Author Topic: Opened a new Roth IRA Vanguard Account, balance $1K - which fund?  (Read 1013 times)

Nicole

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Hi, which Vanguard fund should I use for my brand new Roth IRA account - currently I have $1,000 in a "settlement fund." 

I would like something that most resembles an index fund.  Many of the funds have minimums.  Some of the minimums are $3,000 - I can dump another $2K in if a $3K minimum fund is best.

Thank you.

dandarc

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Re: Opened a new Roth IRA Vanguard Account, balance $1K - which fund?
« Reply #1 on: December 14, 2016, 09:53:36 AM »
TargetDate funds have 1K minimum.  I'd go with one of those that matches your desired AA until you've got more money.

An alternative would be to go with ETFs.

VoteCthulu

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Re: Opened a new Roth IRA Vanguard Account, balance $1K - which fund?
« Reply #2 on: December 14, 2016, 11:02:20 AM »
TargetDate funds have 1K minimum.  I'd go with one of those that matches your desired AA until you've got more money.
+1

Put it in a target fund with a date close to when you would turn 65.

catccc

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Re: Opened a new Roth IRA Vanguard Account, balance $1K - which fund?
« Reply #3 on: December 14, 2016, 01:25:40 PM »
The target date fund is made up of other funds, of which the equivalent funds purchased separately have a lower expense ratio.  I keep meaning to exchange my 2045 funds for other individual funds, but, ya know, procrastination...

Anyway, for example, Target date 2045, which most of my $ is in, has a 0.16% expense ratio.  If you look inside the 2045 fund, it looks like this:

1   Vanguard Total Stock Market Index Fund Investor Shares   54.3%
2   Vanguard Total International Stock Index Fund Investor Shares   35.6%
3   Vanguard Total Bond Market II Index Fund Investor Shares†   7.1%
4   Vanguard Total International Bond Index Fund Investor Shares   3.0%
(percents shown are allocation of total 2045 fund, not an expense ratio, lol!)

If instead I owned what I think are equivalent funds, the fees would be less for each fund, as follows:
VTSAX 0.05%
VTIAX 0.12%
VBTLX 0.06%
VTABX 0.14%

and with the majority of the fund allocation falling into the lowest expense ratio.

Yeah, these are all small expense ratios, even at 0.16%, and yeah, these are admiral funds ($10K min), but you can see that there are some savings to be had.  Something to think about once your balance allows for admiral funds.  Or for anyone else that happens to be reading this and thinking about moving a large amount to Vanguard.

Nicole

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Re: Opened a new Roth IRA Vanguard Account, balance $1K - which fund?
« Reply #4 on: December 15, 2016, 08:37:35 AM »
Thank you, catccc - this is interesting.  Thank you.