Author Topic: Vanguard REIT or VTSMX to Start with ROTH IRA?  (Read 2641 times)

dragonstache

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Vanguard REIT or VTSMX to Start with ROTH IRA?
« on: March 18, 2014, 10:39:25 AM »
Ho, Fellow Mustachians!

I've been poking around the forums a bit, and the consensus seems to be VTSMX to be a good core holding. However, I've also read some posts arguing that for tax advantaged accounts such as a ROTH IRA, high dividend yield products such as REIT are better because of the tax implications.

I'm a pretty young guy (23) and as I'm returning to school, I don't anticipate contributing significantly or (hopefully) touching this account for at least 4 years. I have about $3,300 in my money market with Vanguard right now, and I'm wondering what might be best to start with. I'm willing to take on a bunch of risk as well, because of my age. Which product with Vanguard (or another one with vanguard) would you reccomend? VTSMX or VGSLX (the vanguard REIT)? I also thought a lot about NAESX (the small cap index).

Alright, thanks so much mustachians. Here's to vast financial wealth, eternal life, and endless strength!

foobar

  • Pencil Stache
  • ****
  • Posts: 731
Re: Vanguard REIT or VTSMX to Start with ROTH IRA?
« Reply #1 on: March 18, 2014, 11:42:50 AM »
You don't want to hold reits in taxable accounts since they generate a lot of non qualified dividends that get taxed as OI.  REITs and the Stock market have had generally the same performance over the last 60 years (~9-11% depending on the exact dates and index being tracked). Personally I like total market a bit more for diversification but I own both. Small caps have out performed large caps over the last 100 years or so but given that we are in the middle of a small cap outperformance cycle, it might not be the best time to be buying in.

Ho, Fellow Mustachians!

I've been poking around the forums a bit, and the consensus seems to be VTSMX to be a good core holding. However, I've also read some posts arguing that for tax advantaged accounts such as a ROTH IRA, high dividend yield products such as REIT are better because of the tax implications.

I'm a pretty young guy (23) and as I'm returning to school, I don't anticipate contributing significantly or (hopefully) touching this account for at least 4 years. I have about $3,300 in my money market with Vanguard right now, and I'm wondering what might be best to start with. I'm willing to take on a bunch of risk as well, because of my age. Which product with Vanguard (or another one with vanguard) would you reccomend? VTSMX or VGSLX (the vanguard REIT)? I also thought a lot about NAESX (the small cap index).

Alright, thanks so much mustachians. Here's to vast financial wealth, eternal life, and endless strength!