My employer's 401k plan has a limited selection of Vanguard Funds to choose from.
VERSX Emerging Mkts Stk Index - Signal
VGENX Energy - Inv
VFWIX FTSE All-World Ex-US Index
VMVIX Mid Cap Value Index Fund
VMMXX Prime Money Market Inv
VGRSX REIT Index Signal
VSISX Small Cap Index Signal
VTWNX Target Retire 2020 Investor
VTHRX Target Retire 2030 Investor
VFORX Target Retire 2040 Investor
VFIFX Target Retire 2050 Investor
I just started this particular 401k 45 days ago, so it doesn't have that much in it, about $3500. Right now it's in the default choice, VTWNX, the Target Retire 2020 Investor. I turn 66 in 2023.
With Employer matching and the over 50 catch-up provision, I'll be putting in $25350 a year into this 401k account. It's the max I can put in.
I'm leaning towards the VTWNX as it will self-manage to a "safer" mix of investments over time.
For a "growth component", I'm opening up a Vanguard account of my own, in which I can invest in any of the Vanguard funds. I'll have from $2000 to $4000 to invest per month depending upon how well we control our spending. I'm going to try doing it on auto-pilot which will help with the spending control considerably. (If you don't see it, it's harder to spend it - assuming you have a lick of sense.)
I also have about $60,000 in a regular taxable CD that's no longer earning much interest that I can invest. I'll be able to use that to hit the minimums on some of the funds in the Growth Category. I'm not sure when it comes due, though, or how much I'll lose if I take it out early. So the extra $60,000 will be available within a year at the latest.
I'm looking at putting money into one of these three funds (VTSAX, VTI or VTSMX). They seem to be similar, but I don't understand the underlying differences. (I've asked for a clarification on this thread, "http://www.mrmoneymustache.com/forum/investor-alley/confused-about-vanguard-fund-types!/
I'll be talking to my accountant about the possibility of opening up a "back door Roth IRA". I have from $150000 to $200000 in old IRAs and 401ks from old companies I would like to consolidate into the new Vanguard account. Since Roth IRAs don't pay taxes when pulling out the money, maybe one of these vanguard dividend funds would be a good choice? VDAIX, VIG, VDIGX, VYM. The intent would be to have tax-free dividend payments to cover some living expenses?
I'll keep about $5000 in regular savings/checking account for handy emergency cash.
Here are my questions:
- Which of the above EMPLOYER 401k vanguard funds would you suggest, and why?
Which of the Vanguard Funds would you suggest for the Growth component?
Which of the Vanguard Funds would you suggest for the backdoor Roth IRA?
Thanks in advance for the help!