I would go roth ira as well. You can start with as low as 1000 initial investment in a vanguard target retirement fund, so that could be an nice start. The lifecycles are also a nice choice but i think those are 3000 min investment.
You are lucky you have vanguard 500 and extended market in your 401k you can just have those and complement them with bonds and internation in your ira and taxable and you should be good to go.
Generally when we're talking small dollar amounts you want to be in a fund of some sort: that can either be a typical mutual fund, an ETF, or a bond one.
Individual stocks can be transacted fairly easily in a brokerage house but you're betting on arguably too few horses (I use Fidelity personally, Vanguard is another good one) but bonds typically trade in 50K lots and as such are difficult (admittedly not impossible but it is seriously time intensive) transact on smaller dollar volumes.
As for type of IRA, Roths tend to kick ass and based on what you posted I would personally pick; however, if you expect to be making less when you retire than currently, a tax deferred standard IRA is an option too.
I'm not a huge fan of the TR / retirement age type funds as the fees tend to be exorbitant and at a younger age your target mix is something like 95% stocks anyway and simply dumping it in SPY (SPDR S&P 500 ETF) is a non-suck yet easy method of doing similarly often with equal or better returns unfortunately.
@Revelate wrote:Generally when we're talking small dollar amounts you want to be in a fund of some sort: that can either be a typical mutual fund, an ETF, or a bond one.
Individual stocks can be transacted fairly easily in a brokerage house but you're betting on arguably too few horses (I use Fidelity personally, Vanguard is another good one) but bonds typically trade in 50K lots and as such are difficult (admittedly not impossible but it is seriously time intensive) transact on smaller dollar volumes.
As for type of IRA, Roths tend to kick ass and based on what you posted I would personally pick; however, if you expect to be making less when you retire than currently, a tax deferred standard IRA is an option too.
I'm not a huge fan of the TR / retirement age type funds as the fees tend to be exorbitant and at a younger age your target mix is something like 95% stocks anyway and simply dumping it in SPY (SPDR S&P 500 ETF) is a non-suck yet easy method of doing similarly often with equal or better returns unfortunately.
I agree for the most part about certain TR funds, but i think the exception comes to vanguard and fidelity. There are an few that are pretty good options with fees less than .20% which i think are very good. On the vanguard side you have the lifestrategy ones and their TR, fidelity has their four in one mutual fund and now have the freedom index TR funds. All four of those types of funds are very cheap relatively speaking. The low expense ratios are if you buy it from vanguard or fidelity brokerage houses.
I am also an pretty big fan of roth ira. I also do like the fact that you can withdraw from it if major emergencies do come up without any penalties.
@jorgevazquez87 wrote:
Thanks for all the information, interesting and very valuable for me.
wa3more, I have a savings account with 5k and I'm 27 years old. When you refer to Vanguard S&P index funds are these mutual funds?
I'm aiming at Vanguard to make this since it's my first time and Vanguard website/cs was better than expected via phone.
i personally would go for total stock market fund over s&p 500 fund since it will provide you an bit more diversification, since you have access to 3500+ stocks as opposed to 500 of the largest companies. Vanguard has etf and mutual fund versions of both 500 fund and total stock market funds.