Advice on IRA investment please

[mdmc]

Anyone care to recommend a mutual fund for me to invest in.
I have a IRA that I need to put to work
Thanks in advance for your consideration.

[Probatim]

1. A few questions first...

What is your level of risk tolerance?
Retirement timeline?

Usually a index-based fund will be sufficient but YMMV.

[mdmc]

3. I'll retire in 20 years

I can tolerate some risk
Thanks in advance for reading and replying

[Auggie]

2. Sign up at www.vanguard.com ...

and ask to speak to an investment counselor.

[twodogsbarking]

7. I am not with Vanguard but would recommend them. 401k at my job had Vanguard. Keep in mind where you are in relation

to tax brackets and don't rule out either contributing to a Roth IRA or converting some and pay tax if you can in the lower bracket.. I paid an upfont fee in a fund I got seven years ago. Something to consider long term.
Figure out what works best for you and lets you sleep at night. Don't sleep in court though.

[Auggie]

8. There are mutual funds called Target Retirement

The investment risk is weighed upon your current age and the age you plan to retire. As you grow older the fund investment strategy shifts from, say 80% stocks / 20% bonds to 40% stocks / 60% bonds (or something like that). Vanguard has several.

But PLEASE, speak to an investment expert. Either Vanguard or a certified retirement planner.

On edit: Apologies twodogsbarking -- meant to respond to the original poster.

[twodogsbarking]

9. Your direction is good.

[PJMcK]

4. Too many variables

How old are you?
Do you own a home?
How much money are you looking to invest?
What are your retirement plans?
Do you have any children?
How much do you make annually?

Obviously, I don't want to know the answers to those questions. But they're among the important parameters of your life for consideration before investing any money.

I suggest you find an investment advisor to guide you. A professional will give you better and more specific advice than you'll get on an anonymous internet bulletin board. Ask your friends or family for recommendations. Your bank could be another source of information. Reputable brokerage houses are trustworthy but their fees can be deep.

Good luck!

[Arger68]

5. I like VFIAX

It follows the S & P 500. I actually have a Roth IRA in VOO, which is the ETF version

[Easterncedar]

6. I like do-gooder funds

Pax (now Impax) and Domini. Get decent returns on my IRAs with them. But I’m not knowledgeable! I chose them for their mission statements.

[mdmc]

13. I too like a good mission statement

[Warpy]

10. Check out index funds, also

because they generally aren't loaded down with the multiple fees that mutual funds generally charge. When the market as a whole goes up, the funds go up. When the market goes down as a whole, so do the funds. Regular mutual funds do th the same, although they try to deny it, they just do it with bigger fees.

[progree]

11. Some index funds are mutual funds, and some are ETF's. And there are actively managed ETFs and mutual funds

Last edited Sat Apr 20, 2024, 03:59 AM - Edit history (1)

It used to be that almost all ETFs were index funds, while most mutual funds were actively managed funds. But there have been mutual fund index funds since the 70's. And a growing proportion of ETFs are actively managed.

Actively managed means that an individual or team tries to pick the best stocks to buy and sell, and so tend to be more expensive (higher expense ratio) than index funds where they work to match what's in the benchmark they are indexing.

Examples (both are S&P 500 index funds at Vanguard):

VOO - an ETF - Expense Ratio: 0.03% https://investor.vanguard.com/investment-products/etfs/profile/voo#overview
3 year performance: 11.42% (annualized)

VFIAX - A mutual fund - Expense Ratio: 0.04% https://investor.vanguard.com/investment-products/mutual-funds/profile/vfiax#overview
3 year performance: 11.44% (annualized)

Unfortunately, I can't find the expense ratio to more than single significant digits accuracy, but even if they are indeed 0.01% difference, that's $1 per $10,000 invested per year.

Personally I prefer mutual funds over ETFs because I like that the former are bought and sold at Net Asset Value (NAV), whereas an ETF trades at a varying premium or discount to NAV. But I own both mutual funds and ETFs.

One should use limit orders to purchase or sell ETFs as their price can swing considerably during the day above and beyond changes in the underlying NAV. ETFs are traded throughout the trading day, sometimes resulting in sizable bid-ask spreads, particularly for the smaller more specialized ETFs.

OTOH, ETFs have some tax advantages as they aren't forced to distribute capital gains as much as mutual funds are. I'm not clear how that works, but I don't doubt that's the situation.

For funds held within retirement accounts like 401k's and IRA's (both traditional and Roth), there is no difference between the two as far as taxes.

[bucolic_frolic]

12. Stock dividend funds

SPYI

YMMV, stock funds do fluctuate with the market, there can be periods of advance, and periods of poor performance. The late 60s to the early 80s, for example, was a tough time to be in a general purpose mutual fund.

[mahatmakanejeeves]

14. Roth or regular? NT