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I am 70 years old and after much research and a conversation with a Vanguard senior investment advisor I am about to use some of my IRA funds in the Target Retirement Income Fund (VTINX).
It has an AA of about 70/30. I was previously considering simply using 70% in the Vanguard total bond index and about 30% in the total stock index. My prime consideration is to preserve my principal as I am still working and I do not need risk at this time. At my age I can not replicate my savings so I am seeking very low risk. However, if the return is so low I would consider doing nothing with my cash and let it sit until rates go up or if they go up.I wonder if anyone else is in my position, and what your thoughts are on VTINX versus total market funds. Also how would you rate the risk component of the VTINX fund.
For my personal tax sensitive account he suggested the Vanguard Intermediate Tax Exempt fund for 70% (Perhaps some international) and 30% again in the Vanguard total stock index.
I plan to make contributions spread out over 12 months rather than lump sum for purposes of my sanity.I would appreciate any thoughts.
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"...what your thoughts are on VTINX versus total market funds. "
I don't understand the question since VTINX is just packaged total market index funds, isn't it? In one case you are buying total market funds and in the other case you are buying total market funds.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Based on the information provided, I think you should probably accept the Vanguard Advisor's suggestion.
Keep investing simple.
is the master key to financial success." -- Jack Bogle
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The Target Income fund is an excellent plan. This fund offers a low cost diversified investment.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!"
Disclosure: Three Fund Portfolio + REITs
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I had my single sister in law roll her 401K into this fund when she retired, at age 70, a year ago. Other than S.S., this is her only pension. I don't use this fund because, 5% in Prime, would be $80K earning nothing and I am also a Die Hard that believes in my 60% bonds being split 50%/50% Tot. Bnd & Tips. So I am 67% LifeStrategy Moderate Growth & 33% Tips. I envy your young age.
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I would go with the Target Retirement Income Fund rather than the individual index funds. The fund auto re-balances so you don’t have to work at keeping the 30/70 AA. In addition, with RMD’s just around the corner, you don’t have to worry about which fund to take the RMD from.
I assisted my parents in moving all their IRA’s to the Target Retirement Income Fund last year and they have been happy with the results. They are in their early-mid 70’s.
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Here's a very different alternative: Put it all in a money market fund. Whenever you retire, buy a Single Premium Immediate Annuity with most of your money.
At age 70, the payout is already 7.76%; if you retire at age 75, it will be 9.94% (or more, if interest rates rise). It's extremely unlikely that the Target Retirement funds or individual index funds are going to get anywhere close and you'll have to tolerate market ups and downs with them.
You might not want to put all of your cash with the first purchase but leave out some to make additional purchases, say, every five years. The increase in payout due to age will more than compensate for the effects of inflation.
SPIAs are one of the few things that really do get better as you get older (or, at least, pay out more).
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woodedareas wrote:I am 70 years old...
woodedareas wrote:For my personal tax sensitive account he suggested the Vanguard Intermediate Tax Exempt fund for 70% (Perhaps some international) and 30% again in the Vanguard total stock index.
If you have significant money in Taxable ("tax sensitive") accounts, you are in a high(er) tax bracket, and should use Tax Exempt Bonds plus Total Stock Market in addition to a Target Fund, I prefer individual Index Funds to come-up with the overall allocation.
If you want to target VTINX's allocation, then it could look something like this.
Vanguard Target Retirement Income Fund (VTINX) wrote:
1 Vanguard Total Bond Market II Index Fund Investor Shares* 44.9% [good in tax-advantaged (not taxable)]
2 Vanguard Total Stock Market Index Fund Investor Shares 21.2% [good in tax-sensitive]
3 Vanguard Inflation-Protected Securities Fund Investor Shares 19.9% [definitely in tax-advantaged (not taxable)]
4 Vanguard Total International Stock Index Fund Investor Shares 9.1% [good in tax-sensitive]
5 Vanguard Prime Money Market Fund 4.9%
Total — 100.0% https://personal.vanguard.com/us/funds/ ... =INT#tab=2
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woodedareas wrote:However, if the return is so low I would consider doing nothing with my cash and let it sit until rates go up or if they go up.
Be yourself, everyone else is already taken -- Oscar Wilde
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