I've got to put some money (> $5k but less than $10k) in a IRA to avoid Fed income taxes
Anyone have a suggestion on which Vanguard fund they would pick?
Sorry for the OT post and my lack of $ knowledge. I've got until April 15.
Jim
You might look at their Balanced Index Fund.
I would suggest parking the money in their Money Market ( VMMXX ) fund at first. You can move it around later when you have more time to research something to your liking.
You put money in determined by the markets. I don't think things are going to get better any time soon. Right now I would remain mostly cautious. Stick half in vanguard retirement fund. Put the other half in whatever year your retiring, like vanguard retirement 2020 .
Greg
income taxes
Wow. I had no idea that's what those numbers meant. Do you know what Expense Ratio I should be looking at?
BTW: I'm 57 and my wife is 52.
Don't rush into anything. If you don't know what fund you want now, just pick the Vanguard Prime Money Market fund because that way you'll satisfy the IRS for 2011 and will be in a very safe investment. You can switch to different Vanguard funds later on. A book like Bogle on Mutual Funds, by Vanguard founder Jack Bogle, can help you select funds for your needs.
Don't try to select funds according to ratings or performance because that hasn't worked well. It's a lot more important to select the right types of funds and proportions of them and to keep your costs (expense ratios) low.
Also good for information is the BogleHeads.org forum , and Morningstar.com has several forums, including one for just Vanguard funds:
income taxes
I would have to look up expense ratio ??
Greg
I selected according to performance, and made a bundle. Timing is of upmost importance.
Greg
Fed income taxes
I think it has to do with the cost of administering the fund.
"Definition of 'Expense Ratio'
A measure of what it costs an investment company to operate amutualfund . An expense ratio is determined through an annual calculation, where a fund's operating expenses are divided by the average dollar value of its assets under management. Operating expenses are taken out of a fund's assets and lower the return to a fund's investors."
Sorry for the sloppy cut and paste. :(
The Vanguard site has some info I need to review too.
For now I'll probably follow your advice. I can move it around later "the stooges" said.
I think I'm afraid I'll forget about it and get stuck with a tax bill.
My wife has a much larger sum in there I need to review too.
Go for it. !!! Before I started moving money around I was scared. I was moving money around while I was still working. I ran into a situation last summer, after retirement, that I did not see exactly why I could not transfer like I wanted too. That cost me some money. There are limitations on returning to previously owned funds. Usually a three month wait.
Greg
stooges" said.
That's good to know. Thanks!
Jim
It's called the Doug fund and I can give you the address to mail to. And the advantage to this fund is you can give money all year around.
Seriously I don't know. I let my cpa wife handle this stuff but I thought there were some decent sites that might help answer this type question. I forgot the names right now but I'm sure google will bring them up. Oh yeah... one is motley fool.
I'd suggest to open your yellow pages phone book, and look for financial planners. Call four or five of them. Go with the one who sounds easy going, and who makes sense when he speaks.
In my case, what very small bit of retirement funds I have, I like to support business and industry. I figure they are doing useful work with my money. As opposed to government, who are hiring paper shufflers, and hiring people like DHS and TSA and other agents to take away my freedoms.
Christopher A. Young Learn more about Jesus
Anyone have a suggestion on which Vanguard fund they would pick?
Sorry for the OT post and my lack of $ knowledge. I've got until April 15.
Jim
In article
Over the long run, given his age and life expectancy, 30 years or so is still the long run, timing sucks according to all the studies. The only time time has anything to do with my investing for retirement is every 6 months when I rebalance. Other than that, I keep an eye on their Morningstar rating and bail when it hits 3.
In article
,Check to make sure it it only previously owned funds. Most now a days have some hit for selling for any reason in the first 90 days. They don't want frequent traders running up the costs for everyone else/
In most places, banks offer free investment advice (albeit probably biased towards bank-owned funds.) The point is that the adviser can explain technical terms on the spot, and you have the right to require that all costs be identified. In exchange, you must decide about "risk" in terms the bank understands.
You have received a lot of different suggestions, most of which are much too specific - given that no one knows anything about you other than your age and that from your questions, you have little knowledge or experience investing.
Fortunately, from my perspective, you have stumbled on to an excellent mutual fund family. Vanguard is an extremely well managed fund family known for low administrative expenses and a slightly more cautious approach to their portfolios than most of their competitors. I've been investing in Vanguard funds since the early 1970s and have been extremely pleased with them.
As some others have suggested, Vanguard itself offers a lot of sound advice on its web site and through some publications that you can order from them.
