Help with IRA

[Anonymous]

I'll be opening a Roth IRA with vanguard in a month or two and I'm wondering what are generally the best areas to invest my money into. I know bonds are not such a good idea in general for my age, so what is?

[mongstradamus]

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@Anonymous wrote:
I'll be opening a Roth IRA with vanguard in a month or two and I'm wondering what are generally the best areas to invest my money into. I know bonds are not such a good idea in general for my age, so what is?

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70% US stock and 30% International isn't an bad place to start. 

[heyitsyeh]

Assuming you have only the 5.5k limit this year to start with, a Vanguard S&P 500 index.

[mongstradamus]

I would rather go with their market fund since it covers mid cap and small cap as well as s&p 500

[SCF]

If you're looking for a "set it and forget it" approach, Vanguard offers "target date" funds that automatically balance your assets between different types based on how far you are from retirement.  The fund starts out being heavily weighted toward riskier stocks, and then puts more money into stable investments as you age.  Their fees are a little higher than Vanguards other funds, but they're still generally considered a good deal for investors who just want their money to take care of itself.

Since you don't seem to have much experience or knowledge at the moment, I would buy the target date fund that matches your expected retirement date for now and then spend the next few months learning about investing, portfolios, your goals for retirement and your own risk tolerance.  You won't lose out on growth from your money, but you'll also have plenty of time to make an educated next move.

[mongstradamus]

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@SCF wrote:

If you're looking for a "set it and forget it" approach, Vanguard offers "target date" funds that automatically balance your assets between different types based on how far you are from retirement.  The fund starts out being heavily weighted toward riskier stocks, and then puts more money into stable investments as you age.  Their fees are a little higher than Vanguards other funds, but they're still generally considered a good deal for investors who just want their money to take care of itself.

Since you don't seem to have much experience or knowledge at the moment, I would buy the target date fund that matches your expected retirement date for now and then spend the next few months learning about investing, portfolios, your goals for retirement and your own risk tolerance.  You won't lose out on growth from your money, but you'll also have plenty of time to make an educated next move.

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Target date funds are good choice, they only issue i have which is an really minor issue is that if you buy the individual mutual funds seperately they can graduate to admiral shares, while TDF usually stay at invester expense ratio. Its an very minor thing since target date funds are the easiest set it and forget it funds

[Anonymous]

OP quick question - how old are you?

The bad thing with Target Date funds is that they don't account for whatever amount of risk an individual is really capable of handling. If the OP is young, he can take a much more aggressive portfolio than a 50 year old. 

[Anonymous]

I'm 20 years old and will turn 21 in June.

[Anonymous]

You are very young, I wouldn't mind investing in a pretty aggressive portfolio, If you think you're comfortable with it. You have time on your side and should be alright.

[Anonymous]

Take a look at the Vanguard Lifestrategy Growth, 80% stocks 20% bonds. Good thing about the Lifestrategy funds is that they offer diversification while being cheap and easy to manage (you pretty much select the portfolio without worrying about selecting individual funds). Highly recommended if you are not highly knowledgeable about investing. As you age you switch your Lifestrategy.