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Author: Aida2003 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: How should DH & DW invest their assets? Date: 3/5/2004 4:17 PM
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Hello Fools,
I'd like to ask your opinion(s) how a couple should invest their assets for retirement since a wife and a husband have their separate 401(k) and (Roth)IRAs.
I'll take a specific example.
Me, I opened an Roth IRA and opted to invest in Vanguard's Target Retirement Fund 2045 though I think I'll retire a few years earlier than 2045 (at least, I hope so).

My DH intends to transfer his Roth IRA from a credit union to Vanguard. But my question is whether it's OK (based on the assumption that we'll never get divorced) to keep BOTH Roth IRAs in the same Target Fund 2045 (or even 2025 because he would retire in 25-30 years).

I'm curious how other Fools manage their family's retirement investments when it involves separate investing for a wife and a husband. Do you both invest your 401(k)'s, IRAs in similar fund families, mutual funds?

In addition, if we still have extra available dollars for taxable investing, would you advice to invest in a different fund family (we are with Vanguard, so maybe we should go with Fidelity for taxable investments?) or just select different funds within Vanguard?

I hope you understand what concerns I'm trying to express here.
In summary my questions are:

1. How much of overlap is good/bad between retirement accounts of a DH and a DW?
2. How much of overlap is OK between retirement accounts and taxable accounts?
3. Are there any research studies performed how married couples should invest their separate retirement accounts in order not to end up in the same plunge should the market go south?

Looking at funds' holdings, it seems they have similar companies in their portfolios except that their proportions vary.

Thank you for your insight.

Aida

PS. We are in the middle on the "Aggressive-Conservative" investing style scale. We are definitely NOT aggressive, but more prone towards conservatism should you have any suggestions of the funds to consider.
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Author: pekinrobin Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 39705 of 75383
Subject: Re: How should DH & DW invest their assets? Date: 3/5/2004 5:03 PM
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I dunno the answer to your question although I've often pondered it. We have different fund families for our retirement. Diversification increases your risk of having an average result, I'm afraid. My T. Rowe Price funds have done much better than his extremely volatile (won't name the guilty family here) fund. However, his fund was chosen to be a more aggressive growth fund, so the volatility is to be expected, I suppose. Knowing what I know now, I would have chosen for both of us to go with T. Rowe Price, they haven't been implicated in the fund scandal to my knowledge, and they offer lots of good choices. His company started offering a retirement program with matching in a third index fund, so it just moves with the S&P 500.

For non tax sheltered investing, I don't do funds, I do individual stocks. I do have to pay taxes on the dividends in the year I receive them but I only pay taxes on stocks sold at a profit. I'm not saying that buying individual stocks is a good thing to do, I'm starting to think it's a gambling disease, as we cannot be sure of the accuracy of the information we are provided. Enron was a Fortune 10 company. At this time, I've been slowly profit-taking while I decide where to go next with my money. Maybe retire to a cabana in Belize.

I see I have not been helpful in the slightest. Sigh. Unless it's helpful to know you aren't the only one who questions the value of diversification.

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Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 39708 of 75383
Subject: Re: How should DH & DW invest their assets? Date: 3/5/2004 5:54 PM
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I assume that the twenty years difference in your planned retirement dates is because of an age difference and not some special situation. If this is the case then you might want to reconsider when you and your spouse are planning to retire to try to not have that many years of one spouse working while the other is retired.

The targeted retirement funds are set up so that they can be your only retirement fund and they will automatically shift the fund allocation as your retirement date nears. If you are using these and have significant assets in other funds you will need to regularly rebalance your portfolio. If you are going to do this anyway it might be best to just have several funds that you annually rebalance yourself and skip the targeted retirement funds.

IMHO the balance funds are way too conservative and have way too much of the assets in bonds for people with a long time until retirement. Interest rates and inflation are both at near record lows. If there was ever a time to underweight bonds this is it. With a 2045 retirement date you should be have very few fixed income investments. If you want some diversification from stocks look into REITS. Do a search on this board for “targeted retirement fund” and you should find a lot of discussion on this.

Greg


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Author: Aida2003 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 39727 of 75383
Subject: Re: How should DH & DW invest their assets? Date: 3/6/2004 9:50 PM
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Well, actually I've already read how Target Riterement funds work and I like that approach. Vanguard does a job for us, and we can invest our time managing 401(k) of my DH.
I have considered another option for my husband's RothIRA. Instead of both of us having the same Ret.Target2045, he could probably invest in the index fund that tracks S&P500 for a year. And next year when his IRA assets reach over $10k, we could split and have $5k invested in REIT. That way we'd evade fees for a balance under $5k. How does it sound?

Yes, it's good to hear that I'm not the only one who's pondering such questions. I've read a few books about investments, but none of them addressed how a couple should invest. Authors merely focus on individual investing instead.

Thanks

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