Thinking about converting to this....need opinions/suggestions
Hello, Im new to these message boards and now have become increasingly interested in Vanguards Retirement Funds, especially the Vanguard Target Retirement 2050 Fund (VFIFX). Let me give you a little history before I ask for suggestions and comments on what I should do.
I started a Roth IRA in 2005 at Citibank with Smith Barney, which I now come to find out was a bad idea because bank IRA's tack on a lot of fees, especially a lot broker fees. I opened this Roth with no financial knowledge except for a buddy of mine saying I should open a roth. Now it is 2009 and I have been going to school studying Finance and Investing and have become more knowledgeable with investing, but still not quite an expert.
The money market mutual fund that my broker/financial advisor chose for me to invest in my Roth IRA is a fund titled: Hartford Capital Appreciation B (IHCAX), which I come to fund has a crap load of fees tacked on to it, including a 5% front-end load fee and a 1% 12-b fee.
Now my question is, would this be a good move to convert my roth ira fund from ihcax to the Vanguard target retirement fund 2050? Ive already lost a pretty substantial amount on my existing roth and im just wondering if I should make this move to avoid fees and expenses.
Thanks guys, any insight would be appreciated.
What I would like help or suggestions for now is what I should do from here
there is no reason you should not shop for a broakerage you can manage yourself. It will save you fees. Remember if you do not understand the going in and out (changing your fund) call and ask about expenses etc.. Do yourself a favor. go to the basic chart and mark compare with DOW. You can see how this fund performs against the indices and how it goes up and down. Manage it by watching. Take an investing class online and learn how to read charts and other information. Also keep up with the holdings. Check on those stocks and see how they are doing by charting. Gives you insight and gradually you learn more and more about the funds. I put my son in this in August.
Just transferred my Roth IRA from Citi Personal Wealth Management to Vanguard and invested the funds into the Vanguard Target Retirement 2050. The broker I talked to on the phone said I will not incur the 10% penalty because I am keeping the funds into a Roth and not liquidating funds for personal use. As long as I transferred it within 60 days, I would not incur the penalty. However, I did have to pay a small fee to have it transferred, about $30. The $30 was nothing compared to what I have paid since 2005 to have my roth within Citi Personal Wealth Management (about $450 just in FEES!!!).
As far as taking investment classes, I have for the last 5 years!! I am a Business Finance and Economics double major at my local state university. I have specifically chosen to focus my concentration in the investing field of finance. Its all about passive investing and looking out for the future. I hope to be able to fall on this as my source of income during retirement because who knows what the status will be on social security in 2050.
Im also looking at Vanguards international mutual funds, might be interested in putting some short-term money into those.
First off. . .congratulations that you at least had what it took to get your self started with a Roth IRA. Second. . .it's great that you're aware of how detrimental different fees can be to your Roth IRAs progress.
I would first start off by assuming that you are in the 20-25 year old age bracket. If that's true then you should not have your money sitting in a money market account for your Roth IRA. There is just no way that you will be able to afford the retirement you deserve - or for that matter any sort of retirement - simply by investing in a money market account. At this point in the game, assuming my guess about your age was correct, you need to have approximately 80-95% in equities (a.k.a stocks). As you get older you will need to shift your allocation from equities into something like bonds which tend to be safer investment vehicles.
The beauty of these vanguard target retirement funds is that they are set up to automatically shift from a large percentage in equitites to bonds over time. This is not the only investment that I have for my Roth IRA but it is my Roth IRA "rock" in that my Roth IRA is pretty much 90% of my Roth IRA holdings.
I love Vanguard and how easy they make it to make continued contributions to my Roth IRA. The expenses are low, it has a nice little dividend with it, and it moves with the market - for me, that's what I want. . .I hope that made sense and/or helped.
You were absolutely correct in your assumption of my age. I am currently 22 and have a long way to go until retirement, but worry about social security not being there when the day comes that I decide to retire. SO hopefully I can fall back on my Roth IRA when the time comes. I will only be allowed to contribute $2k-$4k annually to my roth for the time being, but once I get my career on track that could all change with time.
You did, however, answer all my questions and concerns, but was wondering if this would be a good move on my part? That goes to say, should I actually transfer my existing roth from Smith Barney to Vanguard and its target retirement fund 2050. I would like to fall back on this when it comes time to retire and I want to make sure I am getting the highest returns possible without additional expenses, like what is found in my current exisiting roth ira fund.
Thank you for all your help, I really appreciate you taking the time to provide some assistance. Everyone Ive asked about transfering and converting my existing roth with smith barney to a vanguard roth with its target retirement fund 2050 has told me its a great idea and I should pursue it.
Once again, thanks for all your help. If anyone else on this message board has any input, it would be greatly appreciated. Thanks