Note to self, don’t try to time the market
After calculating my networth last week I was a little suprised by how much cash I had, mostly from 0% balance transfer offers. I decided to max out my Roth IRA for the year as I had plenty of non BT money to fund it. The only choice was to decide if I should funds it in monthly intervals to take advantage of dollar cost averaging or just go with a lump sum. Well, I chose the latter, thinking that now would be a good time to invest as stocks got pounded at the end of last week. I guess you could say I was ‘buying the dip.’
My funds were invested by Tuesday and the Dow quickly lost over 300 points in the next 3 days. Ouch. My contributions for last and this year are in Vanguard’s Target Retirement Fund 2045 so its 90% stocks. Needless to say, in the last week I’ve lost some serious $$ there. I think I am going to read up on dollar cost averaging before next year comes along.
May 19th, 2006 at 8:49 am
Yeah, I’m doing a mix of Vanguard 2035 and Vanguard 2045, and just do it blindly once a month. I don’t even really pay attention to the purchase price, although I do track overall performance in Quicken.
Cheers, nickel
May 27th, 2006 at 3:27 pm
Hi Jason,
Not sure if you’ll get to read this comment since it’s a ways in the back - but I just posted about opening a Roth-IRA account and am looking at Vanguard’s Target Retirement 2045 Fund (as well as Fidelity and T. Rowe Price) - if you can say a bit on your experiences with Vanguard and the fund, that’d be great!
Thanks,
Wanda
May 27th, 2006 at 9:47 pm
Sure. Opening the account was pretty easy. The website seems kinda bland and I like Fidelity’s better but thats not that important. I don’t think I had to wait but a day or two to buy the funds. No trial deposits like banks or 5 to 7 business days to verify the account like Fidelity’s brokerage account. So far I am pretty happy with it. Its allowed me to have a simplified retirement account. I think in a couple of years I might look into getting individual funds to set my own asset allocations. But that will take alot more learning and of course, alot more money
I mostly I decided on Vanguard’s Target Retirement 2045 Fund (VTIVX) because of the very low expense ratio, I believe its 0.21. That is much, much lower than Fidelity and T. Rowe. I think Fidelity’s Freedom 2040 (FFFFX) has 0.79 and T. Rowe Price’s Retirement 2045 (TRRKX) has 0.81. Can always look at MorningStar to get more details. The downside is that it has a $10 annual fee for funds under 5k. I won’t have to pay that next year thankfully but if I decided to buy a different fund with next years deposit then I would have to pay the fee.
The benefits of the Fidelity account are that you can open one of their simple start roth iras and not have to deposit $2500, you just have to have monthly deposits of $200. I think the minimum for T. Rowe Price is $1000 whereas the minimum for Vanguard’s is $3000. I think that the asset allocations are very similar, ~90 stocks 10 bonds. I have heard that Vanguard’s stock allocation is slightly more conservative but I don’t think its that different.
I would recommend the Vanguard if you can put $3000 in to open it up. I personally think the expense ratio is worth it.