Vanguard Target retirement funds

[BurnedBefore]

Anybody like the vanguard Target retirement funds?

They have several and I was wondering if any were ones I should steer clear of or which one would go with my current plan.

I'm 55 and want to retire by 65 so I was thinking about adding it to these funds I'm about to buy and dropping my percent investment in one of these categories?

This is my current distribution and I was thinking of dropping my total bond market investment to 40% instead of 50% and adding 10% of my money to the Target retirement fund. Just wondering what you guys think.

VBTLX- Total bond market (50%)
VTABX- Total international bond index (10%)
VTIAX- Total international stock index (10%)
VTSAX- Total stock market index (30%)

Thanks in advance

[guyesmith]

Anybody like the vanguard Target retirement funds?

They have several and I was wondering if any were ones I should steer clear of or which one would go with my current plan.

I'm 55 and want to retire by 65 so I was thinking about adding it to these funds I'm about to buy and dropping my percent investment in one of these categories?

This is my current distribution and I was thinking of dropping my total bond market investment to 40% instead of 50% and adding 10% of my money to the Target retirement fund. Just wondering what you guys think.

VBTLX- Total bond market (50%)
VTABX- Total international bond index (10%)
VTIAX- Total international stock index (10%)
VTSAX- Total stock market index (30%)

Thanks in advance

I think the target funds are solid for anyone who wants to diversify well without having to touch it. After the target retirement year they become even more conservative so you're able to draw.

My portfolio is very simple right now, but I'll be making changes once I'm your age and older. Even though it's simple I'm telling my wife that if I get hit by a truck young to move all our funds into a Target Retirement Fund so she doesn't have to think about it.

My vote for you is to go 100% TRF or continue to do it yourself. Half in half out doesn't make much sense to me. Basically you'd be signing 10% of your money over to vanguard to do what you're already doing with the other 90%. If I understand your question correctly.

Good luck!

[SmileyFace]

Review this if you haven't yet:
https://www.bogleheads.org/wiki/Target_date_funds

[bikechuck]

The problem I have with most Target Retirement Funds is that they hold international bonds which I prefer not to own. I do like the automatic re balancing and set it and forget it nature of the funds. However to avoid exposure to international bonds I am sticking with the three fund portfolio. I have no problems with international equities.

[Texanbybirth]

Vanguard's 2050 (VFIFX) fund is the only holding in our retirement accounts. You could say I'm a fan!

[ofcmetz]

I think the target retirement funds are a great one stop choice. Their asset allocation gets more conservative as they (the funds and you) age.

I actually prefer the Lifestrategy Funds to these. They have similar fees, but the allocations within remain constant. This fits me better. I think the one that holds 60% equities and 40% bonds my be my favorite.

[Silk McCue]

You are already holding the 4 funds that make up most every TD fund. Adding in a TD fund in my opinion is “just doing something to do something” and provides no real benefit. Keep it simple. Look at your current allocation to these four funds and reallocate them to your desired asset allocation. That way you can easily know what you have at any point without unraveling the underlying TD fund allocation against your individual holdings.

Cheers

[Tyler Aspect]

Adding a target retirement fund when you already have a Three Funds portfolio just muddies the water in my opinion. Target retirement funds are intended to be your first fund that someday you can graduate out of it.

[CABob]

Adding a target retirement fund when you already have a Three Funds portfolio just muddies the water in my opinion. Target retirement funds are intended to be your first fund that someday you can graduate out of it.

+1 except I graduated out a three (or 4 or 5) fund portfolio into a target date fund in the interest of simplicity for my self and my DW after I expire.

[Silk McCue]

Adding a target retirement fund when you already have a Three Funds portfolio just muddies the water in my opinion. Target retirement funds are intended to be your first fund that someday you can graduate out of it.

I agree except for “intended to be your first fund that someday you can graduate out of it”. