Hi Fools,I'm 22 and I've finally saved up enough to open up an IRA. And, I'm thinking about opening only a Vanguard account. My friend showed me some model portfolios from RYR, but - given the hip, 40-year-old plus demographic of you Fools - I think the RYR portfolios are non-optimal for my age.Any pieces of advice? Should I open up more than just a Vanguard account? Or, any tools/articles you can recommend so that I can invest in something before tax day comes? Thanks!kkch3n
Start investing at 22 = great!Choosing Vanguard = very good! Just one account is fine, or did you mean more than one mutual fund?Good choices of Vanguard funds would include a high date Target Retirement fund or Life Strategy fund. https://personal.vanguard.com/us/funds/vanguard/TargetRetire... Putting it all into their Total Stock Market fund would be a reasonable choice, but, in the not too distant future you will want to expand your portfolio to include international stocks and bonds. Choosing the TR or LS funds would provide that exposure currently in a single fund of funds.Bob
...My friend showed me some model portfolios from RYR, but - given the hip, 40-year-old plus demographic of you Fools - I think the RYR portfolios are non-optimal for my age....One of the problems with the fool portfolios is that you never really know how many portfolios they started five or ten years ago and if just the better performing ones have survived. Many years ago they used to have a web page of all their closed portfolios and strategies in a "Lessons learned" section which was fair enough but as far as I can tell that disappeared years ago.http://en.wikipedia.org/wiki/Survivorship_biasThe way that the Motley Fool got its name was that the "wise" couldn't beat the index funds or dome simple strategies like "the dogs of the Dow" or the "Foolish four". It turned out that the simple strategies didn't work so well either for the most part. With this in mind it is sort of ironic that they are now selling newletters.Check out a used book store or a library to see some of the Motley Fool books from the late 1990's to see what they said about similar newsletters back then.
I'm familiar with the Fool as I've been reading it for the past two years. I've heard of the Dogs of the Dow and Foolish Four. (Interestingly enough, I met a doctor back in the 90s who "made a ton of money" with the Dogs of the Dow. He got out of the market before 2000s came.)
As my company uses Vanguard for 401k, my dad recommended that I use T.Rowe price to "diversify". Does his logic have any merit?Also, I posted on another board and a person recommended that I choose one Index/ETF for now. Thoughts? (see below) http://boards.fool.com/tips-for-my-first-5k-ira-investment-2..."At 22 I'd just buy the Total Stock Market Index Fund (VTSMX) or its ETF equivalent (VTI).When you have a large enough account balance to split it between two funds, I'd add the Vanguard FTSE All-World ex-US (VFWAX) or its ETF equivalent (VEU).At you age you probably don't need any allocation to fixed income (outside of a 3 to 6 month emergency fund).intercst"
...As my company uses Vanguard for 401k, my dad recommended that I use T.Rowe price to "diversify". Does his logic have any merit?...They are both good companies so it isn't bad advice but about the only real risk you would be reducing would be that one of the companies would have an unlikly MAJOR computer problem and all of your money would be locked up for a short time until they got it fixed. This has happened during the "flash crash" and a few other times where a major company was unable to execute orders for a while. Since this is a retirment account not being able to trade the account for a short period of time should not be an issues. ...and a person recommended that I choose one Index/ETF for now. Thoughts? (see below)....There are lots of good options and the big thing at your stage is actually saving the money and getting into good low costs investments. One to three index funds would be fine for the next few years.
Check out a used book store or a library to see some of the Motley Fool books from the late 1990's to see what they said about similar newsletters back then.The rule breaker strategy worked out well for me with AAPL and NFLX ;)After doing screens for the better part of a decade, I'm mostly in index funds now since, overall, I wasn't beating them.Picking hot funds or hot strategies is a bit like betting on who made it to the final four last year; someone will make it every year by definition, but that doesn't necessarily point to a long term winner.-murray
As my company uses Vanguard for 401k, my dad recommended that I use T.Rowe price to "diversify". Does his logic have any merit?It does have merit, but a broad market index fund is already highly diversified, right? VTSMX includes shares of thousands of companies. Hard to get more diversified than that. However, you're not diversified among asset classes, that might be what your dad is talking about. But IMO that's okay for now. Later on you'll want to stir in some fix-income to smooth things out, but right now downside volatility won't kill you, and upside will greatly help you.You can drill down as far as you want into this stuff, but I'm firmly convinced a nice Vanguard index fund gets about 90% of the job done just itself.
I'm putting my $5k into VMMXX (Prime Money Market) for now. My family suggested that I wait to get into VTSMX until the market comes down a bit. Thoughts? I have until April 17, 2011 b/c of taxes.
My family suggested that I wait to get into VTSMX until the market comes down a bit. Thoughts? often, when you wait for something to come down ..it doesn'tunless you have a good reason for a specific price .. i'd say if you think it's a good investment, just buy it
www.futureadvisor.comThis start-up website works off of ideas from Bogle, Bernstein, and Swensen. (It doesn't take commission, it's a yearly membership fee for premium advice.)I went through registration and linked my Vanguard account. Given my risk profile, it gave me recommended allocation distributions. I'd post them here, but I want to know about your experience.If you do try it, how reliable do you think the asset allocation recommendations are?
This start-up website works off of ideas from Bogle, Bernstein, and Swensen. (It doesn't take commission, it's a yearly membership fee for premium advice.)...how reliable do you think the asset allocation recommendations are?Okay, I looked at it.My prediction: They won't be around a year from now. It's a bunch of youngsters who think it's still the dot-com years of 1999-2000.There are thousands of web sites that give pretty much the same recommendations for asset allocation. All for free, all without requiring you to sign up or register.What they say is trite. For example: "Performance data from the S&P500 Index from November 1998 to June 2011. The Low Fee Fund had an expense ratio of 0.09%" Low E/R funds are better than high E/R funds. What a unique insight!That fund is SPY. You don't need some gee-whiz magic altorithmic methodology to figure this out.
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