is Investing into this such a good Idea?

Question

I am young and I got the money to invest. What I plan on doing is Investing into a Roth IRA and a STAR Fund.....and possibly a S&P index fund. My contributions to my roth will be $300 a month.

Answer 1

If you mean the Vanguard Star Fund, it is somewhat overly conservative for a Roth IRA account for a young person. More of a selecton for an over 55 er. Another thing that I do not like about that particular fund is that it is a fund of funds. The problem with those is that you are racking up expenses on top of expenses. The fund has expenses and the funds that it invests in have expenses.

I personally think you would be better off long term investing in a fund such as Windsor or Windsor II.

As for index funds, they are certainly an alternative to be considered seriously. They have a very big advantage in that their expense ratios are much lower than managed funds and 70% of managed funds under perform the indexes. But to take full advantage of the index funds, you will need to diversify. My main critique of them is that most are captialization weighted. That is not good for sound diversity.

Answer 2

Vanguard Star fund is a very good choice for your Roth IRA, as it is well diversified. By the way, it does NOT "rack up expenses upon expenses". The average weighted expense ratio for this fund (per vanguards site) is 0.35%, way lower than most funds. If this is your first or only investment, go with a fund more diversified than just an S&P 500. Star of one of the retirement funds are good choices.

Answer 3

Get started while your young. All financial people will tell you the same thing, it doesn't matter when you invest. The most important factor is how long you can invest for!

What is a STAR fund?

Make sure to include an international fund in your mix.

Answer 4

sounds like a great idea