Roth IRA Funding

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Topic Author
AK59
Posts: 140
Joined: Fri Aug 16, 2019 7:52 pm

Roth IRA Funding

Post by AK59 »

I have my Roth IRA with T Rowe Price and hold both TRBCX and PRWCX. My Roth currently accounts for about 20% of my portfolio and is my main investing tool for retirement and it's maxed out each year.

With the current drop in value of the actively managed TRBCX fund, I am wondering if this is the best option for my Roth or if I can get a better fund that will serve me well for the long-term.

What are my options here?

Switch to another broker to get access to similar but lower expense ratio funds?

Stay the course with my current roth and play the long game?

Look at other fund options either within or outside of T Rowe?

I do plan to keep my Roth as my main source of retirement investing so maximizing growth with consideration of risk is priority.
sycamore
Posts: 6359
Joined: Tue May 08, 2018 12:06 pm

Re: Roth IRA Funding

Post by sycamore »

AK59 wrote: Sun Jan 16, 2022 12:33 pm I have my Roth IRA with T Rowe Price and hold both TRBCX and PRWCX. My Roth currently accounts for about 20% of my portfolio and is my main investing tool for retirement and it's maxed out each year.

With the current drop in value of the actively managed TRBCX fund, I am wondering if this is the best option for my Roth or if I can get a better fund that will serve me well for the long-term.

What are my options here?

Switch to another broker to get access to similar but lower expense ratio funds?

Stay the course with my current roth and play the long game?

Look at other fund options either within or outside of T Rowe?

I do plan to keep my Roth as my main source of retirement investing so maximizing growth with consideration of risk is priority.
For sure you'll want to decide on a plan you can stick with. If you're questioning whether to stick with TRBCX because it's dropped recently (down only 7% year to date), that suggests you're probably better off in passive index funds. Actively managed funds like TRBCX are bound to underperform every now and then, regardless of whether the stock market is dipping slightly.

No one can tell you what fund will outperform. It's entirely possible TRBCX will turn out to be better than, say, the S&P 500 or a Total Stock Market fund. No one knows.

Bogleheads investing principles say trying to find a fund manager who can find the needle in the haystack is itself like trying to find a needle in the haystack. So don't try. Just buy the haystack, meaning buy a Total Stock Market Index fund.

T. Rowe Price itself offers such a fund: POMIX with expense ratio 0.22%. You can get the same stock exposure at lower cost using an ETF like iShare's ITOT or Vanguard's VTI (around 0.03% or so). The main point is those funds don't try to pick the winners like TRBCX does (and sometimes fails at).
Last edited by sycamore on Sun Jan 16, 2022 1:18 pm, edited 1 time in total.
mhalley
Posts: 10432
Joined: Tue Nov 20, 2007 5:02 am

Re: Roth IRA Funding

Post by mhalley »

Most people won’t take the time to research fund symbols. If you edit your post and include the fund names and expense ratios, you will be more likely to get a response. Short term market fluctuations should be met by a shrug. You should look into creating an investor policy statement (see the wiki). https://www.bogleheads.org/wiki/Investm ... _statement
But in general, most here would recommend ditching active funds for passive such as total stock market or total intl stock market funds. You could achieve this at t Rowe price by buying the etfs VTI and VXUX
RetiredAL
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Joined: Tue Jun 06, 2017 12:09 am
Location: SF Bay Area

Re: Roth IRA Funding

Post by RetiredAL »

AK59 wrote: Sun Jan 16, 2022 12:33 pm
With the current drop in value of the actively managed TRBCX fund, I am wondering if this is the best option for my Roth or if I can get a better fund that will serve me well for the long-term.
Do be aware that a large part of the NAV drop the last 30 days is that TRBCX paid a ~$20 dividend in Dec!

Personally I would not want to hold a .68% ER fund, but it's overall performance has been OK so it's not a run-from fund and since it's in a Roth, income throw-off is not an issue.
Topic Author
AK59
Posts: 140
Joined: Fri Aug 16, 2019 7:52 pm

Re: Roth IRA Funding

Post by AK59 »

RetiredAL wrote: Sun Jan 16, 2022 1:28 pm
AK59 wrote: Sun Jan 16, 2022 12:33 pm
With the current drop in value of the actively managed TRBCX fund, I am wondering if this is the best option for my Roth or if I can get a better fund that will serve me well for the long-term.
Do be aware that a large part of the NAV drop the last 30 days is that TRBCX paid a ~$20 dividend in Dec!

Personally I would not want to hold a .68% ER fund, but it's overall performance has been OK so it's not a run-from fund and since it's in a Roth, income throw-off is not an issue.
Yeah I was aware of that and understand that is a big contributor along with a new fund manager, etc.

I guess it's not a run and dump, but rather, what is my goal with this fund and can I be more efficient with the same goal in another fund kind of question.

I didn't understand ER when I bought into this fund years ago, now I do and am trying to see what is the best option going forward.

I don't expect answers in these responses but rather options and/or other ways to look at this.
RyeBourbon
Posts: 1219
Joined: Tue Sep 01, 2020 12:20 pm
Location: Delaware/Philly

Re: Roth IRA Funding

Post by RyeBourbon »

Perhaps you could just own VTI (total stock market) in your Roth IRA. That's what I do. My bonds are in tIRA.
Retired June 2023. AA = 55/35/10
Topic Author
AK59
Posts: 140
Joined: Fri Aug 16, 2019 7:52 pm

Re: Roth IRA Funding

Post by AK59 »

RyeBourbon wrote: Sun Jan 16, 2022 2:45 pm Perhaps you could just own VTI (total stock market) in your Roth IRA. That's what I do. My bonds are in tIRA.
Currently hold it in my brokerage along with VTSAX in my employer retirement.
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