My plan for my IRA (student)

[gezuz]

After reading the whole 401k plan thread and talking with a financial advisor at my bank, I've invested my 401k rollover into an IRA at Vanguard, but it's currently sitting in a money market account. I've decided to invest it in such a strategy as this:

Large value 20%
Large growth 20%
Mid value 15%
Mid growth 15%
Small value 10%
Small growth 10%
Emerging markets 5%
International markets 5%

How does this look as an overall investment plan for a 20 year old college student? I have 20k I'm putting in, possibly more from a Target 2050 retirement plan I have that my financial advisor wants me to get out of because he wants me to be more aggressive with my portfolio.

Are the Vanguard index funds just fine to use to invest? For example for the Large value part of my portfolio, would investing in Vanguard Value Index Fund Investor Shares (VIVAX), the basic Vanguard Large value fund, be a worthy choice?

Thanks for the responses, I really appreciate any help.

[gull]

Great job for saving and investing. It looks like you've put some thought into your plan, and it should serve you well.

Some thoughts: the Vanguard funds have minimums, so you won't be able to immediately begin with your planned asset allocation. Instead, I would suggest using the Target Retirement 2050 fund or a perhaps a 50/50 combination of total stock market and total international market.

This leads me to another question. Do you really think that using a barbell strategy of excluding midcaps and blends will outperform? If I were you, I would keep it simple and use the funds I mentioned above (adding more small/value/emerging markets assuming you wish to tilt).

These suggests are very minor changes, and your portfolio should do well either way. Congratulations on getting started so early.

[johndenver]

just curious, how can u have 20K in a 401K to roll over into IRA as a 20yr old college student?

[gezuz]

I worked at Washington Mutual starting in HS, and they matched 50% of my income in a 401k. Turned out to be a very good deal for me.

[707782]

If you're 20 yrs old, and thinking about retirement already by enrolling to those retirement, you better get a life.

Not that it's not a correct thing to do, but.....still

[punkass]

Potential BIG OPPORTUNITY:

If you just became a student (no income) and you have this money in your IRA, I'd do some Roth Conversions, which will be free or very cheap to do with your no/low income.

I haven't looked up the tax brackets for the 0% and 10% brackets, but I'd definitely try to get as much money converted to a ROTH if this is your situation.

[gezuz]

I forgot to mention that it is in a Roth IRA, got that on board. Thanks though, I agree Roth is easily the way to go right now.

gull: Thanks for the advice, I noticed the minimums and had to re-allocate my idea, going:

LV 30
LG 30
MV 20
MG 20

while I do more research. You would do 50/50 stocks and international market? Isn't that more risky than the average portfolio with so much in Itnl?