Hello all. This is sort of a general question for saving for a child's future. In August of last year, we had a daughter born to us. In short order, I set up a UTMA account for her with Vanguard. As its been pretty hectic, I just parked the initial investment and monthly contributions in Vanguard's STAR (VGSTX) offering. However, I am planning on reexamining this as I want the best mix of investments for her fund. As we've got 17+ years until it will transferred to her, we can be a bit more aggressive now, but less so as the years roll by. What Vanguard mutual funds would you recommend? Why? Any you'd avoid in this case? Thanks all.
Yeah, 17 years will pass before you know it. You don't want to be TOO aggressive because of the definite timeframe, but you can be fairly aggressive. Have you looked at other companies' funds as well? You might consider putting SOME $ in investment grade corp debt that will be maturing in more or less equal percentages in successive years during her college years, so that returns on principal (in addition to interest accrued) will be available as she needs it. Although rates are very low right now and bonds are not such a hot shortterm investment these days, your daughter's goals are different. Of course you could wait and buy the bonds for that portion of her portfolio years down the road when rates are higher and likely to be heading south, and use that money now for shorter term debt that will hopefully mature by that time - or put it in other relatively safe investments until rates appear to be peaking years down the road.
Thank you for the notes and thoughts. It is appreciated. Concerning viewing another company's fund offerings, I'm certainly open to it. We, generally, keep our investments with Vanguard and, at least as of yet, haven't really found a deficiency in what they have to offer for a fund that accomplishes [Fill in the blank].
Vanguard certainly has some very good funds. Regarding any possible bond allocations, you might consider a bond fund or two instead of bonds in the account to maintain diversification. Templeton Global Bond Fund is arguably the best bond fund out there. Very well managed, equity-like returns, minimal volatility, low investment minimum, and they are currently invested in very short term debt on the whole - so there will be minimal impact on the fund when rates go up.
