how do you manage your IRA?

[nageov3t]

so, I setup a Roth IRA with my bank for 2012... capped it out, picked a couple mutual funds, and that seems to be done (split it 60% moderate growth and 30% aggressive... with the last 10%, I just bought some individual stocks to play with)

but now I'm wondering... what should I do with my 2013 money (and beyond, since I'm still a good 35 years away from retirement)? balance it between the existing funds? pick another 2-3 to split it between? I need help from AT financial gurus <3

 

[Baked]

Dump everything on the most aggressive fund you can find. Morningstar rating be damned!

That's my strategy btw.

 

[Jaepheth]

Catholicism

 

[nageov3t]

Dump everything on the most aggressive fund you can find. Morningstar rating be damned!

That's my strategy btw.

so $10,500 on FB stock?

 

[boomerang]

Find a financial adviser that works for you on a salary basis. When you need advice, you pay him to give it. His only allegiance is to you. You discuss your goals, your tolerance for risk and your time line and he gives you advice based on that. Or, take your chances that you make some good decisions along with the bad and come out ahead in the long run.

Think about it. When you don't know how to do what needs to be done, when you don't have the tools to do it, you hire a professional.

 

[Elbryn]

Find a financial adviser that works for you on a salary basis. When you need advice, you pay him to give it. His only allegiance is to you. You discuss your goals, your tolerance for risk and your time line and he gives you advice based on that. Or, take your chances that you make some good decisions along with the bad and come out ahead in the long run.

Think about it. When you don't know how to do what needs to be done, when you don't have the tools to do it, you hire a professional.

or save the money into a balanced fund of sorts or timed fund based on your estimated age of retirement as a parking place to hang on while you devote the time towards learning what you need to know.

basically, with either a financial adviser or on your own you spend a fairly good time upfront developing a global plan that spans all your retirement saving options. something like i want to be 80%/20% equity/bond until age 30. 75/25 at age 35, etc..

you can get as complicated with it as you want with reits, commodities, foreign bonds, healthcare funds, etc..

or as simple as 80/20 stocks/bonds, with 2/3 of my stocks being a total US market index, the other 1/3 in a total international index. all bonds go into a total us bond index.

once you get the plan, all ya do is consult it and dump money wherever it's needed and rebalance at least 1x a year. in general the plan will not need any modifications barring any huge influx of money. the key to the plan is to make it conservative enough that you'll never deviate from it. remember 2007-2008. equities lost 50% of their value. if you sold, you lost. if you stayed and stuck to the plan, you're in a good position now, having regained the loss and added profit as you bought consistently along the way.

 

[FelixDeCat]

I cashed mine out 5 years ago.

$175,000

:'(

 

[stlc8tr]

so, I setup a Roth IRA with my bank for 2012... capped it out, picked a couple mutual funds, and that seems to be done (split it 60% moderate growth and 30% aggressive... with the last 10%, I just bought some individual stocks to play with)

How many individual stocks are you buying with only $500? Are you paying any brokerage fees? If so, the fees will eat up your returns. My rule of thumb is to have no more than 0.5% cost for a buy/sell round trip. So if I'm paying $2 to trade, the minimum order is $800.

 

[nageov3t]

How many individual stocks are you buying with only $500? Are you paying any brokerage fees? If so, the fees will eat up your returns. My rule of thumb is to have no more than 0.5% cost for a buy/sell round trip. So if I'm paying $2 to trade, the minimum order is $800.

just one; it was an impulse buy that I probably should have skipped on (or done with my standard brokerage account), but it's already there now. lol

will probably consider selling it if/when it grows enough to at least balance out the brokerage fees, but in the long run, $500 isn't enough to lose too much sleep over.

 

[sciencewhiz]

You need to come up with a long term plan. Don't treat each year's money differently, instead figure out what good investments are, and add to them each year.

The following book has lots of good tips for determining the right plan: http://www.amazon.com/Bogleheads-Gui...e+to+investing

 

[DaveSimmons]

Are those funds actively managed? I'd say switch to index funds, for lower expense ratios and historically better performance over time.

