- quote -


Allocation is something quite subjective... I believe earlier in
thread you mentioned the need to avoid bonds... That was a good line
of thinking for being 30+ years to retirement (IMO).

You need to know your ideal allocation. Vanguard has calculators
which can help you with this.

My allocation (age 34) is 100% stock, 75% domestic, 25%
international. 45% large cap, 15% mid cap, 15% small cap, 15%
international large cap and 10% international small cap.

Your will be similar or different. Once you know that, look at the
funds like this:

You are currently
- quote -


which is really 55% large cap, 25% international and 15% tilting
towards more large cap (see a theme?).

New Perpsective would increase "International"
I don't see small cap, emerging markets mid caps etc...

I researched this at yahoo finance while posting.

Here's some tips

100% stock is aggressive. You can reduce risk by choosing funds in
3-6 different categories (large,mid,small, domestic, international).
S&P 500 is large cap. There is a fund at Vanguard called extended
market index (VEXMX) which might compliment some of this well.
Research and see which categories the different Vanguard funds fill
in. The profile page on yahoo finance for each fund helps see this
quickly.

100% stock is aggressive, you could mitigate the risk by choosing
bonds.

Time reduces risk... if you have 30 years to retirement, you can take
risks

100% stock might give returns of around 8-10%/year over 30 years
80% stock/20% bond reduces the return (because it reduces your
risk)... this might be more of 7-8% returns over 30years. This is
still moderately aggressive.

The returns I am comment on is based on past, no guarantee future will
be similar. The point is as you add bonds, the expected return goes
down, and the risks you are taking goes down.

On Mar 5, 2:05 pm, "jIM" <noreplysoc...[at]hotmail.com> wrote:

- quote -

When I get my 06 tax return, I'll have enough to meet the minimums for
both funds together if I want. I wasn't sure if it's better to make
investments into two seperate funds or just put the entire investment
into one.

Here is my current 401k allocation if that helps give a better idea of
my overall portfolio. Obviously I have no bond fund right now so
perhaps that should point me in the direction of a fund that does have
bonds.

AMERICAN FUNDS EUROPACIFIC A 20%
AMERICAN FUNDS BOND FD AM A 0%
AMERICAN FUNDS FDMNTL INVS A 25%
AMERICAN FUNDS NEW ECONOMY A 10%
AMERICAN FUNDS NEW PRSPCTV A 0%
AMERICAN FUNDS INV CO AMER A 10%
AMERICAN FUNDS AM BALANCED A 15%
AMERICAN FUNDS GROWTH FUND A 20%

I know that ultimately I have to decide for myself how much exposure
to risk that I am willing to take. The main purpose that I have is to
try to invest enough so I'm not caught off guard 45 years from now.
So I suppose in that regard, probably any of these funds I'm looking
at would be sufficient, but I'm all for making my dollar go as far as
it can assuming that the risk is reasonable.

Thanks again for your help!

"jIM" <noreplysoccer[at]hotmail.com> wrote
- quote -

... has tended to average out at 10% for most 30 year
periods in the past.

Some authorities do not expect this high a return in the
future.

<joshbilsky[at]gmail.com> wrote in message
news:1173115837.550783.207050[at]t69g2000cwt.googlegroups.com...

- quote -

I think each person needs to find the right balance for his/her own
individual needs and risk tolerance and I wouldn't like to say definitely,
absolutely, positively, that you, at age 26, shouldn't have any bonds in
your portfolio. Having said that, you are just beginning and I do believe
that at this time you can realistically have only one fund in your Roth -
time to expand later as your account grows. You have chosen your options
wisely and either would make a good choice for your core fund.

Elizabeth Richardson

<joshbilsky[at]gmail.com> wrote in message > I've been looking at the Vanguard funds more closely. Would you
- quote -

There is no "correct" answer. Asset allocation not only depends upon
the goal and time horizion for the investment but also on you stomach
for volitality. Try using the asset allocation model at Vanguard or
Fidelity. Also in deciding the asset allocation for your Roth, I would
include in the analysis the asset allocation of your 401ks. This will
give you a picture (asset allocation pie chart) of you total retirement
funds.
You may also want to include your non-retirement assets in this
analysis so that you have a total portfolio picture.
Regards,
BeachBum

- quote -

It all depends on 2-3 factors

1) How much risk can you take?
2) do you think the US market is a good place to invest?
3) Do you understand what it is you are investing in?

1) Risk- the S&P 500 index has yearly returns ranging from -30% to
+30% over the last 10 years aproximates). The long term return tends
to average out at 10% for most 30 year periods.

2) S&P 500 invests in 500 US companies... which are large and
represent a significant portion of the overall US market.

3) The mutual fund will give you the results of the index- you will do
"no better" than the average of the 500 companies. You will also do
"no worse" than the overall market (minus expenses).

4) the "total market index" would have "less risk" because it measures
the average of 5000 companies... some thought might be given to this
if you are only going to choose one single fund.

Do you have enough to meet the fund minimums for either?

- quote -

I've been looking at the Vanguard funds more closely. Would you
recommend that I go for the 500 Index Fund or Total Stock Market Index
Fund instead of Vanguard's Target Retirement or LifeStrategy Funds due
to my age? It appears that Vanguard's retirement specific funds have
a certain percentage of bonds mixed with the stocks. From what I've
read, having these bonds might be a bit conservative from the amount
of time I have to invest. Is this correct?

Thanks

"jIM" <noreplysoccer[at]hotmail.com> wrote
- quote -

Though I would add the caveat that studies point towards low
cost funds tending to maximize returns.

- quote -

My view: I would not think in terms of any numbers, since
currently there is some debate by some noted authorities
about whether stocks will continue their historic high rates
of return.

