Investing with VAnguard ROTH IRA, which mutual funds to select?

Question

I'm in my early 20's and I'm looking to invest 5k yearly to an Roth IRA account. I've recently decided on vanguard and I want to know which type of Mutual Funds suit me the best?

I already have an Roth 401k plan (fidelity) with my company which I contribute to as well. I contribute about 4k yearly in this plan. ( This is my main retirement plan which I plan to go a little more risky since its a 35+ year retirement plan)

For my Roth IRA (Vanguard) ***I MIGHT*** have to pull out my principal for a down payment for a house. ( I have an separate house fund). But if i have to answer the question now, I would say 80 percent I don't have to pull anything out. Having a certainly amount of flexibility should be nice though. With that said, what types of Mutal funds should I invest in.

Answer 1

Well you certainly want to have a diversified portfolio of mutual funds. If you want to keep it simple: VTSMX Total Market Index, VGTSX Total International Stock Index. And I would even throw in a bond fund VBIIX Intermediate Term Bond Index.

But Vanguard has many fine funds, and if you want to break it up into various categories: mid caps, small caps, health care, energy, etc., fine. Do your asset allocation plan 1st. Once you do that, then you can pick your various funds.

Answer 2

Vanguard has target date retirement funds, which adjust automatically for your age. They are a little too boring for me personally. You have a long time horizon to be 100% in stock funds. You have to decide risk tolerance. I currently have energy fund VGENX, international growth VWIGX, international value VTRIX, global equity VHGEX, and emerging markets VEIEX. This mix has done quite well, started with equal amounts 5 years ago, now energy fund and emerging market fund are out of balance big time. Will rebalance soon. Also adjust for trends, but not often, maybe once per year I'll add or switch a fund. Looking to swap some energy fund for large growth real soon.

Answer 3

Many new investors are lured to the appeal of a penny stock due to the low price and potential for rapid growth which may be as high as several hundred percent in a few days.

Check here http://penny-stock.gelaf.info

Similarly, severe loss can occur and many penny stocks lose all of their value in the long term. Accordingly, the SEC warns that penny stocks are high risk investments and new investors should be aware of the risks involved but you can even make very big money. These risks include limited liquidity, lack of financial reporting, and fraud. A penny stock is a common stock that trades for less than $5 a share. While penny stocks generally are quoted over-the-counter, such as on the OTC Bulletin Board or in the Pink Sheets, they may also trade on securities exchanges, including foreign securities exchanges. In addition, penny stocks include the securities of certain private companies with no active trading market. Although a penny stock is said to be "thinly traded," share volumes traded daily can be in the hundreds of millions for a sub-penny stock. Legitimate information on penny stock companies can be difficult to find and a stock can be easily manipulated.

Answer 4

A simple " thumbs up" is not enough for the answer by " pumpdatiron"... great advice, nice funds...I'd start with the emerging markets and energy and add the others in years to come ( or with the yearly " profits")

Answer 5

Well, for starters, you can't put $1 into a Roth if you don't have a W-2 showing $1 of income this year.