You could get by with having 100% of your money in Vanguard's Target <year> fund. It is a fund made up of other Vanguard low expense index funds. It includes the full US stcok market and a good amount of foreign stocks. It also includes a small amount of bond fund shares that slowly increases as you get closer to retirement.

One fund, fully diversified.

 

[Markbnj]

On a similar topic, I have a rolled-over IRA that I just set up with Ameritrade. It's just parked in a money-market for the moment. I don't want to actively trade it, but I do want to move the money into some decent bond and equity funds. The Ameritrade guy thinks I should be in this actively managed retirement portfolio fund they have that is run by Morningstar, and costs 1%/year management fees. What do you guys think about an arrangement like that? Are those fees reasonable?

 

[CRXican]

Target Retirement 2045

 

[vshah]

i have it split into a few funds - total us market, international stocks, and bonds.

 

[DaveSimmons]

On a similar topic, I have a rolled-over IRA that I just set up with Ameritrade. It's just parked in a money-market for the moment. I don't want to actively trade it, but I do want to move the money into some decent bond and equity funds. The Ameritrade guy thinks I should be in this actively managed retirement portfolio fund they have that is run by Morningstar, and costs 1%/year management fees. What do you guys think about an arrangement like that? Are those fees reasonable?

80% of actively managed funds under-perform the S&P 500 index over time.

The expense ratio for Vanguard's Target 2040 is 0.18%. A large-cap index fund ETF can go as low as 0.04%. Over a decade that extra 0.82% - 0.96% you're paying for active management adds up, even before it loses to the S&P 500.

 

[Cuda1447]

On a similar topic, I have a rolled-over IRA that I just set up with Ameritrade. It's just parked in a money-market for the moment. I don't want to actively trade it, but I do want to move the money into some decent bond and equity funds. The Ameritrade guy thinks I should be in this actively managed retirement portfolio fund they have that is run by Morningstar, and costs 1%/year management fees. What do you guys think about an arrangement like that? Are those fees reasonable?

Well some people will tell you just to find a mutual fund that mirrors an index, as most managed accounts won't outperform an index over time. Those mutual funds will be very low cost.

 

[ichy]

My Roth IRA is with Scottrade. I have a few Vanguard Index ETFs that I buy more of every year. Set it and forget it.

 

[Gunslinger08]

I have it all in a target retirement fund right now, which is invested in a total stock market fund, an international market fund, and a bond fund. Sometimes I research switching to some more actively managed funds. However, I find the returns on this one to be pretty much in line with/above most funds and it has a very low expense ratio.

 

[Dr. Detroit]

Rolled that bitch over and day-trade it! old 401k & SEP IRA

Company 401K in 75% S&P 500 & 25% High Growth

 

[Jeff7]

Are those funds actively managed? I'd say switch to index funds, for lower expense ratios and historically better performance over time.

You could get by with having 100% of your money in Vanguard's Target <year> fund. It is a fund made up of other Vanguard low expense index funds. It includes the full US stcok market and a good amount of foreign stocks. It also includes a small amount of bond fund shares that slowly increases as you get closer to retirement.

One fund, fully diversified.

:thumbsup:
And most of those Target Retirement funds will also automatically adjust you toward more bonds as time goes on, though some of them still end up staying pretty heavy on stocks. (I think the Target Retirement Income funds are mostly static, to help keep some money coming in.)


For me, VTSMX and VBMFX. 0.18% and 0.22% are the expense ratios. (Morningstar's numbers don't match the official source.)

Once those go up to >$10k in each, then those drop to 0.06% and 0.10%.

I've also got some more expensive funds in my 401k. (American Funds. No choices below 1.36% there, and they go up to 1.89%. ) The funds I've got there have a little bit of international stock mixed in. RGABX and RWMBX.


Management: I'm planning to check the allocations about once a year, and if something's more than 5 percentage points away from the target allocations, it gets adjusted. Beyond that, all that gets done is the weekly paycheck contributions to the 401k, and weekly payments into the IRA. That's about it.

