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Roth IRA help

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  • Roth IRA help

    I have a Roth IRA for my wife and myself with just over 10k in each in a target retirement 2055 account which has an expense ratio of .16. I am interested in changing to VTSAX with a lower expense ratio of .05 now that I have over 10k and can access the admirals shares option. Does this sound like I good plan? If so, how can I do that successfully? Just sell the target retirement fund and purchase the VTSAX? I just was to make sure I don't screw something up.

  • #2
    Any advice?


    • #3
      Depends on how you want your overall asset allocation to be, and across which accounts.

      First, total stock index is a decent holding to have in a Roth account.  Yes, it's pretty tax-efficient since it doesn't generate much dividends and it has low turnover, but it's going to be a high earner being a domestic equity, so it will be nice to have its earnings not taxed.

      Second, you'll be missing out on the international equity and domestic bond holdings that are in the target date account.  If you still want those as part of your allocation, you'll have to find room for the other pieces, e.g. VTIAX/VXUS or VBTLX/BND.

      Otherwise, it's a good idea to switch.  If you've got any idea what you're doing, and it certainly seems you do, you're not gaining any benefit from holding a target date fund instead of its constituent pieces, you're just paying triple the expense ratio for the domestic portions.


      • #4
        yes its as simple as clicking exchange and picking a new investment.

        but youre asking the wrong question....

        essentially you are saying: i have this mix of US and Intl stocks and bonds at a certain allocation and at this price, but i want to move it to 100% US stock at this price.

        thats a personal asset allocation question which no one can answer.