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Author: jayinSF Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75777  
Subject: Opening IRA; need some quick advice Date: 6/22/1999 10:16 PM
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Hello folks. I'm in the process of rolling over my 401(k) account from my old firm into a new IRA. I finally opened the account at Waterhouse this morning, now I have to decide which funds to choose. I had started to do some research on mutual funds several weeks ago but then lagged off. Now that I've got the account open I'm overwhelmed by all the information there still is to assimilate ...
I've already decided on Vanguard S&P 500 Index and Vanguard U.S Growth but I haven't digested all the information I have about other funds, so I haven't made up my mind what else I'm going to get yet (probably an international fund, a small-cap fund and a mid-cap
fund). In the meantime, should I put half of my money into the two Vanguard funds and half in a money market account, or should I just pick a couple of
other funds to park the other 50 percent in for the meantime until I make up my mind, and then transfer the money then? (I also haven't decided on the ultimate ratio of funds I'm going to end up with, but figure I should get at least half of my money working right away until I decide that too.) (I'm 41 and have only saved $18,000 so far.) Any thoughts?

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Author: slwjpw Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 11467 of 75777
Subject: Re: Opening IRA; need some quick advice Date: 6/23/1999 1:37 AM
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How about putting all of it in the S&P 500 Index or SPYders until you have a chance to go to the Fool's school and do some research on your own ?

SPYders are like a stock but represent a share in all 500 S&P companies. The Vanguard 500 is also an excellent choice.

Good Luck, Phil

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Author: mackinnon One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 11469 of 75777
Subject: Re: Opening IRA; need some quick advice Date: 6/23/1999 6:23 AM
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jayinSF,

Unless you are contributing to an idx fund in your new 401k, I would go 100% w/the Vanguard S&P 500.

locke

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Author: rhecker One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 11470 of 75777
Subject: Re: Opening IRA; need some quick advice Date: 6/23/1999 8:21 AM
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In the meantime, should I put half of my money into the two Vanguard funds and half in a money market account, or should I just pick a couple of other funds to park the other 50 percent in for the meantime until I make up my mind, and then transfer the money then?

Here are some ideas:

1) Since you have decided on two funds which you think will be good investments, you could use your suggestion of putting half your money in those two, and then put the other half in the other two that you will decide on in the future. The money market account at Waterhouse makes a decent return (something in the mid 4%, I think) while you're deciding on where to invest the rest. You might want to pin down your allocation percentage to these funds first.

2) You might only need those two funds which you have decided on. After all, the 500 stocks in the Vanguard 500 index is a very diversified position on its own. Keep it simple.

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Author: tonyw44 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 11474 of 75777
Subject: Re: Opening IRA; need some quick advice Date: 6/23/1999 9:39 AM
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"After all, the 500 stocks in the Vanguard 500 index is a very diversified position on its own."

It's a diversified position among a single asset class. I recommend more diversification, and like his idea of going into small caps and international stocks as well.

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Author: moseykitty One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 11480 of 75777
Subject: Re: Opening IRA; need some quick advice Date: 6/23/1999 1:35 PM
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>Any thoughts?

First, why have an account at Waterhouse? Seems like more fees to pay. Open the rollover IRA directly at Vanguard.

Put half the money in the Vanguard Total Stock Market Index Fund, and the other half in the Vanguard Total International Fund and forget about it. This simple strategy covers every equity asset class.

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Author: jayinSF Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 11487 of 75777
Subject: Re: Opening IRA; need some quick advice Date: 6/23/1999 6:50 PM
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I opened the account at Waterhouse to give myself the flexibility to pick my own portfolio at some point in the future when I feel confident enough to do so. That was the subject of a couple of my posts a couple of months ago - which broker to pick. I got some feedback on that issue and have made my choice, so I'm past that issue now.

As for covering the bases, see some of the posts above. The S&P 500 fund and an international fund wouldn't actually cover ALL the asset classes. I still am interested in trying an aggressive growth fund, possibly a small cap fund, and/or a midcap fund, as well as an international fund. I was looking at Money Magazine's recommendations for various types of portfolios, for an aggressive portfolio they recommend 65 percent large-cap stocks, 15 percent small-caps, and 20 percent foreign. The S&P 500 would cover my large-cap stocks, but like I said I'd want to put some of my money into a good aggressive growth fund as well.
You would have been closer to right if you had advised me to pick the TOTAL index fund. But, I was reading somewhere that with small-cap stocks, you're actually better off with a managed fund where someone is using some judgment as to which stocks to buy, as opposed to an index fund. (Which also eliminates small-cap index funds, I guess).