 

[Markbnj]

80% of actively managed funds under-perform the S&P 500 index over time.

The expense ratio for Vanguard's Target 2040 is 0.18%. A large-cap index fund ETF can go as low as 0.04%. Over a decade that extra 0.82% - 0.96% you're paying for active management adds up, even before it loses to the S&P 500.

Well some people will tell you just to find a mutual fund that mirrors an index, as most managed accounts won't outperform an index over time. Those mutual funds will be very low cost.

Those are good points. Thanks!

 

[Exterous]

so, I setup a Roth IRA with my bank for 2012... capped it out, picked a couple mutual funds, and that seems to be done (split it 60% moderate growth and 30% aggressive... with the last 10%, I just bought some individual stocks to play with)

but now I'm wondering... what should I do with my 2013 money (and beyond, since I'm still a good 35 years away from retirement)? balance it between the existing funds? pick another 2-3 to split it between? I need help from AT financial gurus <3

I'm surprised no one has asked this yet but:

Do you have any other retirement accounts setup? If so you might want to use certain accounts for certain funds. For example: If you had a 401k and a Roth IRA you might want to use the 401k to handle the stock portion and the rIRA to handle the bonds. It makes tracking and re-balancing easier.

There are also potential tax considerations and withdrawal considerations when mixing account types

If not you need to find a risk mix that works well for you. Starting with 80/20 is all well and good when the market does well but if you can't stomach 40-50% losses in a down market and sell at the bottom then it didn't help you at all. Everyone says they won't do that but a significant number of people did in 2008-9 and many are just now getting back in, having lost out on all of the gains since then

Once you have your mix decided you need to fill in that mix with matching choices. For the time being I would likewise recommend index funds. There are many theories out there about tilting, sector bets, DRIP etc but I would shy away from those until you understand the theories and accept the benefit/risks associated with them if you chose to do those at all. Nothing wrong with indexing

:thumbsup:
And most of those Target Retirement funds will also automatically adjust you toward more bonds as time goes on, though some of them still end up staying pretty heavy on stocks. (I think the Target Retirement Income funds are mostly static, to help keep some money coming in.)

And some consider them to be a little light on international funds

 

[Jeff7]

...
And some consider them to be a little light on international funds

Very true. Everyone has their own thoughts on weighting. If you do the 3-fund portfolio, with index funds in US stock, US bonds, and international stocks, well, then you've got the international stocks covered. What weighting? Depends.
Some make the point that US companies do a great deal of business overseas, so you're already getting some international exposure that way. Others want to get in on the international stocks directly. Pluses and minuses to either approach, for sure. I'm mainly not too keen on the whole currency-exchange thing. Besides the fluctuations in stocks, then you also get in on some of the screwy things that governments will do with their currencies, and the resulting perceptions from the populations of any affected countries - good or bad.

I figure I'm not going to have any idea which sector's going to do well, so right now, I'm trying to stay somewhere around a total stock market index, along with a bit less than my age in bonds. (Age 31, so bonds would be 26% of investment assets.) Though thanks to the lousy choices in the 401k, my total allocation ends up being tilted closer to something like an S&P 500 index - which isn't necessarily a bad thing either, but it's expensive to own it. (There is a small cap fund in the 401k. It's also one of the more expensive ones there. Oh, and there is a money market fund available, at 0.66% ER. Yield since inception a few years ago: 0.00%. Maybe I'd see some positive numbers if they showed more significant figures on that. )

If only I could figure out a good way of encouraging management to get a few low-cost funds added... I think the only way would be to find something in the Department of Labor's laws that says that a plan like that is not ERISA compliant. All I've seen thus far is that the fees can't be "high," or that if they are "high," you still need to have some low-cost options available. Nice and vague. :\
And I don't want to make it sound like "I'm gonna get the gov'ment all on you guys!" More like, "Hey....if the DOL sees this, there could be problems, and their lawyers might be able to beat up our lawyers and take their lunch money. Incidentally, there's a good way to solve this, which can benefit a lot of us."