I would have faith in the world's consumers tending to cause
stock prices to rise at least as much as inflation, for the
long run. But that's just myself

For historical returns on stocks for different time periods,
I urge the OP to experiment with
http://www.moneychimp.com/articles/r...me_horizon.htm ,
bearing in mind that history does not necessarily repeat,
even for long time periods.

- quote -

This might be so, but more importantly IMO is that Vanguard
has more index funds than Fidelity, and Vanguard's index
fund expense ratios are competitive. IOW, for index funds,
Vanguard tends to be the place to be.

"Josh Bilsky" <joshbilsky[at]nospam.net> wrote in message
news:2007030400462016807-joshbilsky[at]nospamnet...
- quote -


Others in the group may have experience with both companies, but I have
experience only at Vanguard. I suspect either fund company would have funds
suitable for your retirement investing and both have low expenses.

I am not a fan of the many Target Retirement Funds in the industry. These
funds decide for you about your risk tolerance, and also seem to assume you
have no other monies invested. As you get older, and probably a bit more
knowledgeable, you will want to feel more in control than these funds allow.
Instead, you might prefer to choose an Index Fund of some sort, one that
your 401k might not offer, thereby enabling a broader diversification.

Good luck, and congratulations for looking to your retirement needs at such
a young age.

Elizabeth Richardson

- quote -

snip

- quote -

The government changes the tax code all the time. If a public
official/congressperson votes out the tax exempt status of the Roth
withdraws, I'd think they wouldn't get reelected next time around
(they would lose my vote).

The "promise" of the Roth (being tax free withdraws in retirement) is
**probably** better than most alternatives. In the mean time you get
tax free compounding (this part of IRA is not likely to change, it's
the whole point of tax defferral).

As far as mutual funds... I would look at Vanguard, Fidelity, T Rowe
Price and possibly a few others (Dodge and Cox is another one I hear
about from time to time).

A T Rowe, here are my costs
$10 fee for any IRA under $5000 (meaning if you have less than 5k each
August, in any mutual fund IRA, T Rowe charges you $10). Unless
combined balance is more than 10k (so if you had 3 mutual funds with
3500 each, the fee can be waived, if you ask).

T Rowe Price funds are no load. Expense ratios for the managed funds
I own is around .60%. Avoid loads from anywhere (if you are willing
to do research yourself), avoid 12b1 fees as much as possible, and IMO
expense ratios (for domestic funds) should be less than 1% (and
possibly MUCH lower). I do own a couple of funds with expense ratios
higher than 1%, they are international mutual funds and small cap
mutual funds.

I do not know costs for Vanguard or Fidelity IRAs. The fund expense
ratios at Fidelity for managed mutual funds might be more, I'd think
at Vanguard the fees might be less.

The goal should not be to minimize costs, but maximize return. You
have 30+ years to retirement, the goal the next 15-20 years should be
to maximize return. Target Date retirement funds are appropriate, as
are equity index funds and/or equity managed funds. I'd think in
terms of an 8% return going forward, and be pleasently surprised when
it's higher.

Look for a fund house which has several mutual funds, and choices
which allow you to expand as you learn. T Rowe, Fidelity and Vanguard
meet this criteria. I like T Rowe Price- easy to use web site,
excellent customer service and a wide variety of offerings.

Fidelity has more offerings, Vanguard is cheaper... and I am sure
others here will comment postively on these companies. The company
you choose is not a religion or political view point. Make an
informed decision, and try not to second guess yourself.

Josh Bilsky <joshbilsky[at]nospam.net> writes:

- quote -

Unless you already have one specific fund picked out that you want to put
all your Roth money into, I'd open an account at one of the "supermarkets"
like E-Trade instead.

- quote -

You might head over to morningstar.com and do some research.

- quote -

Vanguard Target Retirement Funds are mutual funds. Roth IRAs are *not*
mutual funds, but rather an account type which can hold mutual funds as
well as other investments (money market account, stocks, bonds, real estate
investments, etc). You might head over to morningstar.com and do some
research. ;-) Seriously, look at their tutorials that explain investing
basics, as well as their fund summaries.

- quote -

It's a possibility, but I'd say the chances of it happening get
smaller every year, as more people put more money into Roth IRAs and
the constituency who would be adversely affected by such a tax law
change grows ever-larger. Congresscritters especially like to avoid
ticking off older folks because they're more likely to show up on
election day and vote than younger folks.

-Sandra the cynic

I am interested in opening a Roth IRA. I am 26 years old. My wife and
I both contribute up to the company matching of our 401ks. Last year
when I first posted in this group, the consensus was to open a Roth.
My goal is to use the Roth to supplement our 401k retirement funds. My
question is which investment firm should I be looking at? Fidelity,
Vanguard, etc? I know that each firm charges different maintenance
fees and have different expense ratios. I also know that some of these
firms charge loads on their funds. Is there any firm and/or fund that
seems to offer superior value over anybody else? Also, what is a
typical rate of return of a general Roth IRA such as the Vanguard
Target Retirement Fund? I'm assuming over time it would be
significantly higher than the 5.25% money market savings account my
money is sitting in now. If this is the case, then it would seem to me
to be a no brainer to use the Roth since the withdrawn funds are not
taxed at retirement, and I could withdraw my contributions if I had to
as a last resort in an emergency. With money market savings accounts
you are using money that has already been taxed, and then the earnings
are taxed again. Is this correct? The only concern I really had with
the Roth is I've been reading that if the tax structure changes in the
future, the Roth could end up being taxed. Is this a legitimate
concern that I should be considering?

Sorry for so many questions. I've been doing a lot of reading on the
Roth especially in this newsgroup because I want to learn as much as I
can before I go any further. Thanks in advance.

JB

--
Josh Bilsky
http://www.joshbilsky.com