Vanguard Roth IRA- STAR or Target Retirement | TigerDroppings.com

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YankeeDoodle
South Carolina Fan
Member since Mar 2013
365 posts

Vanguard Roth IRA- STAR or Target Retirement



Finally about to open up a Roth IRA and this question has come up. Now I am not an expert by any means but I am starting to learn. From what I can tell, STAR will provide a "safer" investment with a 60/40 split rather than the 90/10 split that a TR has. Both require a min $1000 to open as that seems like a good starting point for me. As a beginner, what would be the better option for me?

Sidebar question: Once I pick one of these funds and start to contribute to it, does it then act almost like a savings account where I simply put money into it and watch it or do I have to actively manage what funds it is going into? Basically an "I set it and forget it" kind of account?(hopefully that is not a stupid question )







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jimbeam
USA Fan
University of LSU
Member since Oct 2011
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re: Vanguard Roth IRA- STAR or Target Retirement


Vttsx

For now

You're welcome

You can set it and look at it in 50 years if you want



This post was edited on 11/5 at 1:38 pm


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Volvagia
LSU Fan
Baton Rouge
Member since Mar 2006
41097 posts

re: Vanguard Roth IRA- STAR or Target Retirement


Hold old are you?

FWIW, I would start off in a STAR just to get your feet off the ground and start getting time in market.

Then when you have enough, buy into something like VHCOX or VSEQX

Continue contributing at a 30/70 or so into STAR/equity fund.


Then forget it.


IDK....you wouldn't be wrong setting and forgetting STAR....but I just wouldn't like the idea of being that highly invested in bonds for retirement goals.


FWIW, I only use STAR in my account for money I might pull out...emergency fund, down payment of my house, etc.

My retirement contributions are separate and in addition to whatever I put into the STAR, thus allowing me to use the tax advantaged status for day to day purchases without stealing from my retirement.



I do however use a Vanguard Target Retirement for my Roth 401k contributions though, simply because it is the best option offered.






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PlanoPrivateer
LSU Fan
Frisco, TX
Member since Jan 2004
1383 posts

re: Vanguard Roth IRA- STAR or Target Retirement


I agree with JimBeam. I am assumming you are fairly young. If so you don't need much, if any, money in bonds.

Once you pick you fund just send them money on a regular basis. Vanguard will add it to your fund. As you gain experience you may want to be more active and pick some other funds.







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Fat Bastard
New Orleans Saints Fan
Paradise
Member since Mar 2009
16578 posts

re: Vanguard Roth IRA- STAR or Target Retirement


quote:

When you buy stock on the LA lakers you know the coach, the players, the injuries and the opposing team,..... WTF would you bet the stock market?



LINK







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Oenophile Brah
LSU Fan
The Edge of Sanity
Member since Jan 2013
5510 posts

re: Vanguard Roth IRA- STAR or Target Retirement


quote:

Vttsx

The expense ratio is so low.

It's very attractive. I'm in a similar spot as the OP. My account is with Fidelity, are you aware of a similar Fidelity Fund with that low an expense ratio?






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jimbeam
USA Fan
University of LSU
Member since Oct 2011
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re: Vanguard Roth IRA- STAR or Target Retirement


If not a target fund, they'll surely have a total stock market or sp500 fund with very low ER





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YankeeDoodle
South Carolina Fan
Member since Mar 2013
365 posts

re: Vanguard Roth IRA- STAR or Target Retirement


quote:

Hold old are you?



25 years old. I already have a retirement set up through work (government job so solid retirement) but figured I might as well do more with the added benefits of a Roth.

I guess one of my concerns is if this is something that is easily manageable on my own or if I should just go through some sort of financial adviser. From the research I have done, it seems like a simple roth is something an amateur like me should have no problem with managing.






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jimbeam
USA Fan
University of LSU
Member since Oct 2011
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re: Vanguard Roth IRA- STAR or Target Retirement


I would not suggest an advisor

Buy a target fund(mix of bonds and index of equities) or an index fund. This will consistently beat an active approach by an advisor

And you don't need to pay advisor to buy an index fund for you







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YankeeDoodle
South Carolina Fan
Member since Mar 2013
365 posts

re: Vanguard Roth IRA- STAR or Target Retirement


quote:

agree with JimBeam. I am assumming you are fairly young. If so you don't need much, if any, money in bonds.

Once you pick you fund just send them money on a regular basis. Vanguard will add it to your fund. As you gain experience you may want to be more active and pick some other funds.


