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The Independent Adviser for Vanguard Investors
•
April 2015
•
5
FOR CUSTOMER SERVICE, PLEASE CALL
800-211-7641
Despite two stock bear markets dur-
ing this period, Wellington, which keeps
about 60% of assets in stocks and the
remainder in bonds, beat the returns from
Total Bond Market and came close to
matching those from Total Stock Market.
These charts might be just the thing
to show the teen or young adult you’re
interested in leading down the road to
retirement. I hope I’ve both made the
benefits of funding an IRA clear, and
simplified it enough that a young inves-
tor can understand it. But the question
remains: How can we get a teenager to
save for retirement?
You probably can’t. So, my advice
is to help them. That’s what I did with
both of my kids.
Let’s assume you can afford to
match their summer earnings. Do
it. Let them have their hard-earned
money, but open a Roth IRA in your
child or grandchild’s name and add the
money yourself. Remember, the child
may earn $1,000, but with taxes taken
out, they will not bring it all home.
That doesn’t keep you from putting a
full $1,000 into a Roth for them.
Maybe you can’t afford to add the full
amount. Consider making a deal with
your teen to match a portion of their
earnings that they add to the Roth as
well. If the teen contributes $250, maybe
you’ll contribute $500. Grandparents,
obviously, can get into this act.
Finally, there’s the issue of the many
$3,000 minimums at Vanguard. First
off, you could start the youngster in a
STAR
account for just $1,000. While
I’m not a huge fan of STAR because
of the amalgam of funds it cobbles
together, its one saving grace is that low,
low minimum. My preference, however,
would be to go directly to one of the
PRIMECAP Odyssey
funds, where the
IRA minimums are also just $1,000
(POAGX, my favorite for kids, is now
closed, so go for POGRX).
Or, if you have a personal represen-
tative at Vanguard, see if they’ll waive
the minimum on
Dividend Growth
for
your child or grandchild. Obviously
you won’t be making regular contri-
butions to the IRA, since its deposits
are contingent on the child’s income
stream, but if Vanguard’s smart, they’ll
see this as a way to grab a potential
long-term client at an early age.
Finally, don’t procrastinate. If your
child or grandchild (or young friend)
earned some income last year, you have
Real Compounding:
Total Stock Market
12
13
14
15
16
17
18
19
20
21
22
23
24
25
$1,000 per year
$1,500 per year
$2,000 per year
$2,500 per year
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
AGE
Real Compounding:
Wellington
12
13
14
15
16
17
18
19
20
21
22
23
24
25
$1,000 per year
$1,500 per year
$2,000 per year
$2,500 per year
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
AGE
Real Compounding:
Total Bond Market
12
13
14
15
16
17
18
19
20
21
22
23
24
25
$1,000 per year
$1,500 per year
$2,000 per year
$2,500 per year
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
AGE
500 Index
$0.93400 @ $194.32
Balanced Index
$0.13600 @ $29.86
Convertible Securities
$0.04400 @ $13.18
Developed Markets ETF
$0.18100 @ $39.82
Developed Markets Index
$0.04200 @ $10.15
Dividend Appreciation ETF
$0.45900 @ $80.20
Dividend Appreciation Index
$0.17500 @ $32.74
Dividend Growth
$0.36600 @ $22.81
Emerging Markets Stock ETF
$0.07100 @ $40.72
Emerging Markets Stock Index
$0.03200 @ $25.88
Equity Income
$0.19800 @ $30.75
Europe ETF
$0.31600 @ $54.28
European Index
$0.16000 @ $29.92
Extended Market ETF
$0.03700 @ $92.48
Extended Market Index
$0.02500 @ $70.51
Financials ETF
$0.07600 @ $49.36
Financials Index
$0.03800 @ $24.94
Global ex-U.S. Real Estate ETF
$0.02000 @ $56.29
Global ex-U.S. Real Estate Index
$0.00100 @ $22.66
Growth ETF
$0.33200 @ $108.06
Growth Index
$0.15100 @ $56.21
Health Care
$6.41900 @ $225.42
High Dividend Yield ETF
$0.46200 @ $67.65
High Dividend Yield Index
$0.17800 @ $27.33
LargeCap ETF
$0.43000 @ $95.56
LargeCap Index
$0.16000 @ $38.84
Managed Payout
$0.05890 @ $19.02
MegaCap ETF
$0.31400 @ $70.05
MegaCap Growth ETF
$0.23600 @ $83.07
MegaCap Value ETF
$0.34800 @ $59.36
MidCap ETF
$0.02700 @ $132.70
MidCap Growth ETF
$0.01700 @ $108.02
MidCap Growth Index
$0.00400 @ $42.51
MidCap Index
$0.00500 @ $35.28
MidCap Value ETF
$0.02700 @ $91.91
MidCap Value Index
$0.00900 @ $36.21
Pacific ETF
$0.11100 @ $61.30
Pacific Index
$0.01700 @ $11.92
Precious Metals & Mining
$0.14770 @ $8.95
REIT ETF
$0.51200 @ $84.91
REIT Index
$0.16000 @ $28.45
Russell 1000 ETF
$0.34500 @ $95.21
Russell 1000 Growth ETF
$0.34600 @ $100.96
Russell 1000 Value ETF
$0.41200 @ $89.46
Russell 3000 ETF
$0.34100 @ $95.50
S&P 500 ETF
$0.98400 @ $188.49
S&P 500 Growth ETF
$0.41400 @ $101.78
S&P 500 Value ETF
$0.45300 @ $88.52
SmallCap ETF
$0.05200 @ $122.56
SmallCap Growth ETF
$0.03000 @ $131.78
SmallCap Growth Index
$0.00600 @ $37.86
SmallCap Index
$0.02400 @ $58.80
SmallCap Value ETF
$0.07600 @ $109.24
SmallCap Value Index
$0.01700 @ $26.31
STAR Cons. Gro.
$0.08100 @ $18.67
STAR Income
$0.06700 @ $15.07
Target Retirement Income
$0.04600 @ $13.06
Tax-Man. Capital Appreciation
$0.01700 @ $105.04
Tax-Managed Balanced
$0.13200 @ $26.95
Tax-Managed SmallCap
$0.00900 @ $46.99
Total International Stock ETF
$0.15800 @ $50.38
Total International Stock Index
$0.04800 @ $16.47
Total Stock Market ETF
$0.50800 @ $107.73
Total Stock Market Index
$0.23200 @ $52.78
Total World Stock ETF
$0.31400 @ $61.61
Total World Stock Index
$0.12300 @ $25.43
Utilities ETF
$0.82300 @ $95.32
Utilities Index
$0.41300 @ $49.09
Value ETF
$0.50000 @ $83.76
Value Index
$0.18400 @ $32.79
Wellesley Income
$0.17300 @ $25.58
Wellington
$0.23000 @ $39.09
World ex-U.S. ETF
$0.16200 @ $48.63
World ex-U.S. Index
$0.05800 @ $19.59
World ex-U.S. SmallCap ETF
$0.06600 @ $99.13
World ex-U.S. SmallCap Index
$0.00900 @ $38.26
MARCH SPECIAL DISTRIBUTIONS