Author Topic: Single or Multiple Fund for Roth IRA  (Read 793 times)

Navion33

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Single or Multiple Fund for Roth IRA
« on: September 03, 2021, 02:28:21 PM »
Hello all,

Recently opened a ROTH IRA with Vanguard and was curious to see from others perspective if it matters to select single fund or multiple funds for it? The goal is long-term growth but I just mainly want to deposit money in and forget about it, as I do with my current employee matched TSP account. I wouldn't mind researching to pursue the multiple funs option but would it be worth it in the long run?

Also, might as well ask this here. Are a 401(k) and a TSP similar? If not would I need to open a 401(k) as per the investment order?

Thanks! 

terran

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Re: Single or Multiple Fund for Roth IRA
« Reply #1 on: September 03, 2021, 02:41:19 PM »
Asset allocation should be maintained across all accounts, so having one fund in your Roth IRA is a fine/good idea as long as it works well with what your TSP is invested in. So what is your TSP invested in?

Yes, the TSP is very similar to a 401(k) and you can consider them interchangeable when reviewing the recommended investment order.

Navion33

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Re: Single or Multiple Fund for Roth IRA
« Reply #2 on: September 03, 2021, 03:09:15 PM »
Asset allocation should be maintained across all accounts, so having one fund in your Roth IRA is a fine/good idea as long as it works well with what your TSP is invested in. So what is your TSP invested in?

Yes, the TSP is very similar to a 401(k) and you can consider them interchangeable when reviewing the recommended investment order.

My TSP is allocated to a single fund, L 2050, so not much diversification there. Is it bad to have it in a single fund like that? or would it be different for a Lifecyle Fund? Never really thought much into it until now.

terran

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Re: Single or Multiple Fund for Roth IRA
« Reply #3 on: September 03, 2021, 03:21:13 PM »
Target date funds like the L 2050 fund have plenty of diversification. They're usually made up of a mix of US Stocks, international Stocks, US bonds and International bonds, which is all you really need (and dropping the international bonds wouldn't be a problem). If you're happy being invested in that then I would recommend the [ur=https://personal.vanguard.com/us/funds/management?FundId=0699&FundIntExt=INT&APP=PEl]Vanguard Target Retirement 2050 Fund (VFIFX)[/url], which should be very similar. You can look at the exact allocations in the links I provided. The TSP funds are a little tougher since they just name them with letters, so you'll have to click on those links to see how each of the component funds compares to the similar Vanguard component funds.

JJ-

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Re: Single or Multiple Fund for Roth IRA
« Reply #4 on: September 04, 2021, 06:54:26 AM »
Read up a bit on mutual funds and how mutual funds are comprised of several (many many) individual stocks.

As Terran mentioned the tsp is a 401k. So you're good there.

I will second the recommendation that the Vanguard Target Retirement 2050 Fund (VFIFX) is a fine choice to match how you have assets invested in the tsp.

For reading, the J L Collins stock series is a good place to start as is the bogleheads wiki pages.

Navion33

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Re: Single or Multiple Fund for Roth IRA
« Reply #5 on: September 08, 2021, 08:27:15 PM »
I researched more on the L funds so far but have yet to come across details about their withdrawal. My target fund is 2050, but I probably can't officially retire because I'll be 55 at that time. It seems that the 2060 is a more preferable retirement timeline. I am not sure why my TSP was allocated to 2050 and not 2060.

What would happen if I don't retire by the time the target fund reaches its goal? Will I be able to transfer it to another fund or 401k?

Ron Scott

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Re: Single or Multiple Fund for Roth IRA
« Reply #6 on: September 12, 2021, 05:41:39 AM »
OPóGiven your very good questions in this thread I would suggest you first focus broadly on your investments and not so narrowly on the Roth. What to place in a Roth is a function of how you intend to use it and how it relates to your other taxable and tax-deferred accounts. There are several ways to incorporate Roth investments into an overall plan but they require a thoughtful investment strategy. Having a written one forces you to focus and I suggest this too. Itís NOT hard to develop, but it requires some learning and some time.

