Vanguard Mutual Funds

[risknothing]

Ok so I have narrowed it down to the use of vanguard but now what are some good funds?

Emerging Mkts Stk Idx Inv?
International Growth Inv?
Developed Markets Index?

I'm looking to open the first mutual fund in my portfolio. Which should it be? The three i list have had good returns, Better then CD's.

[meaghanchan]

Re: Vanguard Mutual Funds

Vanguard has many great funds, it just depends on your goals.

Have you figured out an asset allocation plan yet?
Check here if you haven't, and complete the questionnaire:
Vanguard Investor Questionnaire

What is your age? What is the purpose of the money you are investing (retirement? Other?)
Is this fund going to be in a tax-advantaged account (Roth IRA/ 401(k))?

Without knowing that stuff it's difficult to advise on a specific fund.

Look past returns. Returns, as they state in every prospectus, aren't a guarantee. The fund that did well last year may do poorly next year. That's true even over long periods of time.

[risknothing]

Re: Vanguard Mutual Funds

I am 22 years old. I want to start saving for long term goals.

[Ima saver]

Re: Vanguard Mutual Funds

I am very pleased with Vanguard Index 500. It covers the largest 500 stocks in the market and has an average return of about 10% annually and very low expenses.

[Ima saver]

Re: Vanguard Mutual Funds

The funds you mentioned are risky, not so with Index 500! Another good one is Target retirement 2035 or 2045.

[risknothing]

Re: Vanguard Mutual Funds

I'm thinking about doing two things, Investing in the Retirement 2045 ($3000) and then one of the risky ones that i metioned before. And then maybe add at third later on. Good or bad idea?

[Ima saver]

Re: Vanguard Mutual Funds

I guess I would rather be safe than sorry. Now, If you had a lot of money, say $100,000, it would be ok to invest 5% ($5000) in one of the riskier funds. I would stick with retirement 2045 and Vanguard Index 500!

[risknothing]

Re: Vanguard Mutual Funds

haha yeah but i dont have anything close to that. I just graduated and got my first real job. I have more like $20,000 with $10,000 locked up in a 6 month and 1 year cd's. I am just looking to slowly add money to a mutual fund over time. I am looking to not ever have to use this money until retirement but its way to early to say that with any confidence. I just know that i always hear people say i wish i started investing earlier. Well I believe I'm at that earlier time in my life.

[Ima saver]

Re: Vanguard Mutual Funds

If you have $20,000 already, you are doing great!! Why not start with some of the safer funds and build from there. I started with just one mutual fund and had them automatically transfer $50 or $100 a month, into it!

[risknothing]

Re: Vanguard Mutual Funds

That $20,000 is going to drop pretty soon, I'm moving out of my parents house and into a Townhouse in less then a month and I'm estimating that It will cost me $3,000 to decorate and get all the stuff i need for the house. And then the amount i can save will go down dramaticly. But i would like to start a small investment that has a better then average chance to beat CD rates.

What about Vanguard Wellesley Income Fund?

By the way, do Mutual Fund shares ever split?

[meaghanchan]

Re: Vanguard Mutual Funds

I would recommend Target Retirement 2045 for a person in your situation.

Although the holdings change every year, here's what they are right now (2006):

1 Vanguard Total Stock Market Index Fund 71.9%
2 Vanguard European Stock Index Fund 10.9%
3 Vanguard Total Bond Market Index Fund 9.8%
4 Vanguard Pacific Stock Index Fund 5.1%
5 Vanguard Emerging Markets Stock Index Fund 2.3%

As you can see, you get a lot of US stocks, plus the diversification of bonds, and you get foreign stocks, including Emerging Markets. The expense ratio is very low (0.21%). The minimum initial investment is $3000, and the minimum for additional investments is only $100, so you could start off with that till you find out how much you're able to invest every month.

If you later decide to overweight emerging markets by adding a seperate emerging markets fund, just know what you're investing in. You're basically placing a bet that certain countries are going to do better than the overall US or global market- and in the case of Vanguard's emerging market index, those countries you're betting on are Korea (19.6% of holdings) and Taiwan (14.9%), followed by Brazil, China, and South Africa. If you want to make that bet- fine- just know what you're holding.

The Wellesley Income fund, because it provides income, is more for people at or closer to retirement age. I would think there would be a lot of tax consequences owning a fund like that (though I'm not an expert).

To answer your last question, mutual fund shares don't split (as far as I'm aware), but if a stock held within the mutual fund splits, you get the benefit. Someone can correct me on this if I'm wrong.

[risknothing]

Re: Vanguard Mutual Funds

Yeah thats the Mutual Fund that I will most likely invest in. Unless someone can give me a reason to invest in something else.

[Hypersion]

Re: Vanguard Mutual Funds

This website has dozens of examples of asset allocations you can pick from.

http://www.geocities.com/finplan825/ModelPortfolios-Data.html#Armstrong

I use

30% US Large cap
30% US small cap
10% Foreign Large cap
10% Frogein small cap
10% Emerging market
10% REITS

[Ima saver]

Re: Vanguard Mutual Funds

I agree with meaghanghan, Wellesey is too conservation for a young investor. Make sure whatever fund you chose, that you chose to have your dividends reinvested. That will help you gain more shares.

[risknothing]

Re: Vanguard Mutual Funds

Ok well I just opened an account and bought the Target Retirement 2045 fund.