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I'm about to open an IRA with Vanguard starting with about $3,500. I am 32

The annual contribution limit was $2,000 for 2001 and increases to $3,000 in 2002. Those over 50 years of age can make larger catch-up contributions. You might ask Vanguard if there's any way you can still make a year 2001 contribution before April 15th, otherwise you can only contribute $3,000 now, and wait 'till next year for the rest.

I am tempted to just put it in one fund, probably VFINX. But reading previous posts, I am thinking about putting 20-25% in the REIT fund. Any thoughts?

Vanguard has additional fees for fund balances below a certain amount, so it might make sense to contribute solely to VFINX for a few years until you reach the point where you are no longer subject to that fee.

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