Need recommendations for my Roth...

[LRAO]

Hey everyone....

My Roth did well for 2004. Now I am looking towards 2005 contributions, buy-ins, etc.

Here's what I have:

2004
$1000 VFINX (500 Index)
$1000 VGTSX (International Index)
$1000 NAESX (Small Cap Index)

As you Vanguard people know, most of their funds require $1000 buy-ins.

So, where do I allocate my $4000, which translates to possibly 4 new funds?

Thanks.

 

[KB]

If you're happy with the 3 funds you have now, why not split the money between them?

 

[Bob_Smith]

LRAO, a response would require more information. Is the $3000 you listed the total of your investment portfolio currently? How far are you from retirement? Do you have all the other bases covered (insurances, emergency fund, no credit card debt, etc.)?

Also, doesn't Vanguard zing small accounts with various fees? If you're in that situation, I'd consider consolidating everything into one of their Lifestyle or Target funds to keep those fees to a minimum. Just two of those $10 fees on a $1,000 account is 2%, which is ten times what I'm paying.

 

[LRAO]

Bob,

No, it's just my Roth.

I maxed out my SEP-IRA last year. Am on pace to max that out again this year.

I have 6 months of living expenses sitting in an ING account.

I have no credit card debt.

I'm 27, 3 years out of school.

Thanks for asking!

 

[Hyperborea]

Do you have an overall asset allocation plan?  If so, then allocate the money in the Roth to bring or keep your funds in balance with your plan.  If you don't have a plan then make one first.

Even if you do have a plan you may need to deviate from it somewhat with small portfolios to avoid excessive fees as Bob_Smith suggests.  One way to do this is to keep your asset allocation simple until you have a larger portfolio and then to diversify more.

If your overall portfolio is large but this account is small then keep only one asset class in the small account.  For example, my wife's IRA isn't very large as a percentage of our total portfolio but what we do is put all the money in the IRA into one asset class.  Even then it's not enough to max out that asset class as per our asset allocation plan.  We then use another account to get the rest of that asset class that we want and we use that other account to do rebalancing of that asset class.