ripvanwinkle
Well-Known Member
All that is necessary for evil to succeed is that good men do nothing - Edmund Burke 1729 -1797
Joined: Jan 9, 2011 22:36:42 GMT -5
Posts: 1,327
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Post by ripvanwinkle on Jun 3, 2017 21:57:16 GMT -5
I'm just now receiving social security and still working, I now have additional income . About $1,350/mo after taxes. While driving home the other day I chanced upon a radio program talking about dividend funds and total market funds. Since I was driving I couldn't write anything down. Pretty much a hidden sales pitch for Vanguard funds. I went online and poked around and found a lot of funds to look at. A whole lot of funds. I'm just mulling this over right now. Since I can only put $6,500 in my Roth IRA each year, I need a little guidance. I'll have to put the rest in my taxable account. Which way do I go? Dividend or Total US market fund in the Roth or taxable account? Any suggestions are appreciated.
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clarkrl2
Administrator
Joined: Dec 20, 2010 17:57:01 GMT -5
Posts: 5,757
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Post by clarkrl2 on Jun 4, 2017 22:37:42 GMT -5
One of the problems you run into with a total market fund is most funds are market cap weighted which means the vast majority of your investment will be in the large caps. I'm not sure exactly which funds you are considering but VTSMX (Vanguard Total Stock Market Index Fund shows last month 16.4% of the fund was in their top 10 holdings. This is nearly 1/6 of the investment. I'm not saying this is a bad thing but it is something you should understand. personal.vanguard.com/us/funds/snapshot?FundId=0085&FundIntExt=INT
The Vanguard Dividend Growth fund VDIGX is even more heavily invested in the top 10 holdings at 29.8% of the total assets. This is nearly 3/10 of the fund. Again this is not necessarily a bad thing but something to consider. personal.vanguard.com/us/funds/snapshot?FundId=0057&FundIntExt=INT
If it was me and I was given the choice between the two I would probably opt for the total market fund. However, you could increase your exposure to small and midcaps by using a large cap fund and a small and or mid cap fund.
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ripvanwinkle
Well-Known Member
All that is necessary for evil to succeed is that good men do nothing - Edmund Burke 1729 -1797
Joined: Jan 9, 2011 22:36:42 GMT -5
Posts: 1,327
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Post by ripvanwinkle on Jun 7, 2017 19:16:17 GMT -5
Thanks. That give me some food for thought.
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