Author Topic: Q from Beginner: Next step for IRA?  (Read 2331 times)

Meowkins

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Q from Beginner: Next step for IRA?
« on: August 28, 2015, 05:35:49 PM »
This is a laughably stupid question, but it's really where I'm at in my financial knowledge journey so! here we go:

I have $3,000 and $1,000 in two Contributory accounts (traditional IRA? I think) in Schwab. However, neither of them are invested in anything... I think. Yes, I'm pretty sure.

Based on reading MMM, Jhcollins, and the Common Sense Guide to Investing, I think my next steps are to open an account at Vanguard, transfer the accounts, and put them in some index-fundish thing?

Or.... am I wrong?

:( I realize that I'm what's wrong with America and I am sorry.

LAGuy

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Re: Q from Beginner: Next step for IRA?
« Reply #1 on: August 28, 2015, 07:00:47 PM »
You could just invest right there at Schwab too. They have comparable funds to Vanguard.

Bracken_Joy

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Re: Q from Beginner: Next step for IRA?
« Reply #2 on: August 28, 2015, 08:57:07 PM »
You can invest through Shwab. Most people on here prefer Vanguard because it offers index funds with lower fees- so you keep more of your own money. Right now, since the money isn't invested, it'll be easy to transfer to another company if you want, but technically, you can do this at any time.

Do you have login info for your schwab investment? That is step one. You should be able to purchase funds through their online login, but if this is unclear or you want help, call their customer service. You want an index fund with low fees.

Meowkins

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Re: Q from Beginner: Next step for IRA?
« Reply #3 on: August 28, 2015, 09:16:17 PM »
Thanks all, much appreciated! Yeah I thought that moving to Vanguard would be best since supposedly they have the lowest fees. I haven't looked at Schwab's funds and fees... it seemed a little overwhelming so I figured I'd do that.

iamlindoro

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Re: Q from Beginner: Next step for IRA?
« Reply #4 on: August 28, 2015, 09:34:22 PM »
Thanks all, much appreciated! Yeah I thought that moving to Vanguard would be best since supposedly they have the lowest fees. I haven't looked at Schwab's funds and fees... it seemed a little overwhelming so I figured I'd do that.

No need (unless you really, really want to)- you can pay a comparable expense ratio with the Schwab equivalent-- take it from the most rabid Vanguard fans on the internet, the Bogleheads!

http://www.bogleheads.org/wiki/Three-fund_portfolio#Other_than_Vanguard.2C_Boglehead-style

And that's coming from a guy who is 100% at Vanguard-- if I had accounts already open at Schwab, I'd just chuck it all in SWTSX (which has a better expense ratio than one of the Vanguard equivalents, VTSMX, and only slightly worse than the higher end Vanguard equivalent, VTSAX).
« Last Edit: August 28, 2015, 09:36:01 PM by iamlindoro »

Meowkins

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Re: Q from Beginner: Next step for IRA?
« Reply #5 on: August 28, 2015, 10:12:31 PM »
Since I have my nooby post up, what's the difference between choosing an index fund that mimics the S&P and one that is of the whole market?

iamlindoro

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Re: Q from Beginner: Next step for IRA?
« Reply #6 on: August 28, 2015, 10:20:31 PM »
Since I have my nooby post up, what's the difference between choosing an index fund that mimics the S&P and one that is of the whole market?

The index funds don't mimic the indexes, they track them.  That is, they hold them in proportion to their relative size in the market.  Apple, for example, represents about 3% of the stock market, so 3% of any total market index fund is comprised of Apple.  An S&P 500 fund contains only the 502 companies in that index.  A US total market index fund contains all publicly traded companies in the US, in proportion to their values.
« Last Edit: August 28, 2015, 10:22:22 PM by iamlindoro »

MDM

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Re: Q from Beginner: Next step for IRA?
« Reply #7 on: August 28, 2015, 10:21:34 PM »
Since I have my nooby post up, what's the difference between choosing an index fund that mimics the S&P and one that is of the whole market?
By S&P I'll assume you mean the S&P 500 which is the 500 large (by market capitalization) US stocks.  See http://us.spindices.com/indices/equity/sp-500.

Vanguard's VTSMX, https://personal.vanguard.com/us/funds/snapshot?FundId=0085&FundIntExt=INT, includes 3816 stocks.

So 3816 - 500 = 3316 companies different, as (I believe) all the S&P 500 is in VTSMX.