ok - one more Roth IRA question: (I know so little but am getting there). If I only keep 4K in my ROTH for?

Question

14 years and don't add a thing to it - what approximate balance will I have at the end of that 14 yrs? I realize that nobody can give me an accurate answer as it depends on the stock it is invested in. All I know is that it is a "conservative risk" stock with Vanguard Star fund and I guess what I wonder is what othere peoples opinions are as to what is the average rate of return.

Granted, I do plan on putting in a couple thousand each year (minimum) but would like a feel for what it can do for me. Thanks in advance to those knowledgeable and experienced in this field. I appreciate your opinion.

Answer 1

Vanguard has great funds with low fees. Past returns are no guarantee of future returns though.

I keep my Roth, with only about 2K, at my bank, as the amount gets me free checks, free checking, free safe deposit box, etc. which would cost me far more otherwise. It is only paying 3.5%, but I have other retirement accounts to make money.

The extra freebies because of it, make my effective return well over 7%, as I don't have to pay for those other services.

4K is not a lot, and at only 3.5%, it probably fall victim to inflation.

How bad is inflation? Well, 8 years ago I was paying $0.99 for a gallon of gasoline, now it is over $2.50 a gallon. I would say, if inflation continues at this rate, you need to be making a return of over 12% to make money.

Answer 2

The Star fund has averaged about 8-10% a year over the last 10 years- if the next 14 are about the same the $4,000 should grow to about $12,000.

If you go to vanguard.com and click on individual investors and then research funds and then select vanguard funds you can see the Star fund performance and lots of other information on the fund.

By the way the Star fund is an excellent fund, especially for a beginner.

Answer 3

At 4% Growth Annually- $6,926.71
At 7% Growth Annually - $10,314.14
At 12% Growth Annually - $19,548.45