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Author: FoolishWarthog Date: 2/16/02 6:05 PM Number: 33822
For those that have a Vanguard IRA:

Do they automatically reinvest dividends (even for partial shares)?

I have a Vanguard IRA, and I heartily endorse them as one of the best IRA custodians there is!

The Vanguard default is always full dividend reinvestment (even for partial shares), unless you request otherwise. This selection option is included in the paperwork when you open your account.

If I were going to put in money and forget it, and I had a lot of time (ten years or more), I think I would put 75% in VTSMX, Vanguard's Total Market Index, and 25% in VGSIX, Vanguard's REIT Index. The REIT Index is expected to grow at about the same rate as quickly as the total market, but is highly uncorrelated with regular stocks. This should reduce the volatility of the portfolio, and possibly increase its total return.

Since you cannot roll a 401(k) directly to a Roth IRA, you have to roll it to a traditional IRA first. Then, you can convert it to a ROTH by paying the taxes. I would only do this if you can afford to pay the taxes with funds outside the IRA.

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