Author Topic: Investor Class Roth suggestion  (Read 8103 times)

smiley

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Investor Class Roth suggestion
« on: May 04, 2016, 05:32:11 PM »
I opened a 2015 Roth ($5500) with Vanguard and am wondering where to put it.  Per the some of the reading, Stock Series and elsewhere, I was thinking of putting it in Bonds (I don't have the 20% for the 80-20 split), but don't have the minimum for the Admiral shares (VBTLX).   

So which "Investor Class" Bond fund do you suggest? 
Does it much matter if I let it sit there in the Money Market until later this year when I contribute again for 2016, getting it over the $10,000, so I can then put it in VBTLX?   

forummm

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Re: Investor Class Roth suggestion
« Reply #1 on: May 05, 2016, 07:47:12 AM »
VBMFX is the investor share level of that same fund. Once you get $10k in it, it will automatically convert to VBTLX for you.

smiley

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Re: Investor Class Roth suggestion
« Reply #2 on: May 05, 2016, 04:09:05 PM »
Easy enough!  Thanks, forummm.  That would have taken me way to long to figure out on my own.  :)

Full Beard

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Re: Investor Class Roth suggestion
« Reply #3 on: May 05, 2016, 11:12:04 PM »
How old are you smiley?  Usually the younger you are the more you want to be invested in stocks.

smiley

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Re: Investor Class Roth suggestion
« Reply #4 on: May 06, 2016, 05:10:49 AM »
46.   Yeah, I go back and forth on whether to do bonds at all seeing that I am not 20 but not ready to retire either.  Figured I throw a little in there. 

Brokefuturedoctor

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Re: Investor Class Roth suggestion
« Reply #5 on: May 06, 2016, 07:17:27 AM »
You could also try having only stocks in your Roth IRA and invest in Municipal Bonds in a taxable account since those bonds are tax-exempt. I don't know what your marginal tax rate is though. The strategy that I mentioned is one that I may do later. I learned about it on WCI. More on it at this link - http://whitecoatinvestor.com/asset-location-bonds-go-in-taxable/

That strategy may not be for everyone though.

Edit: Here are a few of the muni funds and the ETF vanguard has - VTEBX, VTEAX, and VTEB
« Last Edit: May 06, 2016, 07:27:08 AM by Brokefuturedoctor »

smiley

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Re: Investor Class Roth suggestion
« Reply #6 on: May 06, 2016, 05:39:22 PM »
You could also try having only stocks in your Roth IRA and invest in Municipal Bonds in a taxable account since those bonds are tax-exempt. I don't know what your marginal tax rate is though. The strategy that I mentioned is one that I may do later. I learned about it on WCI. More on it at this link - http://whitecoatinvestor.com/asset-location-bonds-go-in-taxable/

That strategy may not be for everyone though.

Edit: Here are a few of the muni funds and the ETF vanguard has - VTEBX, VTEAX, and VTEB

Oh, interesting thought.  I'll read the link.  My income fluctuates but has never been over $90K (yet!) so around 25% tax bracket.  How does what tax bracket I'm in change things?

Thanks!

Proud Foot

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Re: Investor Class Roth suggestion
« Reply #7 on: May 09, 2016, 09:37:36 AM »
Why do you want bonds in your ROTH? Bonds are a better investment to be held in a tax advantaged account over a taxable account but with a ROTH all the growth is tax free.  I would want to hold something with higher growth potential in an account where I will not have to pay any taxes on the growth. 

smiley

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Re: Investor Class Roth suggestion
« Reply #8 on: May 10, 2016, 05:34:08 PM »
Why do you want bonds in your ROTH? Bonds are a better investment to be held in a tax advantaged account over a taxable account but with a ROTH all the growth is tax free.  I would want to hold something with higher growth potential in an account where I will not have to pay any taxes on the growth. 

Yeah, that's what Brokefuturedoctor said too.   I was looking to increase my percent of bonds in my whole portfolio and thought I'd throw some in the Roth I had just opened.  Clearly this exposes my rookie status in financial planning.  I see the benefit of switching things around to stocks in my Roth! 

Thanks!