Thanks for the advice. It looks like I would just have to through a bit more extreme ups and downs with a target retirement fund if the market fluctuates, but I am not planning to invest a whole lot. This is something to supplement my retirement and just get me better returns than an online savings account






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YankeeDoodle
South Carolina Fan
Member since Mar 2013
365 posts

re: Vanguard Roth IRA- STAR or Target Retirement


quote:

I would not suggest an advisor


I actually have a few buddies of mine working in Primerica and they have been asking me if I wanted to set up a roth through them, but I just dont see the need to after doing my research into Vanguard and Trowe. It seems like I can handle it on my own and wouldn't have to lose any money I could be investing






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Volvagia
LSU Fan
Baton Rouge
Member since Mar 2006
41097 posts

re: Vanguard Roth IRA- STAR or Target Retirement


What is the point of this?

Retirement Supplement/Emergency Fund?

If you need it, it's there, if you don't, Miller Time at 59.5?


Then yeah, STAR is an excellent choice of balancing return with volatility.

Remember though that you can only really take out what you put in with no penalty (which is a benefit in my case....I can take out earnings from the emergency fund segment tax free thanks to contributions to the retirement side) so its to your advantage to put a fair amount in.

Also, you are allowed to take out 10k of earnings tax and penalty free for the purchase of your first house.






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YankeeDoodle
South Carolina Fan
Member since Mar 2013
365 posts

re: Vanguard Roth IRA- STAR or Target Retirement


quote:

What is the point of this?

Retirement Supplement/Emergency Fund?


Basically this. I just want to get more out any extra money that I have rather than letting it sit in a lower interest online savings account.

quote:

Remember though that you can only really take out what you put in with no penalty (which is a benefit in my case....I can take out earnings from the emergency fund segment tax free thanks to contributions to the retirement side) so its to your advantage to put a fair amount in.


So from my understanding, I can take out whatever I put in after 5 years penalty free (or can I do that even before 5 yrs?). But I have to wait until I am 59.5 years old to take out the earnings penalty free right? Minus house exceptions and the other type of things.



This post was edited on 11/5 at 3:58 pm


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BayouBengal
LSU Fan
München
Member since Nov 2003
26717 posts

re: Vanguard Roth IRA- STAR or Target Retirement


quote:

Finally about to open up a Roth IRA and this question has come up. Now I am not an expert by any means but I am starting to learn. From what I can tell, STAR will provide a "safer" investment with a 60/40 split rather than the 90/10 split that a TR has. Both require a min $1000 to open as that seems like a good starting point for me. As a beginner, what would be the better option for me?

Sidebar question: Once I pick one of these funds and start to contribute to it, does it then act almost like a savings account where I simply put money into it and watch it or do I have to actively manage what funds it is going into? Basically an "I set it and forget it" kind of account?(hopefully that is not a stupid question )


I own these two in my Vanguard account. I don't think you have to sink $1000 all at once if you set up automatic contributions. I basically "set it and forget it" with these though I do log in regularly to double check my balance and rate of return. The funds are managed so no need for you to change anything unless you wish to change your allocations, switch to a new fund or to swap out of one and into another. TR automatically adjusts itself to become more conservative over the years.






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HailToTheChiz
Auburn Fan
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Member since Aug 2010
8623 posts

re: Vanguard Roth IRA- STAR or Target Retirement


i thought the minimum to open a IRA was $3,000 deposit?





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Catman88
LSU Fan
Baton Rouge, LA
Member since Dec 2004
40245 posts

re: Vanguard Roth IRA- STAR or Target Retirement


quote:

Vanguard Roth IRA- STAR or Target Retirement


I read this as the other option being to become a door greeter for extra cash at Target post career.






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Volvagia
LSU Fan
Baton Rouge
Member since Mar 2006
41097 posts

re: Vanguard Roth IRA- STAR or Target Retirement


All non conversion contributions are allowed to be withdrawn at any time with no questions asked

Conversion contributions can be withdrawn tax/penalty free after the Roth account is older than 5 years old.






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jimbeam
USA Fan
University of LSU
Member since Oct 2011
33000 posts
 Online 

re: Vanguard Roth IRA- STAR or Target Retirement


The min is 1000 for star and targets





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NYNolaguy1
LSU Fan
Astoria, New York
Member since May 2011
864 posts

re: Vanguard Roth IRA- STAR or Target Retirement


I recently bought into Vanguard's S&P 500 Index fund- VFINX. With an expense ration of .17%, I can't complain much...





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LSU Delirium
LSU Fan
Member since Aug 2013
18 posts

re: Vanguard Roth IRA- STAR or Target Retirement


Sorry to OP for hijacking thread but....

Debating between putting some money for a long term investment into VFIFX (Target 2050 Fund) or selecting my own funds.

Was thinking ~35% in Small-Cap Growth Stock Fund (VEXPX), ~35% in Large-Cap Value Stock Fund (VWNFX) ~30% in International Stock Fund (VWIGX).

Any thoughts on going one way or the other? Selecting my own funds has historically better returns and is more aggressive, but also has higher expense ratios (~.5% for funds vs .18% for targeted fund).

TIA.






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