Lux Investing
Mutual Fund Investing - Vanguard or T. Rowe Only - Advice Wanted?
I need some advice with my 2 questions below. I'm 22 years old and have some extra money I want to invest. I'm looking into 1 or 2 long term (40+ years) mutual funds only from Vanguard or T. Rowe. 1.) Which funds should I consider? Note: I already have maxed out my Vanguard Roth IRA (Target 2050) and have some money in the following T. Rowe funds: Capital Appreciation, New Era, and Equity Income. 2.) Should I close any of these 3 funds and put the money somewhere more aggressive (e.g. Vanguard's Global Equity, T. Rowe's Emerging Mkts, etc ?) Thanks for your help.
Public Comments
- I would suggest investing in the same funds that your Target 2050 fund invests in. To pass through foreign taxes on your 1040 forms, you need to buy the foreign funds directly rather than through the Target 2050 fund. Emerging Markets are very volatile. You could lose 50% in one year. I wouldn't go above 10% in Emerging Markets. Vanguard Total Stock Market Index Fund 72.1% 2 Vanguard European Stock Index Fund 10.2% 3 Vanguard Total Bond Market Index Fund 9.8% 4 Vanguard Pacific Stock Index Fund 4.6% 5 Vanguard Emerging Markets Stock Index Fund 3.3% Total — 100.0%
- It sounds like you're pretty much on top of things. For the non-retirement account investments, make sure you look at your expected time range in which you will need the money (to determine how much risk you want to accept) and the expected tax bite (morningstar.com is good for that).
- They offer some good index funds. Have you considered those? They have very low expense ratios and over time that matters. Judging from what you already own I'd recommend something international. The US economy is going to continue to grow, but the international economy has greater potential.
- The longer the holding period, the more generic the fund should be. Otherwise you risk getting jerked around too much when the latest hot thing fizzles and something else becomes hot. I'd just stick with an equity income fund from either. Best core holding l.t.