I still haven't decided what to do yet while I'm researching funds, the advice I've received runs the gamut. I think I'm gonna have to break down and call my brother the financial adviser and see what he thinks! Thanks for the input though everyone!

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Author: jayinSF Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 11489 of 75777
Subject: Re: Opening IRA; need some quick advice Date: 6/23/1999 7:29 PM
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Double oops. I think I posted my last reply to your message as a new post instead of as a reply. Anyway I now see that you did recommend the total stock index fund, not the 500. My reason for not wanting to do that is set out in my last post. I'm even reconsidering that, though, since I've read somewhere that the 500 indexes have done well recently only because the stocks that are in the S&P 500 have led the market, but that this hasn't always been the case and may not be the case in the future. So maybe I'll consider putting some money into both the 500 and the total market index, AND picking a small-cap fund. We'll see. Everything is up in the air right now; I would like to get my money moving into SOMETHING pretty soon though.

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Author: mackinnon One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 11495 of 75777
Subject: Re: Opening IRA; need some quick advice Date: 6/24/1999 7:14 AM
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jayinSF,

You can certainly pick any different fund that you 
like, but I would like to share some analysis I did 
when I was looking at the Vanguard funds for my dad.

 Ticker     Abbrev/Idx Mirrored  NetAssets  Inception Trans Fees          Consecutive Down Yrs  Max %Loss       1 yr    5 yr  10 yr  20 yrs
     VIVAX      Value S&P/BARRA Val  1.8B         1992                                       1  0.73%           29.80%  20.5%  20.70%
     VIGRX      GrowthS&P/BARRA Grw  2.4B         1992                                       0  0.00%           36.30%  19.5%  19.50%
     VTSMX      TotSt Wilshire 5000  5.09B        1992                                       1  0.17%           31.00%  18.9%  18.50%
     VFINX       500    S&P500       49.4B        1976                                       1  3.32%           33.20%  20.1%  17.8%  16.30%
     VEXMX      Extnd Wilshire 4500  2.72B        1987     0.25%                             2 14.05%           26.70%  17.5%  16.40%
     NAESX      SmCap Russell 2000   2.7B         1960     0.50%                             3 28.00%           24.60%  17.5%  15.80%

I hope this helps.  I got this info from the Vanguard site about 6 mnths ago.

locke



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Author: jayinSF Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 11500 of 75777
Subject: Re: Opening IRA; need some quick advice Date: 6/24/1999 9:33 AM
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That is interesting, thanks for the data, it looks like their growth and value funds did very well over the last 20 years. Still, as I've been advised, you have to be careful about making past performance of a fund or an asset sector your sole criterion. I'll have to check out Vanguard's U.S. Growth and Growth Index funds and see how they stack up though. Thanks.

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 11505 of 75777
Subject: Re: Opening IRA; need some quick advice Date: 6/24/1999 12:03 PM
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There are some on these boards who claim to have retired on S&P Index fund income. Their assumptions are that the S&P averages 7% growth over the long haul and any breaks are likely to be less than two years.

What they don't say is that if that doesn't work out, they can always go back to work.

That may be a bit aggressive for some of us at retirement, but if you are young, reach for the brass ring. Most of us find out later we were far too conservative in the early days--when being aggressive really mattered. I would say S&P Index funds are a conservative investment for 30 years olds. But probably would not be considered conservative for 60 year olds.

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Author: BookmFool Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 11506 of 75777
Subject: Re: Opening IRA; need some quick advice Date: 6/24/1999 12:33 PM
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the S&P averages 7% growth over the long haul

Actually, the S&P Index has had a return of more like 10.5% over the last 70 years or so, and it represents a good solid place to start investing, and maintain if you want to "just" beat most of the available mutual funds.

Just helpin' out.

Ridin on the ship of Fools,

Rick

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