What Vanguard fund for my 1ST tIRA contribution?

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xoxohth
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Joined: Tue Dec 27, 2016 3:43 pm

What Vanguard fund for my 1ST tIRA contribution?

Post by xoxohth »

I just made my first non-401k retirement fund contribution. I put $5,500 in a tIRA.


I have about $18,000 in traditional 401k contributions in Target Retirement 2055 Fund. I was going to just add my $5,500 to the 2055 fund, but Vanguard has recommended I use the Vanguard LifeStrategy Growth Fund (VASGX). (VASGX is 49% stock, 32% international stock, 14% bond, and 5% international bond).

Do I want the 2055 Fund, or the LifeStrategy Fund? They have about the same expense ratio.
PFInterest
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Re: What Vanguard fund for my 1ST tIRA contribution?

Post by PFInterest »

They are the same funds it looks like. One moves, the other doesn't though is my understanding.
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Phineas J. Whoopee
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Re: What Vanguard fund for my 1ST tIRA contribution?

Post by Phineas J. Whoopee »

xoxohth wrote:...
Do I want the 2055 Fund, or the LifeStrategy Fund? They have about the same expense ratio.
We don't know. What do you want?

Target Retirement 2055 Fund, VFFVX, is about 90% stock, 10% fixed income, and very gradually will increase its fixed income over time, but not much for a very long time.

LifeStrategy Growth Fund, VASGX, is about 80% stock, 20% fixed income, and will, presumably, stay about there (although Vanguard has made changes within the LifeStrategy funds, just like it has within the Target Retirement funds).

It seems as though you're early in the accumulation phase. For now, and probably for another decade or two, most of the increase in the size of your portfolio will come from new savings, not from investment returns. The thing to focus on is saving a lot.

That said, both are perfectly fine, low-cost, index-based balanced funds. Either could work, and I see no compelling reason for a person in your situation to choose one over the other.

If it were me, I'd let lethargy and inertia rule, and stick with 2055, but not because I think it will perform better.

Does that help?

PJW
brad.clarkston
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Re: What Vanguard fund for my 1ST tIRA contribution?

Post by brad.clarkston »

There almost the same fund:

VFFVX - US Stock 54% / non-US Stock 34% / Bond 9.67%
VASGX - US Stock 48% / non-US Stock 30% / Bond 18%

If you want to keep it simple stick with VFFVX.
If you want to slice-&-dice go with a 3 or 6 index fund portfolio.

Personally I'd just stick with VFFVX.
Topic Author
xoxohth
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Joined: Tue Dec 27, 2016 3:43 pm

Re: What Vanguard fund for my 1ST tIRA contribution?

Post by xoxohth »

Very helpful. I will stick with 2055 for simplicity, and because it has the lower bonds % allocation.
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