Vanguard question

[Frenchy1011]

Hey all,

 

I have a quick question for all of you. I am currently in the starting line of getting my Vanguard account set up. I currently have 6K in a Roth IRA in a money market fund. I am planning on putting money into a four fund portfolio (Total Stock, Total Int'l Stock, Total Bond, and REIT). Most of those have a contribution minimum. I am also putting in about $500 monthly to that IRA.

 

So my question is, how do I get my money into those funds? Is there a way to split that up by percentage? Also is there a way to split up my $500 monthly contribution by percentage into these funds? Or does that money need to go into the money market fund and I need to contribute to that at a later date? Sorry for all the questions. Thanks for the help!

[PhysicianOnFIRE]

I would buy what you can with the minimums. That might be 2 funds with your $6,000. When you have enough in the account, buy the third and fourth classed by exchanging into them from the other funds. You won't have tax implications within the account.

You should be able to set how much you invest into each fund and automate it once you've bought into the fund at the required minimum.

[Frenchy1011]

Ok great. That definitely clears things up for me. Thanks so much!

[Peds]

Start with a target retirement fund then break it out individually later.

[DMFA]

Either buy the minima and round it out later, or do ETFs.

[TheAbacus]

My understanding was that monthly contributions to a taxable account should be avoided, as you will end up with 12 distinct lots of funds with different rates / basis etc. which can be problematic when you plan to sell (even for tax loss harvesting).

[DMFA]

TheAbacus wrote:

My understanding was that monthly contributions to a taxable account should be avoided, as you will end up with 12 distinct lots of funds with different rates / basis etc. which can be problematic when you plan to sell (even for tax loss harvesting).

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I think he's doing Roth IRA.

[TheAbacus]

Also, you might want to look into using your Roth IRA / tax protected accounts (like a 403b) for REITs, since they are not tax efficient and keeping these in a taxable account may diminish their growth.

[Hatton]

Since I assume you are young just put it all in the total stock fund.  When you get more money you can diversify.

[Frenchy1011]

Yes all of this is being done in a Roth IRA account. It sounds like what might be the best thing is to try and get he minimum into each fund as I go, starting with the Stocks. Once I have enough in those accounts I can buy the minimum into the other funds and then separate out my contributions by percentage at that point. And still under the Roth account.

[Zaphod]

Is there a reason you're using the funds that require a minimum? Just get the etfs instead, it doesnt make a lot a sense to not do so.

[PhysicianOnFIRE]

TheAbacus wrote:

My understanding was that monthly contributions to a taxable account should be avoided, as you will end up with 12 distinct lots of funds with different rates / basis etc. which can be problematic when you plan to sell (even for tax loss harvesting).

Click to expand...

Since 2011, brokerages are required to keep track of lots and cost basis for you. Be sure to set "Specific ID" as your cost basis (Vanguard) and you're all set.

There are actually a number of advantages to contributing regularly as you get paid. You'll capture any gains throughout the year, and will be more likely to have tax loss harvesting opportunities on short swings. I was able to take advantage of the Brexit to TLH, even though it was just a blip.

[Frenchy1011]

Zaphod wrote:

Is there a reason you’re using the funds that require a minimum? Just get the etfs instead, it doesnt make a lot a sense to not do so.

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I guess I don't really know what an ETF is haha. I just looked at my Vanguard account and was planning on buying the Vanguard funds, didn't know much about ETFs. Any help with this and if this is easier/better to do than buying the Vanguard funds (which all have a minimum)?

[G]

I find funds easier than ETFs because you don't have to worry about the intra-day pricing.

I agree that you should focus on one or a couple funds at a time.  If you're really a penny-pincher like me, and your risk tolerance allows just one fund, you might work on getting enough into one fund so that you can convert it to Admiral class for the lower fee.

[Kamban]

I would get 2 funds with the 6K you have to meet the minimums and buy the other 2 funds next year. All funds will then meet the minimums