| Transferring Roth to Discount Broker; Fund Critique Please |
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volume@11
New Member
Cash: $ 2.00
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Joined: 18 Oct 2007
Location: rochester, ny
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| Transferring Roth to Discount Broker; Fund Critique Please |
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I currently have a Roth IRA through American Funds. I am 37 and will have a bit over $20k (minus the xfer fees and backend load fees from American) to move over. The funds that I have right now are class C types. I have determined that I need to get out of these and that I want to do investing on my own.
My current American funds are:
AMPCX (AMERICAN FDS AMCAP FUND C)
AFICX (American Funds Fundamental Invs C)
GFACX (American Funds Grth Fund of Amer C)
NPFCX (American Funds New Perspective C)
SCWCX (American Funds Smallcap World C)
I have been looking at discount brokers and I have pretty much narrowed it down to either Vanguard or TRowePrice. I am trying for a fairly aggressive mix with both regular funds and at least one index fund. I am leaning towards Vanguard right now but I wanted to ask for opinions about the selections that I have made. If going with Vanguard, what do you think of these choice?
Vanguard fund choices
1) VEXMX (Mid Blend)
2) VTHRX (Vanguard Target Retirement 2030 Fund)
3) VTRIX (Vanguard Intl Value Fund)
4) NAESX (Small Blend, Small Cap Index Fund)
Now, if going with TRowePrice, here are my choices with them:
TRowePrice choices:
1) PEXMX (Extended Eq Mrkt Index, Mid-Cap Blend)
2) PRGFX (GROWTH STOCK, Domestic Stock)
3) PRGSX (GLOBAL STOCK, International Stock)
4) TRBCX (BLUE CHIP GROWTH, Domestic Stock)
5) TRSGX (PERSONAL STRATEGY GROWTH, Domestic Stock)
Depending on which broker I pick, I will split the money up fairly evenly. Do you think I have a good mix? Too many funds? Not enough diversity? Anything that you would change?
Thanks
dennis
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Fri Dec 28, 2007 3:44 am |
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pf101
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Joined: 12 Sep 2007
Location: Portland, OR
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Well, I'd personally choose Vanguard, but T. Rowe is my 3rd choice (after Fidelity). One thing to keep in mind is that a target fund like you have listed is meant to be a stand alone fund. It should either be your only holding or you shouldn't have it at all. some people do invest in a target fund and then put a small amount into specialized funds (like emerging markets or a sector fund) but the allocation you're suggesting will just give you a lot of duplication with your investments which is pointless.
Personal Finance 101
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Fri Dec 28, 2007 7:50 am |
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Apollo
Senior Member
Cash: $ 73.85
Posts: 360
Joined: 10 Sep 2007
Location: New York
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Well, personally I don't like your entire mix but that is due to the fact that I completely dislike mutual funds but since it seems that you have really low expectations as far as performance is concerned that mix may be enough to meet your expectations.
Having said that, coaster made a really good point. At the very least know what your funds holdings are.
pf101 also made a good point that duplication is pointless.
It is not smart to play it safe but it is safe to play it smart.
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Fri Dec 28, 2007 11:41 am |
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volume@11
New Member
Cash: $ 2.00
Posts: 9
Joined: 18 Oct 2007
Location: rochester, ny
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Thanks to all of you for your comments.
pf101, I think you are right about the target fund. It does seem to be intended for somebody to just pull a pile of money in just that one and let it ride. I am not sure if that was a brain fart on my part or what. Perhaps I just got too involved and mentally lost it for a bit. Sometimes a good night of sleep helps with that  When you spend several hours at a time looking over funds you tend to get a little loopy.
I had thought of fidelity as an option too, but because I was picking four to five funds, I opted not to go with fidelity because their website had listed that most index fund had a min invest of $10k, some at 100k. My 401k is done through fidelity as well. I don't know if I should have diversity through different brokers or not? Would be nice to have it all at one place but is this a good way to go?
Apollo, you do not like my mix. I don't mind this but perhaps you are right and I do have too much duplication. I can understand why you think so. How would you feel about a market index fund and and international/foreign stock fund? In total, it would just be the two investments. Then, how would you feel about a 85/15 split, or maybe an 80/20 split (in terms of cash balances)?
I could look into Scottrade or Ameritrade. That might be a better option but as of right now I had no intentions of doing straight stock stuff.
dennis
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Fri Dec 28, 2007 3:08 pm |
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pf101
Senior Member
Cash: $ 62.25
Posts: 311
Joined: 12 Sep 2007
Location: Portland, OR
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If you aren't planning on buying stocks there's no reason not to go with the fund company directly.
As far as your cash holdings go, it depends on your age and risk tolerance. You mention that you have a 401k with Fidelity. Make sure that you are managing your asset allocation as a total investment amount, not doing a complete allocation for each account. All that will do is ensure that you're holding at least two of everything. You really only need to be invested in 5-7 funds across your entire portfolio to be completely diversified. Any more than that is likely just duplication.
