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Old 07-25-2009, 01:21 PM   #21
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There can be annual fees, like $10 or $30 or there could be no annual fees. What company to go with depends on your other investments and the amount of money you want to invest. If you have at least $1000 you go with Vanguard, but only 1 of their funds allows an initial minimum investment under $3000 and that's the Vanguard STAR with a $1000 minimum. If you have less than $1000, then it becomes more problematic, but still doable. There are lots of options, but they will generally cost a little bit more money in terms of expense ratios.
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Old 07-25-2009, 04:01 PM   #22
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Originally Posted by bw1985 View Post
Hi all, I'm new here, found this place through google!

I'm 23 and started my career out of college about a year ago. I'm going to open a Roth at Vangaurd because thats where my 401k is, but I'm not sure what fund to start it with. I know I only have until April to fund it with the full 5k so I was just going to fully fund it upon opening. My 401k is 100% Target retirement 2050 which is mostly made up of VTSMX.

Now I've heard index funds are the best way to go but since I'm already doing that in my 401k should I pick another fund for the Roth, maybe something riskier since I'm only 23? I've read FAIRX and DODGX might be good choices?

I also have 25k in a savings account and I think I should be doing more with it to earn some returns. Maybe I should open a trading account online? I have no debt or responsibiliites so I'm open to being risky to earn higher returns than 2%. I'd like to leave some in the savings for emergency and do something better with the rest.

Thanks and look forward to advice
The cool thing about target funds is they take the allocation (asset allocation) decision out of the investors hands.

If you were to choose a normal mutual fund, before choosing the mutual fund you would determine how much risk you are willing to take.

So you need to know
a) risk tolerance
b) an asset allocation which fits that risk tolerance
c) mutual funds which can make up the asset allocation

if you skip to C you missed two great steps a) and b)

risk tolerance is usually defined as % stocks and % bonds. It is determined in part based on age (younger=more risk) and how you react to financial issues and financial news (if market goes down are you selling or buying).

Your current fund is 90% stocks and 10% bonds according to another poster. You should look into this and know if this is fact or not.

Before making any changes based on 90-10, you should do a risk tolerance quiz. It might mean the 2040 fund is better for you because it is less aggressive.

Not sure how many here pick their own funds vs use target funds... I pick my own. and manage my allocation myself.
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Old 07-25-2009, 05:57 PM   #23
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With VFIFX you are underweight in small value. I would go with that in the Roth.

VFIFX is made up of:
Quote:

Vanguard Total Stock Market Index Fund Investor Shares 72.0%
Vanguard Total Bond Market II Index Fund Investor Shares** 10.1%
Vanguard European Stock Index Fund Investor Shares 9.2%
Vanguard Pacific Stock Index Fund Investor Shares 4.8%
Vanguard Emerging Markets Stock Index Fund Investor Shares 3.9%
Of course you need to watch the allocation. So I would not go more than 10-15% of the total in small value (VISVX).
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Old 07-25-2009, 06:06 PM   #24
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I have uninvested cash in my account from previous years. That is why I have more than the $5,000 yearly contribution limit to invest currently. I realize there have been harsh losses in each of these funds and it is a great opportunity to get in at these levels. Since the minimum investement is $3,000 for each of my choices perhaps I will choose two. I'm leaning towards $3,000 in VFIFX (thus buying both the VBMFX and VTSMX) and $3,000 in VWINX.
You're 26, and can only invest $5K this year in the Roth. Put it all in VFIFX, which has 10% VBMFX. If you are not happy with that, then go with a different target fund to get more VBMFX.
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Old 07-26-2009, 07:34 AM   #25
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inquisitive resurrected this thread yesterday.
Quote:
Basic question about starting a Roth IRA: In addition to the internal fees that mutual funds charge, does it cost anything to open a Roth IRA and are there annual fees? How does one decide what company to go through?
The OP hasn't posted since last February.
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Old 07-26-2009, 08:18 AM   #26
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inquisitive resurrected this thread yesterday.

The OP hasn't posted since last February.
Thanks. Saw that.

Thought it a good idea to add the target fund's AA, and also correct the Roth contribution mistake.
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Old 08-05-2009, 09:15 PM   #27
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So I am deciding between Tradeking and Fidelity to open a Roth IRA. Does every company basically have the same selection in terms of no load mutual funds and retirement funds? I am going to start with the full $5000 so the minimums don't bother me.

