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I just opened my Vanguard Roth IRA account
Posted on 8/23/17 at 1:57 pm
Posted on 8/23/17 at 1:57 pm
What the heck do I do now? 
Do I buy a fund? Which one?
I took the vanguard test and it told me --- 30% bond & 70% stock
Explain this to me like I am a 5 year old
I can deposit $5,500/year into my IRA account and do what with it? That $5,500 is tax deductible correct?
I do have a 401(k) through my employer, but will not be rolled over into this account.
Do I buy a fund? Which one?
I took the vanguard test and it told me --- 30% bond & 70% stock
Explain this to me like I am a 5 year old
I can deposit $5,500/year into my IRA account and do what with it? That $5,500 is tax deductible correct?
I do have a 401(k) through my employer, but will not be rolled over into this account.
This post was edited on 8/23/17 at 1:59 pm
9
Posted on 8/23/17 at 2:02 pm to DirtyMikeandtheBoys
quote:
I can deposit $5,500/year into my IRA account and do what with it? That $5,500 is tax deductible correct?
Negative. All of that money is post tax. You will recieve no tax deduction for it.
However, when you take it out, you will pay no tax for the gains and contribution between now and whenever you take it out in retirement. Youve essentially pre paid for tax at that point.
Also, be careful about contributing to it if you have an employer based retirement plan. There are contribution limits based on your income.
This post was edited on 8/23/17 at 2:03 pm
Posted on 8/23/17 at 2:11 pm to DirtyMikeandtheBoys
quote:
I can deposit $5,500/year into my IRA account and do what with it? That $5,500 is tax deductible correct?
Like the other poster said. Its already taxed dollars that you are putting into the Roth so can't deduct it. Traditional is the opposite in which it would be tax deductible but you already have a 401k.
You just let it sit and build now until you hit 59 1/2 and withdrawal tax free. I just did the target fund for right now but you can change it. Mine is basically 80% stock with 20% asset allocation. There are several threads about which Vanguard funds to pick, I would look at the sticky thread regarding Vanguard funds.
This post was edited on 8/23/17 at 2:46 pm
Posted on 8/23/17 at 2:45 pm to NYNolaguy1
quote:
Also, be careful about contributing to it if you have an employer based retirement plan.
This is incorrect. Only limit is based on income, employer plans are unrelated to a personal Roth IRA.
Roth 401k from an employer isn't related to a Roth IRA.
This post was edited on 8/23/17 at 2:48 pm
Posted on 8/23/17 at 3:50 pm to DirtyMikeandtheBoys
I had the exact same issue/question when I opened mine. I ended up putting my money into their holding account/money market fund thing. Once money is in there, you can buy into other funds and it will pull money from the money market fund. I chose to go for the VTIVX (Vanguard Target Retirement 2045 Fund).
Basically its this: Deposit from bank to Money Market Fund, buy into Target Retirement Fund/whatever you choose with the money in the Money Market Fund.
Basically its this: Deposit from bank to Money Market Fund, buy into Target Retirement Fund/whatever you choose with the money in the Money Market Fund.
This post was edited on 8/23/17 at 3:53 pm
Posted on 8/23/17 at 4:32 pm to DirtyMikeandtheBoys
Target Retirement Fund is the easiest. You could set an automatic draft weekly or monthly in order to average out your buy costs. After you learn a bit more about the different funds, you can sell a bit of the target retirement fund to buy other funds. Usually minimum buy prices are $3,000 for the first purchase. Low cost index funds are popular.
Read through the Vanguard Threads and go to the Vanguard site. There are descriptions for each fund. You are asking about asset allocation, and that is a big question, and everyone probably has a different answer. But, the Target Retirement Funds are a good way to start. You could also leave some money in a money market fund so that you have some money to buy other funds when you have enough saved.
Read through the Vanguard Threads and go to the Vanguard site. There are descriptions for each fund. You are asking about asset allocation, and that is a big question, and everyone probably has a different answer. But, the Target Retirement Funds are a good way to start. You could also leave some money in a money market fund so that you have some money to buy other funds when you have enough saved.
This post was edited on 8/23/17 at 4:33 pm
Posted on 8/23/17 at 4:41 pm to DirtyMikeandtheBoys
Very good move by opening this account. Contribute 5,500 dollars a year every year. As for which funds to by do your research and I'm sure someone on this board can help you out as well
Posted on 8/23/17 at 5:08 pm to DirtyMikeandtheBoys
quote:
I just opened my Vanguard Roth IRA account
Do you know if there is a minimum to open one?
