Getting in the game... ROTH/Vanguard

**humandraydel** · 03-27-2008, 03:12 PM

I would go with VTSMX as long as you don't mind the volatility of 100% stocks. Otherwise, either a target retirement fund or $3k in VTSMX and $2k in Vanguard's STAR fund would work great. Either way, congrats on getting an early start.

**lostboy** · 03-27-2008, 04:49 PM

Thanks for the advice. I'll look into the STAR fund idea as well. Very happy and feel very fortunate to have this opportunity to start early...

**humandraydel** · 03-27-2008, 05:29 PM

STAR is good because it has a minimum of (I think) $1k, whereas other Vanguard funds require $3k minimum. So, with $5k you can put $3-4k in VTSMX and $1-2k in STAR. STAR is about 60% stocks, 40% bonds. So $1k in STAR, $4k in VTSMX would be 92% stocks, 8% bonds.

**sweeps** · 03-27-2008, 05:31 PM

I would put 100% in VTSMX. $4,000 for your 2007 contribution. $1,000 for 2008.

**Broken Arrow** · 03-27-2008, 05:42 PM

Is there a particular reason why you wanted to avoid target retirement?

To me, VTSMX is great, but that means your entire portfolio is tied to the US market. You guys are so young that I really do think up to 30% of your portfolio should be diversified into VGTSK as well. And if you wanted to continue slicing like that without the work, you can do it all with target retirement....

Either way, it's great that you guys want to invest your money like that, and at such a young age.

**lostboy** · 03-28-2008, 07:36 AM

As for avoiding the target retirement option... Good question. I guess I wasn't aware of the things we could do with it. Thanks for the info. I will look into the STAR/VTSMX combo via the target option.

**noppenbd** · 03-28-2008, 07:47 AM

I think what broken arrow was saying is that once you start trying to diversify with STAR/VTSMX/VGTSX/VDEQX that you are really doing the same thing as a target retirement fund. The target retirement allocations are fixed by the company that offers it, so it is sort of a generic approach, but not necessarily a bad one, especially when you are just getting started and bumping up against the account minimums.

**jimmyengland** · 03-28-2008, 08:37 AM

I personally think you will be best off with the target fund. You can put it out to like a 2050 which should be pretty aggressive probably 90% stocks and you will be well diversified. I am pretty much the same age as you and untill you have more money inevested in your roth without doing a target fund it is very hard to be diversified as you barely have enough to cover the minimums. As you start to get more money in your roth then move from the target fund to your own strategy. Well that is my plan anyway good luck

**Broken Arrow** · 03-28-2008, 10:48 AM

Originally posted by noppenbd View Post

I think what broken arrow was saying is that once you start trying to diversify with STAR/VTSMX/VGTSX/VDEQX that you are really doing the same thing as a target retirement fund. The target retirement allocations are fixed by the company that offers it, so it is sort of a generic approach, but not necessarily a bad one, especially when you are just getting started and bumping up against the account minimums.

That is exactly right.

There's no need to make it harder on yourself by trying to roll your own, especially if a decent, ready-made one is available to you. Believe me, the Target Retirement system is better than many people give it credit for.

You can roll your own eventually, but I wouldn't do so until you have a good grasp of the target retirement fund, why it's not going to work for you, and know exactly what will....

**lostboy** · 03-28-2008, 01:44 PM

Thanks for the advice everyone - the help has been great!

Getting in the game... ROTH/Vanguard