Roth IRA

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flo879
Posts: 13
Joined: Sat Sep 05, 2020 12:13 pm

Roth IRA

Post by flo879 »

Hello,

I have a current target fund retirement account via employer, but want to contribute to the the max $6k to an ROTH IRA. Is it wise to invest in only one index fund (am looking into S & P 500) or is it recommended to invest in 2 o 3 index funds? My current allocation in my retirement account is 90% stock-if I choose more than one index fund, do I then split the 90% allocation evenly percentage wise between those funds?

Tips would be great, on what types of index funds and how many to choose from. I'm trying to steer away from a retirement targeted date fund due to the expense ratio.

Thank you!
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KingRiggs
Posts: 1154
Joined: Wed Dec 12, 2018 11:19 am
Location: Indiana

Re: ROTH IRA

Post by KingRiggs »

Looks like you have been considering your Roth (not ROTH) IRA since November...

Most common advice is place the investments with the highest expected rates of return in a Roth, as it grows and is withdrawn tax-free. Most recommend simply holding a broad-market US stock index fund in the Roth.

You can then use your 401k space to arrive at whatever ratio of stock to bonds you have decided upon. It is typically best NOT to have the same ratio mirrored in each account. Search the Bogleheads Wiki for entries about asset location (not allocation) for further reading.
Advice = noun | Advise = verb | | Roth, not ROTH | | "Remember, there's always money in the banana stand." - George Bluth, Sr.
mhalley
Posts: 10432
Joined: Tue Nov 20, 2007 5:02 am

Re: ROTH IRA

Post by mhalley »

The go to portfolio here is a 3 fund portfolio consisting of a total stock market, total international stock market and total bond market index fund. An S&P 500 fund is an ok replacement of the total stock market fund.
https://www.bogleheads.org/wiki/Three-fund_portfolio
tibbitts
Posts: 23716
Joined: Tue Feb 27, 2007 5:50 pm

Re: ROTH IRA

Post by tibbitts »

flo879 wrote: Thu Jan 20, 2022 3:24 pm Hello,

I have a current target fund retirement account via employer, but want to contribute to the the max $6k to an ROTH IRA. Is it wise to invest in only one index fund (am looking into S & P 500) or is it recommended to invest in 2 o 3 index funds? My current allocation in my retirement account is 90% stock-if I choose more than one index fund, do I then split the 90% allocation evenly percentage wise between those funds?

Tips would be great, on what types of index funds and how many to choose from. I'm trying to steer away from a retirement targeted date fund due to the expense ratio.

Thank you!
There are reasons you might not want a target fund in your Roth but expense ratio isn't a rational one given the miniscule differences in expense ratios. If you read the wiki here you'll see that generally you'd want your highest-theoretical-potential-growth (so, generally equity, the past few weeks notwithstanding) investments in your Roth. So maybe equities in Roth and whatever fixed income you have in deferred, for example.
Silk McCue
Posts: 8951
Joined: Thu Feb 25, 2016 6:11 pm

Re: Roth IRA

Post by Silk McCue »

One fund is fine. Our preference is Vanguard Total World. 100% equities.

Cheers
Flyer24
Posts: 5233
Joined: Sun Apr 08, 2018 4:21 pm

Re: Roth IRA

Post by Flyer24 »

Just for reference, only the first letter is capitalized in “Roth”. It refers to Senator William Roth.
wetgear
Posts: 859
Joined: Thu Apr 06, 2017 10:14 am

Re: Roth IRA

Post by wetgear »

flo879 wrote: Thu Jan 20, 2022 3:24 pm Hello,

I have a current target fund retirement account via employer, but want to contribute to the the max $6k to an ROTH IRA. Is it wise to invest in only one index fund (am looking into S & P 500) or is it recommended to invest in 2 o 3 index funds? My current allocation in my retirement account is 90% stock-if I choose more than one index fund, do I then split the 90% allocation evenly percentage wise between those funds?

Tips would be great, on what types of index funds and how many to choose from. I'm trying to steer away from a retirement targeted date fund due to the expense ratio.

Thank you!
Hi flo,

If you provide more information in this format you likely will get better and more complete advice: viewtopic.php?t=6212

In general most here will suggest starting here: https://www.bogleheads.org/wiki/Getting_started
rkhusky
Posts: 17763
Joined: Thu Aug 18, 2011 8:09 pm

Re: Roth IRA

Post by rkhusky »

flo879 wrote: Thu Jan 20, 2022 3:24 pm I have a current target fund retirement account via employer, but want to contribute to the the max $6k to an ROTH IRA. Is it wise to invest in only one index fund (am looking into S & P 500) or is it recommended to invest in 2 o 3 index funds? My current allocation in my retirement account is 90% stock-if I choose more than one index fund, do I then split the 90% allocation evenly percentage wise between those funds?
Having a target date fund in your 401k and a single stock fund in your IRA is perfectly fine. So is having a target date fund in both.

For the Roth IRA, S&P 500, Total Stock Market, or Total World Market are all fine choices.
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