I need to start contributing, but I don't exactly have a ton of money laying around other than my emergency account.
Posted on 8/23/17 at 5:17 pm to DirtyMikeandtheBoys
quote:
I took the vanguard test and it told me --- 30% bond & 70% stock
Sounds like you're a perfect candidate for the Wellesley fund. VWINX It's an excellent fund that I've owned for several years. I find it's a great fund to build up your roth balance before spreading into more funds/stocks.
Posted on 8/23/17 at 5:35 pm to Lazy But Talented
No minimum to open the account. I auto drafted $100 into the Roth IRA account upon setup.
But I know I will need to transfer at least $1,000 to buy into a fund. More likely $3,000. After that I will setup an auto draft and auto buy to happen weekly at $105.76 per week so I get to $5,500/year without even looking at it
But I know I will need to transfer at least $1,000 to buy into a fund. More likely $3,000. After that I will setup an auto draft and auto buy to happen weekly at $105.76 per week so I get to $5,500/year without even looking at it
Posted on 8/23/17 at 7:11 pm to DirtyMikeandtheBoys
Just pick a target date fund with the stock/bond ratio you like
Posted on 8/23/17 at 10:04 pm to Oenophile Brah
quote:
Sounds like you're a perfect candidate for the Wellesley fund. VWINX It's an excellent fund that I've owned for several years. I find it's a great fund to build up your roth balance before spreading into more funds/stocks.
I'm no investing wizard, but VWINX seems to badly underperform compared to the Vanguard target retirement date funds (and lots of other funds too).
Posted on 8/24/17 at 12:41 pm to sincerecontact
quote:
I'm no investing wizard, but VWINX seems to badly underperform compared to the Vanguard target retirement date funds (and lots of other funds too).
I was basing my recommendation off the OP's listed risk profile. When I initially started my Roth, it was also my emergency savings so I lowered my risk level. Once my Roth balance grew enough, I shifted to a more aggressive posture. Like I mentioned in my comment.
Posted on 8/24/17 at 4:18 pm to Oenophile Brah
I went with the suggestions in this article
LINK
I didn't use the bond fund. Instead I added an extra 5% to each of the other funds.
Its been doing well. The mid and small caps have been lagging. russell 2000 has been down recently
LINK
I didn't use the bond fund. Instead I added an extra 5% to each of the other funds.
Its been doing well. The mid and small caps have been lagging. russell 2000 has been down recently
This post was edited on 8/24/17 at 4:19 pm
Posted on 8/24/17 at 4:48 pm to Mikey P
quote:
I didn't use the bond fund. Instead I added an extra 5% to each of the other funds.
How far away from retirement are you?
And these are ETFs. If the thinking is to set it and forget it, why ETFs and not index funds?
Posted on 8/25/17 at 8:40 am to meeple
Yes, they are ETF's. I used to get the funds but I like the flexibility of the ETF's. These ETF's are indexes so its just like owning the fund.
I'm only 46 so I have a ways to go yet.
I'm only 46 so I have a ways to go yet.
Posted on 8/25/17 at 12:10 pm to Mikey P
Thanks for the article
Posted on 8/25/17 at 1:36 pm to Mikey P
quote:
I went with the suggestions in this article
That article lists a solid diverse portfolio, but it doesn't come close to the 30/70 risk threshold you mentioned. In fact, if you dropped the listed bond fund, you may be 100% in stocks. That may be fine for you, but be prepared for some potential volatility with stocks at all-time highs.
You seem like you have time before you need any of this money so that is good.
Posted on 8/26/17 at 10:27 pm to DirtyMikeandtheBoys
You get educated.
If you were to buy a rental property you would have to know the cost, expenses, risk, exit strategy, etc...
What would your strategy with Vanguard?
Are you a passive (index funds) investor or active?
Put some thought into it-if you don't you aren't investing, you are speculating and assuming 100% of the risk.
If you want to take the risk out you need to get educated..
If you were to buy a rental property you would have to know the cost, expenses, risk, exit strategy, etc...
What would your strategy with Vanguard?
Are you a passive (index funds) investor or active?
Put some thought into it-if you don't you aren't investing, you are speculating and assuming 100% of the risk.
If you want to take the risk out you need to get educated..
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