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Subject:  Re: New to Fool - lots of questions Date:  2/3/2004  4:31 PM
Author:  dsemmler Number:  38922 of 88517

As for my current Roth IRA - I think I will transfer that to a fund family such as Vanguard. I do not want to be investing in the same index fund in my Roth IRA as I am in my 457 (deferred compensation) plan though. Do you think it is smarter to invest in an index fund through my deferred comp plan, or through a Roth IRA? Again, I do not get any matching from my deferred comp plan, but they do offer a Vangaurd Total Stock Market Index.

Do you not want to invest in index funds in both your Roth IRA and your 457? Is there a particular reason you are opposed to that? My current situation has me essentially in index funds at 100%. There are still a few stocks that I hold that were purchased before I became Foolish but that is a very small piece of my portfolio.

Also, depending on your asset allocation strategy, you could stick with one fund such as the Total Stock Market Index fund in all of your accounts as you build your foundation. Some people prefer more of a "slice and dice" approach where you cover more of the various types of available funds. Personally, I have invested almost entirely in the Total Stock Market Index fund with a small position in the S&P 500 Index fund. These two funds mirror each very closely but there are slight variations. Once I build up a foundation of 2-3 times my annual salary, I will re-evaluate my holdings and weigh my choices of sticking with my plan or going with a more diverse allocation.

Also, since you do not receive any match in your 457, I would be inclined to max the Roth IRA contribution first and then redirect funds to the 457 as you can. The Roth will most likely offer the greater rewards as the growth will all be tax-free, assuming tax laws with regard to Roths remain constant.

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