I Have Just Opened A Roth Ira With The Limit For 2007 All In Vanguard's Windsor Fund (vwndx). Is This Good?
I am not sure if I am too aggressive or should find a more balanced fund. I am 31 yrs & just starting to invest. Any ideas or suggestions on other funds or strategies to earn a decent interest of 8% or more per year…
Thank you.
Windsor isn’t Vanguard’s best-performing fund, but Vanguard is a GREAT fund company. And, study after study shows that, in terms of mutual fund investing, WHAT you invest in is not nearly as important as the length of time you invest for. You’re 31, getting started early, and that’s by far the most important thing. Anyway, one of the mantras of the mutual fund world is “past performance does not guarantee future results.” Windor has been around a long time, and there’s every reason to believe its performance will pick up in the coming years.
Hang on to Windsor, and maybe next year pick another Vanguard fund to diversify a little bit. Their S&P 500 fund is boring, but it makes a great “anchor” for your portfolio. Also, next year, rather than investing all $4,000 at once, try doing $400/month over ten months. This is called dollar-cost averaging, and it enables you to take advantage of any market volatility. When the market goes down, your $400 buys more shares, and when the market goes up, you’re buying fewer of the more expensive shares. It’s also easier on your pocketbook that way.
I hope that helps. Good luck!
You’ve made a nice first step… all you do now is read, read, read…educate yourself a little in “personal investing”.
Log in to finance/yahoo once in a while…and compare your holding to a few others.( You should be able to create a ” watchlist” on your Vanguard site…. put the same amount of ” money” into a couple other funds and compare the returns after awhile) When you have accumulated enough to buy in to another fund…split your money and get a little more aggressive…YOU ARE YOUNG…which means now is the time to be just a little ” risky” and build up a core fund that will really compound into something, given time. You have a long time to recover from any setbacks…and they may or may not happen!!
Generally, you might want to get a little ” global” or ” international” holdings. ( Think 25% instead of 8% !!!)
Kiplinger’s has a website…they can show you some strategies there.They also publish a mag with lots of ” fund” info….don’t go crazy, but when you get a rainy weekend ..look into any place you can get tips/ info on funds and investing.
moneycentral/msn has a funds for beginners page.
A GREAT place is : http:/www1.investorvillage.com/home.asp
Man! If you register there and learn how to use the ” boards”, you will be talking to great people with years, years and more years of experience . They have boards for funds as well as stocks…someday you’ll move into ” income investing” … Some people there have ( no kidding) investments that pay monthly what most Americans think is a yearly salary!!
“You made a nice first step..” now don’t doze off and think you’re through.
Good luck…and if nothing else PROMISE yourself that you’ll max out every year..no matter what the ” sacrifice”
Sure, that’s a good way to start. Here’s that fund’s top holdings:http://finance.yahoo.com/q/hl?s=VWNDX
Keep reading and learning about investing, especially asset allocation strategies and portfolio management.
Since you are only 31, this might not be anywhere NEAR aggressive enough! You need some “safe” investments to make you feel better, but you also need some “risky” ones to help your cash grow. Remember, the “safest” thing you could have done with $4,000 is to lock it up in a safe for the next 34 years. Then you’d be sure to still have….$4,000!
Here’s a chart of what VWNDX has done over the last 25 years or so:http://finance.yahoo.com/q/bc?s=VWNDX&t=…
The red line is the unmanaged S&P index, which as you can see has done over 400% better!
There is nothing wrong with this fund as a part of your portfolio, so if I were you I’d just leave the money there until you retire. With a 30-year horizon, though, you should certainly put some assets into far more aggressive growth-type funds, though. They will be FAR more volatile month to month than something like VWNDX, but they will also (over the long term) greatly outperform it.
The easiest way to earn better than 8% is to buy Diamonds (DIA) or Spiders (SPY), which track the Dow and the S&P respectively. If you put $4,000 into DIA, in 30 years it would be worth about $1.7M
Alternatively, you can open a very low-cost on-line brokerage account with BuyAndHold or ShareBuilder, and if you start out with $500, & invest the equivalent of $5 a day into SPY’s and DIA’s, you’ll amass about a million extra bucks by the time you retire.
Or do both!
Good luck…
I think you are ahead of maybe 80% of all people your age (lol, maybe 80% of all people any age), but I don’t think thats a particularly good fund choice. My complaint is that if you compare the returns from this fund to other similiar funds, its only a tiny bit above average – essentially its just average. Morningstar also gives it a 3 star rating (on a scale of 1 to 5) so they think its just average too.
Here is a link to a fund screener, I’d suggest you play around with this a bit to look for what you think is a very good fund (fyi, if you account is with vanguard you will be very limited in what funds you can buy. I’m sure there are better vanguard funds out there you can but you’d probably be better off moving your account to a broker that lets you invest in 1000’s of different mutual funds – scottrade or someone else). Anyhow, here is the link:http://screen.morningstar.com/FundSelect…
You probably want to choose funds with “No-load” and a manager tenure of at least 3 years. Also choosing only Morningstar 5 star funds is a good idea. To be safe you may also want to just stick to Domestic Large cap Funds (from the Morningstar categories “Large Value”, “Large Growth”, or “Large Blend” – foreign Large cap funds may be fine too). Beyond that, just play around and see what you get. Also, its possible some funds that show up may be closed to new investors, you’ll have to check that in yahoo or somewhere.
Also, FYI, here are the main yahoo link to your current fund”http://finance.yahoo.com/q/pr?s=VWNDXhttp://finance.yahoo.com/q/pm?s=VWNDX
But let me say this again; this is a pretty good fund, and you are already ahead of most of the people your age so even if you just stick with this you are doing well.
Good luck.
There is no right or wrong answer for your asset allocation. Each person will have their own level of risk tolerance as well as their own level of personal assets. You always want to be balanced with stocks and bonds, and the Windsor fund is a balanced fund.
Keep in mind that your stock to bond ratio determines most of the risk and return of your portfolio in the long run. This is, by far, the most important decision in your asset allocation plan.
Download a free copy of my ebook from my website. Click on my profile and then read the info to get the site, or email me. Then go straight to chapter 23, “Allocating your Assets”. I talk about some general rules of thumb to help you develop your own asset allocation plan.
Personally, I use the age rule for retirement investing. My age is the percentage of bonds I have in my retirement portfolios. I am 31, so I use a 30% bond and 70% stock portfolio. Every 5 years I will increse the bond percentage by 5 percent. It’s an easy rule and ensures that I become more conservative the closer I get til retirement.
Read my book. It will help you. I go over several different ways to formulate a stock to bond ratio, so you will get to see a variety of different “answers”.