Beginning a Roth IRA through Vanguard

[DanS]

Bear with me here guys, I'm a relatively young and new investor, so the following may be borderline retarded.

I just opened a Roth IRA for tax year 2003. I sunk the max for me, 3k, into Vanguard, and stuck it all on VASGX, the (IIRC) "LifeStrategy Growth Fund."

My friend, who's a financial advisor, is enlightening me on investing, and clarified the difference between A, B, C, and I shares, and suggested I lean towards "A" shares, given that my investments will be long term (higher sales commission, lower management fees).

So, anyway, the Vanguard funds (mostly) are no-load, no-fee. Vanguard told me that they derive their profit from the fact that the funds are all invested into Vanguard companies, etc., etc.

Is the fact that I'm saving about 5% on sales commission and 1% a year on managerial fees just too good to be true? If this question doesn't make sense, let me know, and I'll refine the question.

Thanks,
Dan

[AceHigh]

You should probably pick an index fund.

[GeorgeF]

You decision is what mix of cash, bonds, or stock. I personally am about 50% bonds and 50% stocks with alot of international investments. You will have to make up your mind yourself. Do not assume that cash or bonds are always a bad investment.

[deathtoau]

The problem with Vanguard is that other than the index funds, vanguard's funds usually lag the Morningstar and Lipper Averages.

[Ray Zee]

do not buy any funds with loads. waste of money and lets you know the fund is out for their own interests not yours. vanguard funds are low cost and do fairly well. no funds will beat the averages for the long haul in the future. so index will do marginally better than a low cost fund. but if you can or will just put your own picks of stocks in your ira you will do the best hopefully. as you will only pay commisions once buying and selling when you retire. all funds churn their portfolios somewhat and that decreases profits.
i dont know a thing about a b and c funds but you friend isnt one to listen to for advice as he only knows what he was told.

[DanS]

Thanks guys. It is an index fund, though about 90% stock, 10% bonds. It's diversified enough that I feel comfortable sticking the whole 3k in the fund for now, with an eye to diversify in the future.

Dan