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Funds for Roths
Old 05-04-2012, 04:53 PM   #1
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Funds for Roths

Our Roths are our last buckets, to be inherited by our children or tapped 15-20 years from now. I want an investment that doesn't need oversight so a mutual fund, perhaps an index fund, would work well. They are at Fidelity but am open to Vanguard. I looked at funds with a dividend focus and found them wanting. Mid-cap growth might fit the bill.

[The IRAs will soon be primarily Wellesley, Permanent Portfolio with a salting of emerging markets & a couple distribution years of cash. We are both in our 70s.]

I am looking for suggestions...
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Old 05-04-2012, 05:01 PM   #2
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Vanguard STAR fund is a nice 60 stock/40 bond balanced fund that is simple. ER is .34%
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Old 05-04-2012, 08:48 PM   #3
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Since you have such a long time until you will need the money, volitility should be of minimal concern. I would go 100% equities. Value shares beat growth, and small beats large. You should be able to find a Wilshire 5000 index fund, or something like that if you trust that the US is a good long term bet. small value beating large growth article
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Old 05-04-2012, 10:26 PM   #4
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My gut is all equities too, we pick up bonds in the balanced IRA investments - particularly Wellesley. Interesting that your pick is small value over mid-cap growth. Would you suggest index over managed funds?
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Old 05-05-2012, 12:14 AM   #5
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If you do not want to or cannot watch them closely, you may not want managed funds. They can change managers or styles too easily.
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Old 05-05-2012, 11:41 AM   #6
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Good point. Even money managers retire. An index fund is probably wiser for the long term. How does an index fund distinguish between growth and value stocks?

ETFs work nicely in taxable accounts but I see no advantage in IRAs. Am I overlooking anything?
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Old 05-05-2012, 03:18 PM   #7
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We look at our Roth in the same way. We are using Vanguard's extended market index ETF (VXF) and own in our Fidelity account which is setup as a brokerage account so no problem buying. Cost is same as any equity--$8/trade. It is a blend of midcap and small cap.
We also include a slice of intl emerging markets--Vanguard VWO and large cap dividends with DVY.
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Old 05-06-2012, 11:48 AM   #8
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Quote:
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Good point. Even money managers retire. An index fund is probably wiser for the long term. How does an index fund distinguish between growth and value stocks?

ETFs work nicely in taxable accounts but I see no advantage in IRAs. Am I overlooking anything?
I use ETFs in my IRA when the expense ratio is lower than for an index mutual fund. Many brokerages now offer no or low cost commissions on ETFs.

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Old 05-06-2012, 11:51 AM   #9
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Now that I think of it I don't plan on liquidating the Roth investmens in dribs & drabs so an ETF would function as well as a mutual fund.
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Old 05-06-2012, 05:24 PM   #10
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My gut is all equities too, we pick up bonds in the balanced IRA investments - particularly Wellesley. Interesting that your pick is small value over mid-cap growth. Would you suggest index over managed funds?
At the end of that article, I think he references 3 ETF's that, if the rear-view mirror if a good guess for what's ahead, would leverage the mid and smaller equities his analysis says should beat the others over the long haul. You can pretty much ignore me, but Marrotta might be worth listening to. But I agree with the others that indexed are probably a better bet.
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