Author Topic: How does this ROTH look?  (Read 2893 times)

OvertheRainbow

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How does this ROTH look?
« on: January 08, 2016, 08:14:42 AM »
Here is my portfolio:
Principal : 8500

Target 2050 -5500 (added for 2015)
1   Vanguard Total Stock Market Index Fund Investor Shares   54.0%
2   Vanguard Total International Stock Index Fund Investor Shares   35.9%
3   Vanguard Total Bond Market II Index Fund Investor Shares†   7.1%
4   Vanguard Total International Bond Index Fund Investor Shares   3.0%
Total   —   100.0%

Reit Index fund- 3000 (added for 2016)

I have another 2500 that I can add for the year. I was thinking of adding Vanguard STAR which is actively managed and made up of these funds:

1   Vanguard Windsor II Fund Investor Shares   14.2%
2   Vanguard Long-Term Investment-Grade Fund Investor Shares   12.5%
3   Vanguard GNMA Fund Investor Shares   12.4%
4   Vanguard Short-Term Investment-Grade Fund Investor Shares   12.4%
5   Vanguard International Growth Fund Investor Shares   9.5%
6   Vanguard International Value Fund   9.2%
7   Vanguard Windsor Fund Investor Shares   7.7%
8   Vanguard Morgan Growth Fund Investor Shares   6.1%
9   Vanguard PRIMECAP Fund Investor Shares   6.1%
10   Vanguard U.S. Growth Fund Investor Shares   6.1%
11   Vanguard Explorer Fund Investor Shares   3.8%
Total   —   100.0%
 

It has a minimum of $1000. Should I buy STAR? Or should I allocate the $2500 into the 2050 and Reit?

Is my portfolio diverse enough?

GGNoob

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Re: How does this ROTH look?
« Reply #1 on: January 08, 2016, 08:50:30 AM »
Well, you should really look at your entire portfolio as a whole, not just at a single account. But assuming this is your only investment portfolio...

I like holding extra REIT investments in my portfolio as compared to just having the REITs that are included in total stock market funds. So I like your addition of $3,000 in the REIT Index Fund. I'd put the rest of your 2016 contribution in the Target 2050 fund. I'd suggest keeping between 10 and 20% of your portfolio in REITs, however, you will be a little higher than that at first with the smaller account. That's completely fine.

OvertheRainbow

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Re: How does this ROTH look?
« Reply #2 on: January 08, 2016, 09:41:39 AM »
Well, you should really look at your entire portfolio as a whole, not just at a single account. But assuming this is your only investment portfolio...

I like holding extra REIT investments in my portfolio as compared to just having the REITs that are included in total stock market funds. So I like your addition of $3,000 in the REIT Index Fund. I'd put the rest of your 2016 contribution in the Target 2050 fund. I'd suggest keeping between 10 and 20% of your portfolio in REITs, however, you will be a little higher than that at first with the smaller account. That's completely fine.

Thank you for reply!

I am just starting out. I opened a Roth in November of last year. Not including 17k in a government retirement plan, this is all I have. I am starting a new job and I plan on starting and contributing to a 401k right away. This Roth is really all that I have.

So no need for STAR?

GGNoob

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Re: How does this ROTH look?
« Reply #3 on: January 08, 2016, 09:47:07 AM »
So no need for STAR?

No need for STAR and honestly, no need for the REIT index either because the Target Retirement funds hold everything you need. But I like to add extra REITs myself. Here's an article I've always liked on the subject: http://www.forbes.com/sites/rickferri/2014/01/07/reits-and-your-portfolio/

MDM

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Re: How does this ROTH look?
« Reply #4 on: January 08, 2016, 10:41:02 AM »
1   Vanguard Total Stock Market Index Fund Investor Shares   54.0%
2   Vanguard Total International Stock Index Fund Investor Shares   35.9%
3   Vanguard Total Bond Market II Index Fund Investor Shares†   7.1%
4   Vanguard Total International Bond Index Fund Investor Shares   3.0%

Is my portfolio diverse enough?
The answer to that question is "yes". 

It is certainly valid to ask if you should become less diverse by buying funds concentrated in certain classes and sectors, but you are already "diverse enough".

OvertheRainbow

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Re: How does this ROTH look?
« Reply #5 on: January 10, 2016, 10:21:42 PM »
Thanks for the replies.

I have maxed out my Roth by putting in the additional $2,500 in the Target Retirement Fund. So two years straight I have maxed it out. Woot!

MustacheAndaHalf

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Re: How does this ROTH look?
« Reply #6 on: January 11, 2016, 02:36:32 AM »
So you now have 27% REIT?  ($8k Target Retirement, $3k REIT)
That looks like a rather large allocation to an asset class that is normally used to diversify, rather than be a main part of someone's portfolio.  You might want to read a book by an investment author who includes a REIT allocation (William Berstein, Larry Swedroe).

OvertheRainbow

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Re: How does this ROTH look?
« Reply #7 on: January 11, 2016, 03:38:41 AM »
So you now have 27% REIT?  ($8k Target Retirement, $3k REIT)
That looks like a rather large allocation to an asset class that is normally used to diversify, rather than be a main part of someone's portfolio.  You might want to read a book by an investment author who includes a REIT allocation (William Berstein, Larry Swedroe).

It is only like that because the minimum reit index investment is 3k and I just opened this roth last year. Going forward,  more will be pumped into the target fund.