I noticed that some of you are recommending retirement funds such VFIFX. Didn't all of these get destroyed last year? I pulled up a chart of the S&P 500 for the past couple years and there is no clear uptrend. Wouldn't it be safer to be in bonds or a money market fund and then switch into a stock fund later (and are there transaction fees for doing so?)? Instead of these 2050 type funds, wouldn't it also make more sense to get into the most aggressive funds now, eg an emerging market fund or small cap fund?
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Old 08-06-2009, 05:05 PM   #28
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So, you're going to wait until the S&P recovers (gets more expensive) and then buy? Sounds like dirty market timing, to me. Which seldom works, apparently. How do you know that this market isn't going to be the cheapest it'll be for 10 years? Or, maybe a couple 10% "corrections" are coming. If it's all so obvious, how come some fund manager isn't consistantly "knocking one out of the park".
I'd figure out your risk level, adopt an asset allocation (stocks vs. bonds, then types of funds) and stick with it. Maybe read some books like Bill Bernstein's 4 Pillars or Bogleheads Guide to Investing. Until that, I'd pick one of those Target Retirement funds or something similar. They give you exposure to everything - stocks, bonds, international, emerging markets, etc. Until you figure out if you want to "slice and dice" and/or chase past performance.

Re-read jIMOh's post above.

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Old 08-06-2009, 09:17 PM   #29
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So I am deciding between Tradeking and Fidelity to open a Roth IRA. Does every company basically have the same selection in terms of no load mutual funds and retirement funds? I am going to start with the full $5000 so the minimums don't bother me.
Absolutely not. For example, to buy a Vanguard fund at Fidelity will cost you something like $75 in commissions. To buy a Fidelity fund or a fund in the Fidelity no-transaction-fee (NTF) network will not cost you a commission, BUT the ongoing annual expense ratio will be higher than the corresponding Vanguard fund unless you use the Fidelity Spartan funds.

Or you can purchase an ETF, but both Fidelity and TradeKing charge commissions for that, while some other brokers do not charge commissions if you keep enough money with them.

Quote:
I noticed that some of you are recommending retirement funds such VFIFX. Didn't all of these get destroyed last year?
Vanguard is well-known for its index funds. If a fund got "destroyed" it is because the underlying index(es) got destroyed. One should figure out their risk level and then dial in that risk level with their desired asset allocation. It seems that rather than jump in and buy a target retirement fund based on some date in the name, that one should figure some things out first.

Good luck!
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Old 08-10-2009, 01:37 PM   #30
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If I have my Roth with TD Ameritrade instead of through Vangaurd, will it cost me more somehow if I try buying Vanguard mutal funds in my roth through TD Ameritrade?
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Old 08-10-2009, 01:43 PM   #31
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If I have my Roth with TD Ameritrade instead of through Vangaurd, will it cost me more somehow if I try buying Vanguard mutal funds in my roth through TD Ameritrade?
First of all, do you know that Vanguard funds are available through Ameritrade?

Even if they are, chances are that there will be transaction fees involved. Vanguard tends not to participate in those "no fee" mutual fund supermarkets; doing so would require their expenses to increase and Vanguard tries to keep them as low as possible.
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Old 08-10-2009, 02:00 PM   #32
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I've researched about 10 popular Vanguard funds and all are accessable through TD Ameritrade.
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Old 08-10-2009, 05:59 PM   #33
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Yes you can buy Vanguard funds through TDAmeritrade, but if you buy the open-end mutual fund it will cost you lots in commissions. If you buy the ETF share class (if it exists), then it will likely be cheaper and cost a commission of $10. You can easily read the commission/fee schedule for your brokerage account much easier than we can, so why not do so and tell us what your costs would be?

Of course, you can avoid the commissions altogether for Vanguard funds by opening a mutual fund account directly with Vanguard or by opening a PMA account at WellsFargo with a WellsFargo brokerage account and by having $25,000 in combined assets at WellsFargo.
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Old 08-11-2009, 10:01 AM   #34
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One of the things that I do that you might find helpful, is to fund my Roth IRA at the end of the year.... for the previous year. I have set up my deductions etc, that for now, I almost always get back around 3k or so. It is really difficult to make 5k dissappear at once into your Roth IRA... so by doing it that way it is sort of a "forced" savings on myself. So when my tax return comes back, it get put back right into the Roth IRA.

I could probably do inventments that have a slightly better return with the money during the year.... but this way I have a fairly good idea where a large percentage of my Roth IRA money is going to come from in advance.
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