Does it make any sense to have individual stocks, bonds, preferred shares
Sure, with some general rules of thumb: what is the minimum portfolio balance to avoid paying too much for transaction fees? Well, the fee doesn't change with portfolio balance or order size, so I don't know what you're trying to do here.  The way to have less transaction fees is to have less transactions.  That means no day-trading, no option rolling, etc.  A Buy-and-hold strategy (with free dividend reinvestment if available) will minimize transaction fees.
So in a sense, I can think of the employees / option-holders as another investor?   That makes sense - but many of the examples I'm finding online are still confusing me. Based on the example above, it seems like option-holders would be paying the same exercise price as the VC. Per [Andreesen Horowitz](https://a16z.com/2016/08/24/options-ownership/) this seems uncommon:   &gt; The exercise price of employee options — the price per share needed to actually own the shares — is often less than the original issue price paid by the most recent investor, who holds preferred stock.    In reality, would option-holders receive, say, 40% (using example above) for their $6m in exercise value due to receiving common stock, with the founder being diluted to even further? TL; DR version of my answer: In view of your age and the fact that you have just opened a Roth IRA account with Vanguard, choose the Reinvest Dividend and Capital Gains distributions option. If Vanguard is offering an option of having earnings put into a money market settlement account, it might be that you have opened your Roth IRA account with Vanguard's brokerage firm. Are you doing things like investing your Roth money into CDs or bonds (including zero-coupon or STRIP bonds) or individual stocks? If so, then the money market settlement account (might be VMMXX, the Vanguard Prime Money Market Fund) within the Roth IRA account is where all the money earned as interest on the CDs or bonds, dividends from the stocks, and the proceeds (including any resulting capital gains) from the sales of any of these will go. You can then decide where to invest that money (all within the Roth IRA). Leaving the money in the settlement account for a long time is not a good idea even if you are just accumulating the money so as to be able to buy 100 shares of APPL or GOOG at some time in the future. Put it into a CD in your Roth IRA brokerage account while you wait. If your Roth IRA is invested only in Vanguard's mutual funds and is likely to remain so in the foreseeable future, then you don't really need an account with their brokerage. You can still use a money market settlement fund to transfer money between various mutual fund investments within the Roth IRA account, but it really is adding an extra layer of money movement where it is not really necessary. You can sell one Vanguard mutual fund and invest the proceeds into another Vanguard mutual fund or even into several Vanguard funds without needing to have the funds transit through a money market account.  Vanguard calls such a transaction an Exchange on their site. And, of course, you can just choose to reinvest all the dividends and capital gains distributions made by a mutual fund into the fund itself. Mutual funds allow purchases of fractional shares (down to three or even four decimal places) instead of insisting on integer numbers of shares let alone round lots of 100 shares. All this, of course, within the Roth IRA. "From the Times A Reader Q.&A. on G.M.’s Bankruptcy Q. I own G.M. preferred shares. Should I be looking to sell them, or   hold on? I bought them at $25 a share when they were issued in late   2001. — Karen, Manhattan A. When a company files for bankruptcy, its various stock and   bondholders essentially get in line. The first investors to be repaid   are secured debt holders, then senior bond investors, followed by   subordinated debt holders. Preferred shareholders are next, and   lastly, holders of common stock. In a bankruptcy, preferred shares are usually worthless, much like   shares of common stock. But in the case of G.M., there may be some   good — or at least somewhat better — news. Most of G.M.’s preferred   shares are actually senior notes or “quarterly interest bonds,” which   means you will be treated as a bondholder, according to Marilyn Cohen,   president of Envision Capital Management. So you will be able to   exchange your preferreds for G.M. stock (bondholders will receive 10   percent of the new company’s stock). It’s not the best deal, but it   beats the empty bag true preferred shareholders would have been left   holding. Of course this is just one example, and you were hoping to get some larger picture. The article stated ""In a bankruptcy, preferred shares are usually worthless, much like shares of common stock"" which at least is a bit closer to that, if you accept usually as a statistic." "An ETF does not track any one individual stock. It ""is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund."" Check out this link to learn more about ETFs. The easiest way see what ETF tracks a stock is to determine what sector and industry that company is in and find some ETF that trade it. The ETF will likely trade that stock, assuming that its market cap and exchange it trades on fits within the parameters of the ETF." The same as you would for an individual stock. A stock starts the year at $100, and has $4 in dividends over the year, why would the fact the the stock ends the year at say $90, confuse you?  You pay tax on the dividend at the favored rate, if held in a taxable account, obviously, and that's about it. Funds can't limit themselves to a small number of stocks without also limiting themselves to a small amount of total investment. I think 25 companies is too small to be practical from their point of view. "I don't know whether you'd consider buying a single bond instead of a fund. Strips are Treasuries where the coupons have been ""stripped"" to produce debt instruments with a fixed maturity date. They pay zero interest. Their value comes from the fact that you buy them at a price less than 100 and they are worth exactly 100 at some point in the future. You can buy them with any year/month that you wish. They are backed by the federal government and are considered to have no default risk. Like most bonds the price is actually a percentage and they mature at a 100. The one that expires 9/30/2018 costs 91.60 and returns 100 on the expiration date. The price list is here There's more information about them here First of all, they are still T-bonds (in all but the most legalistic   sense) which means they are the safest, most risk-free investment   possible. The U.S. federal government has stellar credit and a record   of never defaulting. These bonds have no call features, so the timing and distribution of   bond payments cannot be altered by any foreseeable occurrence. They are sold at a known - and generally deep - discount off a known   face value that can be redeemed at a known date, so buyers know   exactly how much they will earn from an investment in STRIPS." ETFs are just like any other mutual fund; they hold a mix of assets described by their prospectus. If that mix fits your needs for diversification and the costs of buying/selling/holding are low, it's as worth considering as a traditional fund with the same mix. A bond fund will hold a mixture of bonds. Whether that mix is sufficiently diversified for you, or whether you want a different fund or a mix of funds, is a judgement call. I want my money to take care of itself for the most part, so most of the bond portion is in a low-fee Total Bond Market Index fund (which tries to match the performance of bonds in general). That could as easily be an ETF, but happens not to be.