Personal Finance 101
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Fri Dec 28, 2007 5:11 pm |
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Apollo
Senior Member
Cash: $ 73.85
Posts: 360
Joined: 10 Sep 2007
Location: New York
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I like your second idea better then your first one. You may want ot do a 60/40 or even 50/50 between the two. International markets have outperformed the U.S. for years and if you take the sharp drop in the U.S. Dollar into consideration even longer.
Broker diversification only makes sense if you insist on buying mutual funds for which you should open an account directly with the fund family and if you want to buy individual stocks then you should open an account with a discount broker.
Personally, I don't invest into any funds but I have very good reasons for that. If you buy any funds then at least know all their holdings.
It seems that you keep an open mind to your investment stratey which is very good. Don't limit your investments to funds, especially not mutual funds.
I have said it plenty of times and I know that the majoriy disagrees with me but that doesn't surprise me at all:
Mutual funds were designed for the middle-class in order to keep them in the middle-class for as long as possible and mutual funds try to manage risk where there is no risk to be managed which results in very lousy returns. Risk is simply the lack of knowledge.
If you choose to diversify away from mutual funds, which I strongly recommend, take your time to do that. I don't want to discourage you away from mutual funds but rather suggest to widen your investment spectrum.
In the end it comes down to personal preference and what you think will work best for you.
There is no right or wrong investment strategy just a good and bad one and the definition of good and bad once again depends on your definition.
It is not smart to play it safe but it is safe to play it smart.
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Sat Dec 29, 2007 6:27 pm |
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401kDave
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Cash: $ 3.10
Posts: 15
Joined: 09 Apr 2008
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| Here's another options and how it competes |
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I agree with Pf101. Don't go direct to the funds company, you're limiting your options. Unfortunately stocks are entising but ask those who bought enron, world com, adelphia, tyco .....bear stearns. I'd say learn how build a solid mutual fund portfolio first with good funds from an open list. Once you're comfortable with that you can start dabbling in stock picking. if you're at all concerned about risk, picking individual stocks is a whole new level of risk. I don't deny that you could do very well with stocks but you can also end up a big looser and you only have one chance to save for retirment in most cases.
This looks much nicer on my spread sheet, I can send it to you.
Name Ticker Morningstar Category Rating 1 Yr 3 Yr 5 Yr 10 Yr 2007 Rank Exp
American Line up
American Funds Amcap C AMPCX US OE Large Growth ÙÙÙ -5.98 4.09 9.14 5.54 83 1.48
American Funds Fundamental Invs C AFICX US OE Large Blend ÙÙÙÙÙ 1.34 11.04 16.39 7.02 9 1.38
American Funds Grth Fund of Amer C GFACX US OE Large Growth ÙÙÙÙÙ -0.01 8.79 13.68 8.44 68 1.42
American Funds New Perspective C NPFCX US OE World Stock ÙÙÙÙ 4.80 12.66 18.56 8.68 30 1.52
American Funds Smallcap World C SCWCX US OE World Stock ÙÙÙÙÙ -2.47 13.34 21.70 6.78 24 1.79
T. Rowe Line up
T. Rowe Price Blue Chip Growth TRBCX US OE Large Growth ÙÙÙÙ -1.21 6.71 10.60 3.43 48 0.77
T. Rowe Price Extended Eq Mrkt Index PEXMX US OE Mid-Cap Blend ÙÙÙ -9.05 7.39 15.94 5.32 58 0.40
T. Rowe Price Global Stock PRGSX US OE World Stock ÙÙÙÙÙ 4.78 18.99 20.65 7.45 8 0.87
T. Rowe Price Growth Stock PRGFX US OE Large Growth ÙÙÙÙ -4.00 7.23 11.56 4.83 67 0.67
T. Rowe Price Personal Strat Growth TRSGX US OE Large Blend ÙÙÙÙÙ -3.18 7.31 13.15 6.14 29 0.84
Vanguard
Vanguard Extended Market Idx VEXMX US OE Mid-Cap Blend ÙÙÙ -9.52 7.13 15.92 5.35 56 0.24
Vanguard International Value VTRIX Foreign Large Value ÙÙÙÙ 0.07 15.45 23.86 8.38 19 0.40
Vanguard Small Cap Index NAESX US OE Small Blend ÙÙÙ -11.24 5.85 15.85 5.70 30 0.22
Vanguard Target Retirement 2030 VTHRX Target-Date 2030+ -2.57 38 0.00
Schwab No Load Funds
Janus Contrarian JSVAX US OE Large Blend ÙÙÙÙÙ 5.24 18.66 25.61 2 0.96
Royce Premier Service RPFFX US OE Mid-Cap Blend ÙÙÙÙÙ 3.49 12.62 19.74 11.62 10 1.29
Transamerica Premier Inst Sm Cp Val TPSMX US OE Small Blend ÙÙÙÙÙ 19.75 17.97 1 0.85
Janus Global Research JARFX US OE World Stock ÙÙÙÙÙ 8.33 18.19 3 1.11
Lazard Emerging Markets Open LZOEX US OE Diversified Emerging Mkts ÙÙÙÙ 19.76 29.66 38.02 12.88 73 1.47
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Fri Apr 11, 2008 6:38 pm |
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