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I'm starting to read up on annuities, also. Is there anything there I should look at?

The general attitude is that in most cases, when someone offers you an annuity you should look at your shoes. Are they good walking shoes? If not, fake it. Pick up your money and walk away. You don't need, or want, to hear anything further from that person. (Particularly not if it's praising your wisdom in rejecting the annuity - the person who tries to sell you something and then flatters you for not buying it is probably a con artist.)

If someone suggest you buy an annuity inside any sort of tax-sheltered account... then you want running shoes.

Use an annuity when you need to protect money from its owners and/or administrators. Or maybe as an estate-planning tool.

1. 6K Roth IRA (two of us at 3K annually)
2. 10K into the company's 401K (Vanguard 500 and Int'l index funds
3. 19K into Vanguard 500 and Int'l index funds


What are you planning on putting the Roth IRA money into? Let me guess: Vanguard 500 and Int'l Index.

The Vanguard 500 is an index fund based on an unspecified index of large-cap stocks. Its performance actually tracks the S&P500 index fairly closely, which suggests (but doesn't prove) that this is the index it is based on.

Everything I can find on the International Index seems to imply that it also is a large-cap fund. It does get you an interesting global diversification... but not necessarily the global diversification you want. The International Index actually only invests in other Vanguard funds, which in turn invest in other parts of the world. To the extent that you want international large-cap, a good argument could be made that you should leave this particular fund out of it and (at a minimum) invest in its constituent funds.

And a large-cap international fund has an interesting side effect... many of its holdings are listed on US exchanges and thus readily available to funds that are NOT international. At least the top two European holdings (BP Plc and HSBC) are listed on the New York Stock Exchange.

So I'd say you need some diversification.

Particularly into small cap value. This is the section of the market that has, long-term average, been the source of the greatest increases in share value.

An article I read a while back renamed the basic categories as follows:

Large cap -> companies everyone's heard of
Small cap -> companies hardly anyone's heard of
Growth -> exciting companies
Value -> boring companies

Boring companies hardly anyone's heard of is where positive surprises that nobody is prepared for usually come from.

(Exciting companies hardly anyone's heard of may produce more positive surprises, but the stock price has already has a large hope factor in it for years before the surprise occurs. Big boring companies hardly ever surprise anyone, because they are well-watched and boring; and big exciting companies have a steady rate of positive surprises already built into their price.)
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