...or maybe just index funds.
I've just begun dabbling in stock market investing, after having done plenty of reading on the subject. I figure passive index-based investing is the way to go, so here's what I'd like my asset allocation to look like once I've started making some real money.
About a third (or a bit more) in a small-cap index, like NAESX.
About a third in a large-cap index, like VFINX.
About a third in an international stock index, like VEURX or VGTSX.
Since I'm getting a pretty early start on investing, I don't want anything in bonds for a good long while. I figure it would also make sense to have more funds in a small-cap than in a large-cap or international index - since I'm playing the long game, I don't mind some added volatility.
For the time being, I'm only invested in Vanguard's STAR fund (VGTSX). It's actively managed, which I don't like, and it's about 40% bonds, which I definitely don't like. But it was the only halfway decent fund for which I could afford the minimum investment (being a college student and all), so I figured I'd go for it. It's doing phenomenally well, too; it's earned about 6.5% over the last four months. I know it's just been a good four months for the market, but I can't help but be encouraged.
I also really like the idea of paying as little in taxes as possible. My holdings are in a Roth IRA, but the more I think about it the less certain I am that I should stay with the Roth. I hope to be retired when I withdraw most of this money, which means I'll likely be in a lowish tax bracket. So the Roth makes sense right now, when I'm making very little money, but for most of my working life it might make more sense to be contributing to a traditional IRA.
Obviously I'm pretty new to most of this stuff, so if anyone thinks I'm being an idiot, please do let me know where my thinking is wrong.
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