So I have a chunk of change, am in my 40’s and stable and want to save for retirement. I have a 401K, Roth IRA, and I’d like to set up a mutual fund.
I’ve done it before (Eaton Vance) but with only a little money and I never knew what I was doing.
Vanguard seems the way to go for long term low-cost investing. However there are quite a few.
Would anyone with some experience in this point me to a book or other resource that puts all this in plain speak?
Since this is likely to involve investment advice and opinions, let’s move this to IMHO (from GQ).
Factual information, such as pointers to books and other resources, is of course still welcome.
Who is your Roth IRA set up with? Are you maxing out your 401k and Roth contributions?
Don’t recall, and yes.
I’d find out, and set up your non-qualified with the same company. Or if you’re not happy with that company, I’d look for other options (sounds like you like Vanguard, which is perfectly fine). I’m sure there’ll be plenty of posters who will come in and give specific mutual fund suggestions once you do.
I’ve been happy with Vanguard. I have my Roth IRA there, and additional after-tax accounts. (My 401 is through my employer).
You’ve probably heard this before, but stick to index funds, as opposed to actively managed. And compare the management fees, even among the index funds.
For long-term investing, I like Vanguard’s VTSAX, a very broad-access stock fund. Its management fees are 0.04% per year, which is quite low. (There are additional charges, but you can avoid those by having sufficient money invested with Vanguard and in the specific fund, as detailed here).
One option is the target date funds at Vanguard. There are funds tailored for someone five years, ten years, fifteen years, etc from retirement and the mix of investments is tailored that time period. As the target date approaches, the mix changes to reduce risk.
BTW, you may want to move the Roth IRA to Vanguard so you can manage all of the funds under your control (which the 401(k) is not) in one place.
One source of information is the Bogleheads wiki (named for John Bogle, the founder of Vanguard and inventor of index funds). In particular, you may find the idea of the three-fund portfolio interesting. Note that these people are really big on index fund investing and down on investing in individual stocks.
I was going to mention the three fund portfolio, also. I think all Vanguard funds are low cost, but make sure that whatever you pick is really low cost. I also have never had a bond fund as part of my portfolio, just a mix of US total market (or just S&P 500) and some foreign funds. In your 40s, you can probably get away with a smaller percent of your mix in bonds.
Just my opinion though.
I’m remembering something about Vanguard mutual funds, but it has been awhile and my memory may not be accurate (also, they may have changed the rules). They charge a yearly fee of $20 for each mutual fund of theirs in which you hold less than $10,000.
That said, I hold a couple of Vanguard funds in my Schwab account, neither of which falls below the level where I’d have to pay a fee. I’m very happy with them - VWINX and VTWNX.
Googling, Vanguard will waive the fee if you agree to electronic delivery of the paperwork, or have at least $50,000 in assets. That’s perhaps a reason the OP should move their Roth IRA to Vanguard.
Just an FYI, Fidelity has $0 fee accounts with no minimum, and has total market index funds with 0% expense ratios.
I am suspicious of this - what is their business model here? Are they relying on making money entirely from stock lending? Trying to sell you other products? In investing, nothing is truly free.
The short answer is they don’t make money. Vanguard is owned by the investors, so it only needs to cover its expenses. With no one extracting profit expenses are low. Plus, it specializes in passively managed index funds so those active management fees aren’t an issue.
They will sell you a fund advisor for 0.3% of the assets under management if that’s the way you roll, but most people don’t need training wheels.
I bought their 2025 target fund online, because it was highly rated by Consumer Reports. It’s basically no-touch. I invested a lump sum and have not deposited or withdrawn anything since. I just checked, and in 2 years and 15 days, it’s up 27.72%. I’m not sure how this compares to alternatives. Note that at this stage only 4 years from the target date, it should be pretty unaggresively balanced right now.
By the way, if anybody has any reaction to how good or bad this performance is, I’m curious to hear.
The business model is that most people don’t come for just a total market ETF - they invest in other funds as well. Like Vanguard, they have plenty of other non-zero but low cost passive funds to offer, as well as access to the rest of the market. Trading is free as well, as they got rid of the $4.95/trade fee a few years ago.
If I can piggyback onto this topic, I’m looking for a Vanguard fund for my 91-year-old mother’s savings. She has less than $100K, and after her Social Security spends only about $10K a year, so we’d like to find a safe fund that earns more than 1% without risking the principal. I’m thinking bonds, probably.
Ideally, she’d be able to withdraw funds at any time but some time restrictions for portions of the total might be acceptable. (She already has some of her money in a Vanguard fund, but I don’t recall exactly what it is, except that it earns almost no interest.)
Any suggestions?
The 10 year treasury yield is 1.7%. And that is not guaranteeing principal until the end of the 10 years.
You are going to have to give up a lot of liquidity even to get 0.75% (like a 5 year CD)
My savings account is at 0.01% right now. I earned less than a dollar in interest last year on an average balance of over 20k. I didn’t care because no other option would give me more than $50 in interest and I’m not moving money between banks for that kind of difference.