someone just starting out - roth options?

[mistymoney]

Hey all,

one of my offspring has a windwall (about 5k) and I think I've almost convinced them to put it all into a roth. They have their roth at fidelity but only have a couple hundred in there, not even sure if it is invested yet. Last we talked I made some recommendations but not sure if they followed through or not.

They are mid 20s now (! how??), and I think finally ready to get a little bit serious about financial security. They have a 401k at work, no match, but signed up in target funds and I think they doing 5-10%, I forget exactly....total investments are under 10k, maybe under 5k....., but they have a fully stocked EF that is maybe 30k or more, so in a good position to invest all of this.

Anyhoo, since the 401k is a target fund, they have a full EF, and given age and no timeline as yet for FI due to just getting started, I was thinking this should be 100% stock allocation for the roth, and somewhat aggressive.

What would be an ETF that you would recommend for this?

I was thinking Vanguard Small-Cap Growth Index Fund ETF Shares, but would like to hear pros/cons or other recommendations.

Thanks!

[Rob_bob]

I would go with a total U.S. market fund and a small cap fund.  You can adjust the AA as you like.  Since they are young maybe overweight the small cap fund.

Myself I use Vanguard ETF VB for small cap, currently it has the highest cap gains in my account but if we have a serious market drawdown it will drop harder but long term it regains the top position, you just have to live with the volatility.

[bacchi]

I would go with a total U.S. market fund and a small cap fund.  You can adjust the AA as you like.  Since they are young maybe overweight the small cap fund.

Myself I use Vanguard ETF VB for small cap, currently it has the highest cap gains in my account but if we have a serious market drawdown it will drop harder but long term it regains the top position, you just have to live with the volatility.

Same. I use VTI and VBR (or AVUV, which is a minimally active fund).

[Financial.Velociraptor]

If your current 'Place' is 'ask on the internet' the best place for now is indexing.  Really, its probably still best place even if you learn as much as a PhD in Finance.  VOO or VTI is about the same in my mind as the S&P 500 is comprised on a weighted basis primarily of fully global companies. 

As you learn more, and get closer to retirement age, your bond allocation matters.  That gets discussed far too little in these parts.

[SeattleCPA]

If your current 'Place' is 'ask on the internet' the best place for now is indexing.  Really, its probably still best place even if you learn as much as a PhD in Finance.  VOO or VTI is about the same in my mind as the S&P 500 is comprised on a weighted basis primarily of fully global companies. 

As you learn more, and get closer to retirement age, your bond allocation matters.  That gets discussed far too little in these parts.

+1. To both points.

[EchoStache]

Act fast and have them put it all into a 2022 Roth.  Help them keep it simple and just go with either an S&P, total market, or target date index fund.

Personally, I advised my three young adult children to be 100% S&P500 index fund.

[Dicey]

Act fast and have them put it all into a 2022 Roth.  Help them keep it simple and just go with either an S&P, total market, or target date index fund.

Personally, I advised my three young adult children to be 100% S&P500 index fund.

Damn, UltraStache, look at you! You have learned so much here!

Dicey heartily endorses this advice. Maybe VTSAX, FZROX, or  equivalent. Just chose one and get it done.

[mistymoney]

If your current 'Place' is 'ask on the internet' the best place for now is indexing.  Really, its probably still best place even if you learn as much as a PhD in Finance.  VOO or VTI is about the same in my mind as the S&P 500 is comprised on a weighted basis primarily of fully global companies. 

As you learn more, and get closer to retirement age, your bond allocation matters.  That gets discussed far too little in these parts.

+1. To both points.

I don't even understand what this means! Could someone elaborate? current "place" - ???

[Financial.Velociraptor]

If your current 'Place' is 'ask on the internet' the best place for now is indexing.  Really, its probably still best place even if you learn as much as a PhD in Finance.  VOO or VTI is about the same in my mind as the S&P 500 is comprised on a weighted basis primarily of fully global companies. 

As you learn more, and get closer to retirement age, your bond allocation matters.  That gets discussed far too little in these parts.

+1. To both points.

I don't even understand what this means! Could someone elaborate? current "place" - ???

Your situation, level of understanding, etc.