Which Vanguard Fund?

[Guest gzwick04]

I am going to start putting money into a Roth for 2004. Does anyone have any advice on which Vanguard fund to put the money into? Thank you.

[ElGuapo]

Yes, Vanguard does. Seriously, if you call and ask them they'll help you choose an appropriate fund. If you don't have a complicated investment portfolio and just want something simple, you'd probably start with one of their asset allocation (all-in-one) type funds. Good luck!

[John G]

I am assuming that you might be just starting your Roth contributions and this may be your first investment choice. Some general suggestions:

(1) Choose a fund that is broadly based, representing a wide range of stocks and sectors. There are over 8,000 mutual funds and some are very narrowly cast (like telecommunications or medical technology) which will be more volatile. There are dozens at Vanguard. The average investor should not look at investing as an opportunity to hit the jackpot by betting on longshots in specialty mutual funds. Time is very much an investor's friend, and over the long haul, getting a reasonable performance from a mixed of stocks in a broadly based fund will probably have you achieve your financial goals. An S&P500, overall market, Wilshire 5000, etc. will likely be just fine.

(2) Vanguard has many extremely low expense index type funds. These have a significant edge in letting you retain a very high percent of your gains each year.

(3) If you follow #1 above, you may not need to even consider more than one fund. Most funds have a substantial overlap in portfolio. Owning multiple funds initially makes your recordkeeping more complicated and may buy you no advantage.

(4) As your assets grow, you may eventually decide to choose a second fund. While you don't need to spend a lot of time watching your fund, periodic reviews of your statement will give you a better base to make a future decision. Some folks never own a individual stock or bond. Some families move rather quickly to individual stocks. The first path takes less time and effort. The second requires more skill and knowledge but can be more enjoyable. I am not convinced that either path can be demonstrated to offer consistently better results. I am a stock picker, but would hardly recommend that to most people. It is more like an advanced hobby. My wife can hardly stand spending talking two minutes about a company. She prefers mutual funds. Different strokes.....

Vanguard's website is a pretty useful mechanism for reviewing their choices. Call them if you need additional help.