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Author: jbking Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75379  
Subject: Re: VANGUARDS ROTH IRAS Date: 2/21/2002 2:00 AM
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Greetings P8NT,

I started my ROTH IN 1998 investing 2,000 each year for the past 3 years.

Now, you do realize that there was a management change in June 2001 and so that for most of the past 3 years it isn't the track record of the current managers, right?

I lost about half the value in my ROTH since I selected Vanguards US GROWTH which took a beating the past few years. (figures) Anyway, I was thinking about selecting Vanguards VTSMX (total market fund) as my ROTH since I feel better about investing in a more conservative but more diversified fund. How do I go about switching these funds?

If you have on-line access to your account, you can exchange funds there OR you could call Vanguard OR you could write them a letter for a few ideas. I have changed funds through Vanguard's site in my own Roth without problems, FWIW.

I don't want to take the money out of US GROWTH, just start making payments toward an index fund... can you have two funds that work as roths??

The Roth is an account and within that you can have as many funds as you want so long as you meet the minimums for each fund. For my Vanguard Roth I have always had 2 funds in it and could add a few more next year IF I wanted to with the $3,000 limit on IRAs and Vanguard having a $1,000 minimum for IRAs on their funds.

In this case, I'd be more tempted to take a good look at Vanguard's value funds to complement a growth fund rather than buy a blend that will likely hold a fair amount of overlap with a growth fund unless you don't mind having this overlap, ie by having VTSMX and VWUSX you will be doubling up on holdings within VWUSX that are also in VTSMX.

How low can US GROWTH GO??

Hypothetically, quite low since large-cap growth was a rather high performning segment of the market recently. I think if you invest in a stock fund that focuses on one corner of the market that you should expect some volitility here and may see losses of 50-75% in the worst cases although some funds may be down 90-99% in some cases like what Jacob Internet(JAMFX),Van Wagoner funds(VWPVX, VWTKX, VWMDX, VWMCX, VWEGX) and some leveraged index funds like Profunds UltraOTC(UOPIX).

Just because some private stock funds get really really low doesn't mean it's time to buy, I realize that... they could very well keep on going down. Is that the same case as these mutual funds??

Yes, although I would suggest having a plan that notes when it is time to sell a fund that isn't doing what it is supposed to do which I don't think you have.

I am afraid to put another 2,000 for last year and 3,000 for this year into my ROTH. (US GROWTH)

Then my I highly suggest putting it into another Vanguard fund, preferably a large-cap value fund like Windsor(VWNDX), Windsor II(VWNFX), or US Value(VUVLX) that should be a very different type of fund than US Growth and read about different fund styles such as at Vanguard's education area at http://www.vanguard.com/educ/inveduc.html or other educational parts of sites like TMF, Moneycentral or Morningstar.

The funds I hold are: 500 Index(VFINX), Growth Index(VIGRX), International Growth(VWIGX), Capitol Opportunity(VHCOX), and Selected Value(VASVX) with the last 2 being in my Roth. My Growth Index has gone down since I've been investing in it since 1999 like 19% or so and I believe in it in the long run but that is ME and I have no fear of adding to it month after month myself whereas I think you may need to re-evaluate just how aggressive you want to be. Feel free to ask more questions if you have them.

Regards,
JB
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