The Bogleheads Guide to Investing is a great place to start. After digesting a book like this, this forum and the Bogleheadsí forum are good for asking targeted questions.

JoePublic3.14

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Re: Single or Multiple Fund for Roth IRA
« Reply #7 on: September 14, 2021, 04:53:42 AM »
I researched more on the L funds so far but have yet to come across details about their withdrawal. My target fund is 2050, but I probably can't officially retire because I'll be 55 at that time. It seems that the 2060 is a more preferable retirement timeline. I am not sure why my TSP was allocated to 2050 and not 2060.

What would happen if I don't retire by the time the target fund reaches its goal? Will I be able to transfer it to another fund or 401k?

Donít focus on the year, but on the asset allocation that means. Look at plan documents and see how the various years have varying asset allocations. And of course get the most recent documents since they will change with time as a key feature of target date funds is their glide path towards less equity exposure.

So, first you decide on your desired asset allocation, and then you find the target date that most closely matches that desired allocation. Small point is that you should consider your overall allocation, across all accounts.

But maybe more importantly, as mentioned, do some reading, ask more questions, donít rush.

Navion33

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Re: Single or Multiple Fund for Roth IRA
« Reply #8 on: September 24, 2021, 10:14:36 AM »
Would it be better to asset allocate a regular investment account when comparing mutual funds "minimum investment" to get in for the Roth IRA? I would assume asset allocation would happen over time with supplying the minimum investment for each fund.

I did some looking over several of the mutual funds at Vanguard. This is what came up with for now, what are your thoughts?

VFIAX - 500 U.S. Index Fund (30%)
VTWAX - World Index Fund (20%)
VGSLX - Real Estate Index Fund (20%)
VSBSX - Short-Term Treasury Fund  (10%)
VTAPX - Short-Term Inflation-Protected Securities Fund (10%)
VSIGX - Intermediate-Term Treasury Fund (10%)

I tired to get a similar allocation from the Swenson Model https://www.optimizedportfolio.com/david-swensen-portfolio/. Asset allocated would take some time, therefore would it be better to just have my regular brokerage investment account follow this plan since I wouldn't need to meet the minimum for each fund.

This research has helped me out for asset allocating my investments. Besides the general stock/fund/bond investment, what other assets could be possible to investment in to diversify the entire portfolio?

JJ-

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Re: Single or Multiple Fund for Roth IRA
« Reply #9 on: September 24, 2021, 10:20:19 AM »
Would it be better to asset allocate a regular investment account when comparing mutual funds "minimum investment" to get in for the Roth IRA? I would assume asset allocation would happen over time with supplying the minimum investment for each fund.

I did some looking over several of the mutual funds at Vanguard. This is what came up with for now, what are your thoughts?

VFIAX - 500 U.S. Index Fund (30%)
VTWAX - World Index Fund (20%)
VGSLX - Real Estate Index Fund (20%)
VSBSX - Short-Term Treasury Fund  (10%)
VTAPX - Short-Term Inflation-Protected Securities Fund (10%)
VSIGX - Intermediate-Term Treasury Fund (10%)

I tired to get a similar allocation from the Swenson Model https://www.optimizedportfolio.com/david-swensen-portfolio/. Asset allocated would take some time, therefore would it be better to just have my regular brokerage investment account follow this plan since I wouldn't need to meet the minimum for each fund.

This research has helped me out for asset allocating my investments. Besides the general stock/fund/bond investment, what other assets could be possible to investment in to diversify the entire portfolio?

Instead of VTWAX I would suggest VGTSX. The VTWAX is 60/40 US / World I believe and it looks like you're after international exposure with that slice.

Some recommend including gold as part of the portfolio. If you want to peruse some common portfolios check out this site:
https://portfoliocharts.com/portfolios/