Reply To: Roth – Dividend vs High Growth Stocks

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Dan Schointuch

If you want to mange your portfolio yourself, you might want to look into setting up a “lazy portfolio”, like one of the three fund lazy portfolios found here:

The basic premise is that, instead of trying to beat the market by picking individual investments and most likely not succeeding over the long term, you invest in the entire market while paying as little in fees as possible.

(Even seemingly small fees can add up to significant amounts of money over your lifetime. If you invest $300 a month for 45 years and earn 8% interest, you’ll have saved $1.61 million. But, if you have to pay an extra 0.5% in fees on those same investments, effectively earning 7.5% interest, you’ll only have saved $1.36 million. In other words, paying just 0.5% in fees would reduce the money you’d have saved for retirement by $250,000.)

But you should also take a look at target date retirement funds from Vanguard and Fidelity. The funds essentially follow the strategy of a lazy portfolio, and start off aggressively when you’re young then gradually become more conservative as you grow older by automatically changing the ratio of stocks to bonds.