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Learning, Sharing, and Teaching => Investor Alley => Topic started by: mjb on February 19, 2014, 12:58:13 PM

Title: $19k in Vanguard 403b rollover: all VTSAX or Lifecycle?
Post by: mjb on February 19, 2014, 12:58:13 PM

I'm 37, hoping to FIRE in about 12 years.

I have rolled over my old 403b to a Vanguard IRA. The balance is about $19,000. (It's currently my only investment account.)

Based on what I've read, a 90:10 :: stocks:bonds AA seems like a better situation for me than 100% stocks. However, this puts me out of range of even the Investor Shares version of Vanguard's Total Bond Market Index Fund, which has a $3,000 minimum.

So, right now, my entire balance is in their Lifecycle 2045 fund, which is currently at 90:10 :: stocks:bonds, and has an ER of 0.18%.

Since this is an IRA and I won't be able to access the funds without penalty for some time, would it make sense to put the entire balance in VTSAX (with its lower ER of 0.05%) until the balance has grown enough to diversify my AA?

Thanks!

Title: Re: $19k in Vanguard 403b rollover: all VTSAX or Lifecycle?
Post by: GlassStash on February 19, 2014, 02:14:33 PM

Quote from: mjb on February 19, 2014, 12:58:13 PM

Based on what I've read, a 90:10 :: stocks:bonds AA seems like a better situation for me than 100% stocks. However, this puts me out of range of even the Investor Shares version of Vanguard's Total Bond Market Index Fund, which has a $3,000 minimum.

Since this is an IRA and I won't be able to access the funds without penalty for some time, would it make sense to put the entire balance in VTSAX (with its lower ER of 0.05%) until the balance has grown enough to diversify my AA?

Thanks!

1) IRAs can be accessed w/out penalty through a Roth IRA conversion ladder or 72(t) distribution.

2) Either is a fine choice. You can leave the money in a Lifecycle fund until you have enough to buy the index funds separately OR you can invest all of it into the VTSAX. I'm am not sure how long it will take you to amass enough to purchase the Bond index, but in the grand scheme of things the choice is relatively minor.

Title: Re: $19k in Vanguard 403b rollover: all VTSAX or Lifecycle?
Post by: clarkm04 on February 19, 2014, 02:37:06 PM

Another option might be to put 3 K into Total Bond (Investor .20%) and the remaining 16 K into Total Stock (Admiral .05%).

This does lower the allocation ratio to 84:16. It's also slightly cheaper than the Lifecycle fund and would still allow you flexibility to rebalance or drift to your desired 90:10.

Title: Re: $19k in Vanguard 403b rollover: all VTSAX or Lifecycle?
Post by: mjb on February 20, 2014, 10:57:29 AM

Thank you!