joshbilsky@[EMAIL PROTECTED]
writes:
> Last year I opened a Roth IRA and contributed the maximum 4k amount
> for both 2006 and 2007.
Good for you! You might also consider making your 2008 contribution now,
while the market is down, so you get the most bang for your buck.
> Since I just started the account, I just
> stuck to the Vanguard STAR fund (VGSTX). This fund seemed like a good
> start since it is a "fund of funds".
That's a very sane choice for a core fund.
> I was wondering though, if I
> should consider adding another fund to my ****tfolio or just continue
> to buy more shares of VGSTX. Any recommendations on other Vanguard
> funds that might be a good addition to what I have now?
That depends. Do you have other investment accounts, like a 401K?
What's in them? How far away from retirement are you? What's your
risk tolerance? You should look at your overall asset allocation
first, and then choose specific funds within that allocation.
Personally, I'm a fan of keeping things simple while you're a newbie
investor. Sticking with the VGSTX or a generic balanced or
target-retirement fund is usually the best choice if you haven't had
time to think about asset allocation, don't have enough money that it
makes sense to keep track of 5 or 6 different funds, or just don't
want to put in the effort to come up with an asset allocation plan or
research lots of funds. That'll protect you from newbie mistakes like
putting way too much in risky asset classes like emerging markets or
gold, or investing in lots of funds that are too similar to provide
any diversification value and just add to your recordkeeping headaches.
-Sandra
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