11 Aug I’m new at investing. Should I change my portfolio?
Q. I’m 53 and just getting started with investing. I have $2,500 in a 401(k), $1,000 in a Roth IRA Fidelity Go account, about $2,000 in 10 different individual stocks and lastly, two custodial accounts for my twin grandsons. I want to max out the Roth IRA. Should I switch the Roth IRA, which has management fees, to a Vanguard Total Stock ETF? There are management fees included with the Fidelity Go account. Should I invest in the same fund for my nephews?
— New investor
A. It’s always a good time to start investing, and we’re glad to see you’re planning for the future.
Maximizing the contribution to your Roth IRA is certainly a good first step towards saving for retirement.
Another good step is to save as much as you can afford to invest in your 401(k) plan, said Michael Green, a certified financial planner with Wechter Feldman Wealth Management in Parsippany.
“Many employers will match a percentage of the employee’s elective deferral (contribution),” he said. “If your employer does this, and you do not contribute to your plan, you could be losing out on free money from your employer.”
There are a number of factors to consider when providing recommendations regarding your specific investments, including your risk tolerance profile, time horizon, goals and tax sensitivity.
Green said the Vanguard Total Stock Market ETF does offer broad-based exposure to the domestic markets. However, a diversified portfolio of cash and cash equivalents, equities, and fixed income is the foundation of a strong portfolio, he said.
“A well-balanced portfolio based on your overall investment profile will provide the best chance for investment succeed,” he said.
You should consider reaching out to a certified financial planner who can look at your entire financial picture and help you create a portfolio and overall plan to guide you to a successful retirement.
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This story was originally published on Aug. 11, 2020.
NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.