Your decision to invest in mutual funds is a good one for someone who does not have a lot of money to invest and does not know much about the market. The advantages of a mutual fund is that the well managed ones are advised by people who are less likely to make major errors choosing stocks than are total laymen, and the funds own shares in many more securities than you would be likely to own as an individual, thereby spreading the risk if one or some of those securities bomb. The disadvantage is that you are forfeiting control over precisely which securities you own and are paying a management fee that somewhat reduces potential profits. (However, don't forget that if you were buying shares of individual stocks, you would be paying brokerage commissions that in many cases are a larger percentage of the investment price than you pay as a mutual fund expense - especially for purchases of a small number of shares, also known as odd lot purchases.)
Vanguard funds generally have an expense ratio lower than their competitors offering similar funds.
I completely disagree with the one poster who indicated that timing is everything and that you can make a bundle by "timing the market" - knowing when to buy low and sell high. The bottom line is that even the experts can not and do not consistently predict accurately how individual stocks, much less the entire market will move. Many well done analyses have shown that the overwhelming percentage of people who trade frequently end up making less money than those who largely buy and hold and ride out the downturns. Every time you sell at a profit, you are going to be paying capital gains taxes. If you sell in less than one year, the "short term capital gains" are taxed at the same rate as bank interest and ordinary dividends. After one year, the "long term" capital gains tax rate will usually be lower than the taxes you pay on your other sources of income. A lot depends upon when you believe you may need or want to sell in order to have access to the dollars you invested versus wanting to live off the dividends/interest/capital gains that a particular investment earns for you. That time frame is known as your investment horizon. If it is very short, only a few months, you are unlikely to make substantially more in a risky investment than you would make in something much safer.
You also really need to try to understand your own tolerance for risk. Can you sleep well at night knowing that your investment may periodically dip 5%, or maybe 10%, or even more lower than the price you paid when you bought it? Or would you "sell low" because you are too afraid that the price will never come back before you need to reclaim the money you invested? That's known as your risk tolerance. Everyone's personal circumstances differ, as do their investment horizons and risk tolerances. There is no one size fits all investment.
I also am not a fan of investment advisers for small investors. If you are even modestly intelligent, you can teach yourself what you need to know to avoid the worst mistakes. Investment advisers are likely either to push the products that make the largest sales commissions for them, or if they are independent of any investment house and charge an hourly flat rate for advice, you may spend money to hear the same advice you will read on your own.
One final thought, which I didn't see referred to in any of the other postings. Mutual funds come in 2 flavors, no-load funds and funds that charge fees either when you buy or when you sell the shares of those funds. The funds with fees (often call front loaded when the fees are charged at the time of purchase) often claim that they provide a higher percentage of income to their investors than do no-load funds. The truth however, is that when all the management costs and investor expenses are factored into the equations that calculate true investment yield for the investor, the difference between no-load funds and loaded funds disappears and in many cases, the no-load funds provide a higher net yield than their loaded counterparts. In many cases the difference between the 2 types is substantially less than 1% averaged across an entire category of funds or fund family. If you will be buying and selling frequently, the no-load funds are much cheaper as you are not penalized by a commission for every transaction. Vanguard funds are all no-load funds.
In summary, do some reading, try to understand your own needs and attitudes, and don't sweat it if you make a little mistake. I don't want to demean the amount that you are investing, but $5K-$10K is not going to make the difference between being able to retire or not, and in any case, you can't make such a big mistake with any well regarded mutual fund family that you are likely to lose more than 20-30% of your investment and the likelihood is that you would at worst be likely to lose a lot less, and more likely make more after taxes than you would in a money market account or CD. One final word of advice - do not be greedy! You are more likely to win the lottery than you are turn your modest investment into major money over the next 2-3 decades. Slow and steady and sleep well at night with whatever decision you make. Good luck!
Yup. Having a CPA for a wife is a real plus.
My wife trusts me. BBA I didn't want to spend one more second in a classroom. I haven't opened a serious financial text since graduation. I'd much rather watch paint dry,.
Yeah. It's a just to get our taxes down. This appears to be a no-brainer. We have a considerably larger amount in a employer contributed 403B and other investments like equity. We're not set but better off than most.
All Vanguard IRAs are all no-load I believe. But there maybe exceptions (?). The one I picked is no-load. If I learned anything from Clark Howard it's that.
I took the "timing" remark is in context of Greg's experience. On the ER comment, I finally put 2 and 2 together.
Vanguard's site is pretty good for first time IRA investors from what I can see. Looking back on it, I could probably come to a reasonable conclusion just using Vanguard but these comments helped.
BTW: Excellent post.
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