Newbie investor, where to start?

[LRS]

I have a friend who recently battled her way out of debt and is working on living within her means and not creating new debt. She's also starting from the bottom with investing. She's thinking about putting $200 a month in a Roth IRA.

I've mentioned Vanguard to her and suggested starting with an indexed mutual fund. Which Vanguard product would be a good starting place for someone in her position?

 

[mb]

If she only has enough for one fund I would suggest a balanced fund.

IRRC most Vanguard funds have a min of $3k. An exception is STAR which has a min of $500.

Therefore if her funds are limited I suggest starting with STAR.

After she accumulates a bit more she could shift it to

- a Lifestyle Fund or some other balanced fund
- or some combination of index funds such as Total Market, Total International, etc.

Since it is an IRA switching funds is a non-taxable event.

MB

 

[unclemick]

Benchmark the age appropriate Target Retirement Fund and go from there - aka Bogleheads Guide to investing, Four Pillars or similar reading program of self education.

Although we humans have a tendency to overcomplicate things. Even a thirty year DCA into the Total Stock Market Index Fund and not reading a thing might even work - with a transition to a stock/fixed balanced fund as retirement nears.

Or age appropriate Target Retirement Fund - it's that simple.

Which leaves me nothing to pontificate on - hormone or B.S. wise.

Heh heh heh heh heh

 

[Goonie]

I know T. Rowe-Price will let you open a regular or Roth IRA with $100 if you use auto transfer from your bank account. Might Vangard be the same?? It might be worth checking to see.

 

[ylm23]

Vanguard most certainly does not allow that. I looked into it. No riff-raff at Vanguard!

 

[brewer12345]

Hmmm, does this person have an adequate e-fund stashed away? If not, I would concentrate on filling up a savings account first.

 

[LRS]

Thank for the responses. I showed my friend this site and encouraged her to do some research in the archives.

 

[Patrick]

Here's a website with a lot of good info to get her started:

http://www.icmarc.org/xp/rc/planning/guides/

Also this one from Vanguard:

https://flagship.vanguard.com/VGApp/hnw/content/PlanEdu/Retirement/PEdRetSaveOVContent.jsp