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I'm trying to encourage my 20 yr. old son to start a roth. He has 3300.00 in earned income. Need advice on investments. I was thinking of Vanguard for starting out. Anyboby have any thoughts?
Dear Tip: Might I suggest your son open a Vanguard Brokerage Account and invest in the following two Vanguard ETFs, VTI & VXUS, putting $1650 in each fund. I would normally recommend their open-ended counterparts but there is a minimum intial investment of $3000 or higher in all of their mutual funds. At his age and a very long investment horizon, you son should be aggressive, and these two ETFs will give him excellent worldwide equities exposure. Regards,
Vanguard kept its STAR fund open to investors with just $1K to invest - they felt it provided a good broad market exposure for investors just starting out. There's something to be said for a new investor not going 100% into stocks. I can still remember being anxious about investing at all (you mean I can lose money?). STAR lets young people get their toes wet.
More recently, Vanguard created its Target Retirement funds. These too have $1K minimums. The Target 2060 Fund VTTSX (that's as far out as Vanguard goes) is a mix of the funds you recommend - Total Stock Market and Total Int'l Stock, with about 10% of Total Bond Market II thrown in. (Why, you ask, Bond Market II? I ask the same thing.) This might be a reasonable alternative, still following your thinking.
This fund does have a hometown bias - it's 7:3 domestic/foreign. The mix in the real world is closer to 1:1, as you suggest. And the fund does gradually shift its stock/bond mix, but not for about 22 years.
If you like the 1:1 mix, then why not just go with VTWSX (currently about 4:5 domestic/foreign)? This fund has a $3K min, so by sticking with one fund, one doesn't have to go the ETF route (VT).
Comments
Regards,
VTI Snapshot: https://personal.vanguard.com/us/funds/snapshot?FundId=0970&FundIntExt=INT
VXUS Snapshot: https://personal.vanguard.com/us/funds/snapshot?FundId=3369&FundIntExt=INT
More recently, Vanguard created its Target Retirement funds. These too have $1K minimums. The Target 2060 Fund VTTSX (that's as far out as Vanguard goes) is a mix of the funds you recommend - Total Stock Market and Total Int'l Stock, with about 10% of Total Bond Market II thrown in. (Why, you ask, Bond Market II? I ask the same thing.) This might be a reasonable alternative, still following your thinking.
This fund does have a hometown bias - it's 7:3 domestic/foreign. The mix in the real world is closer to 1:1, as you suggest. And the fund does gradually shift its stock/bond mix, but not for about 22 years.
If you like the 1:1 mix, then why not just go with VTWSX (currently about 4:5 domestic/foreign)? This fund has a $3K min, so by sticking with one fund, one doesn't have to go the ETF route (VT).