Roth IRA Asset Mix Question

[cologero]

Hey everyone,

I finally opened a Roth IRA through Vanguard this week (for $5,500). I selected the Vanguard 500 Index Fund. I don't know if this happened by default for that fund, but my asset mix at 100% stocks (Large Cap).

So my situation is that I'm pretty much just starting my retirement at 36 years old so I have some catch-up to do. I have no plan on withdrawing any money from this account unless all he** broke lose and I needed every penny I had.

I took the Vanguard investor questionnaire a few minutes ago and it recommended 70/30 stocks and bonds. This made me wonder if I need to re-adjust things. I mainly opened this account up because I wasn't earning anything in a savings account. I certainly don't want to lose my $5,500 over the long-term. Should I keep this at 100% stocks, or make adjustments?

Thanks in advance for the feedback.

[autoxer]

You will see a lot of different views on asset allocation, so it is tough to figure out which one is right for you, but you don't have to rush back in and start making adjustments. Just do a lot of reading and when you are ready to make your next contribution, you can use that to adjust your allocation. Personally I am 35yo and comfortable with 90% stocks, 10% bonds.

[feh]

You'll want to read this page: http://www.bogleheads.org/wiki/Bogle...g_start-up_kit

It's good that you took the questionnaire to find your risk tolerance. At your age, 70/30 sounds sensible.

That being said, since you are just starting, your asset allocation isn't really that important. How much you save is the primary factor for your success.

Given you're only talking about a few thousand dollars, I wouldn't worry about equity/fixed income ratio at this point. Just keep saving...when it gets to be 10s of thousands of dollars, then you may want to buy some bonds/CDs.

[cologero]

Thanks for the advice everyone! I'll continue to read up. If I'm hearing everyone correctly, it sounds like at this point I'm fine with 100% stocks, but 70/30 is probably more realistic?

Question, does anyone know if there are any cons to changing my allocation to say 70/30 with Vanguard? In other words, are there fees for changing it, penalties, etc.?

[Petunia 100]

Thanks for the advice everyone! I'll continue to read up. If I'm hearing everyone correctly, it sounds like at this point I'm fine with 100% stocks, but 70/30 is probably more realistic?

Question, does anyone know if there are any cons to changing my allocation to say 70/30 with Vanguard? In other words, are there fees for changing it, penalties, etc.?

There aren't any fees to switch funds. There are a few VG funds which have early redemption fees, but your fund isn't one of them.

Personally, I prefer VG's target retirement funds. They hold total stock market, total international stock market, total bond market, and now total international bond market. It is a nice diversified low-cost portfolio with a single fund.

(Total stock market is about 70% S & P 500, plus mid and small cap stocks).

I have both my Roth and Simple IRAs invested entirely in VG's TR 2030 fund, so I really do think they are a very good choice.