I want take 3000 dollars from my IRA account and invest it in the VanGaurd S&P 500. Would that be a wise move at the moment. I am only 21 and have 40 years to let the money grow.
2006-07-01 04:16:00 · 8 answers · asked by Anonymous in Business & Finance ➔ Investing
You have received a lot of excellent answers. I particularly agree with one responder who mentioned that you should diversify. With a modest amount that is not an easy task.
There are a few cautions worth mentioning. One is although the S&P 500 has performed well historically, that does not guarantee that it will in the future. The U S has many structural problems that it may not overcome any time soon that have the potential of adversly impacting future market returns.
You might wish to consider instead a more worldly distribution of your assets to areas that promise enhanced growth possibilites and perhaps less currency risk. It would be nice if there were a total world index fund, but if there is I do not know of it. There is a world markets index fund that excludes the U S. It is EZU. Another is FEU. There are hundreds of U S market index funds tracking all kinds of indexes. IVV tracks the S&P 500. You may wish to consider possibly puting $1500 in IVV and $1500 in EZU or FEU for example or some similar strategy.
2006-07-01 07:07:56 · answer #1 · answered by Anonymous · 0⤊ 0⤋
I think it is a good idea as long as you don't want to pull the money out for at least 5 years. The S&P has not made much head way in 5 years, however in the long term 40 years it has a double digit annualized return. Vanguard are best for cheap index funds, however Fidelity now has a cheaper fund which let's you keep more money in your investment. With 3,000 you may have to stick with Vanguard which is an excellent choice. Personally I prefer a Total Market index fund instead of the S&P because the Total Market Fund has approximately 5,000 companies instead of 500 in the S&P. It also includes smaller companies which have a larger propensity to grow.
2006-07-01 04:42:36 · answer #2 · answered by Anonymous · 0⤊ 0⤋
I hope that you mean you will ALLOCATE the $3000 that is already in your IRA account to the Vanguard Fund? Or, make a trustee-to-trustee rollover?
Given your age and the current economic situation, I would probably put $1500 into a US stock market index and the other half into a global or internationally-based index fund
By the way, I am really impressed with your maturity about saving for retirement!
2006-07-01 05:01:03 · answer #3 · answered by ps2754 5 · 0⤊ 0⤋
You can do a rollover of your IRA to a mutual fund that invests in a stock index fund or exhange traded fund. Don't take a distribution of your IRA because you will have to pay a peanalty and the trustee will withhold 20% on a distribution. Do a rollover to a brokerage IRA and buy an exchange traded fund like ishares. www.ishares.com low expenses and professional management. If you like Vanguard check out their vipers, they have very low expense ratios.
2006-07-01 05:31:37 · answer #4 · answered by frodo_lives_9991 1 · 0⤊ 0⤋
Historically speaking, the S&P 500 has done well over any 10 year period. As long as you will leave it there for years, it should be OK.
One caveat. Your overall IRA should be diversified unless you are just starting to build it. You should be in domestic large, medium, and small cap stocks, foreign stocks, and some small amount of bonds.
Vanguard has a good retirement fund that diversifies for you, plus rebalances those diversifications as you get closer and closer to your retirement date. It's called the Target XXXX where the XXXX is the year you expect to retire. I think they have one that is Target 2045 that would be good for you.
2006-07-01 05:22:16 · answer #5 · answered by Uncle Pennybags 7 · 0⤊ 0⤋
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