After you are done with Jim's articles, take a look at these ones:

http://www.madfientist.com/traditional-ira-vs-roth-ira/

http://www.madfientist.com/retire-even-earlier/

Bateaux

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Re: VTSMX in Roth IRA vs Taxable account
« Reply #4 on: February 22, 2014, 05:40:59 AM »
I've bought and held VTSAX for years and it has not failed me.
“Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away.”
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TheHappyGoomba

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Re: VTSMX in Roth IRA vs Taxable account
« Reply #5 on: April 16, 2018, 08:09:42 PM »
Hello all,

I am very new to investing and have so much to learn. I just opened a ROTH IRA at Vanguard and put about $3800 into VTSMX (Vanguard Total Stock Market Investor Shares) for my 2013 contribution. I plan to contribute the remaining $1700 before the April 15 deadline to max my contribution at 5500 for 2013 and then I will go on to max my 2014 contribution so I can get the Admiral Shares version (VTSAX).

I had a few questions about Vanguard and VTSMX....

1) Just as I opened my Roth IRA, I began to read that VTSMX is better suited for taxable accounts, so I began to doubt my decision to pick VTSMX for my ROTH IRA. Is VTSMX good to have in a ROTH IRA?

2) I plan to open a taxable account after I max my 2014 roth contributions and was wondering... would it be a bad idea to have VTSMX (or VTSAX) in both my ROTH IRA and taxable account? If so, how should I go about this? Have VTSMX in taxable and choose a different fund for my Roth??

3) Also, I was looking though my vanguard account and saw that my dividends and capital gains were set at "Reinvest". I can change it to transfer to bank account/ vanguard fund /mail by check but not sure which is the best option for me. Any advise or suggestion on this?

Hey Droh,

How are you doing? It's now 2018, and I am going down the same path as you - planning on opening my Roth IRA soon and investing in VTSMX which would eventually become VTSAX when I plan on hitting the 10k minimum in two years.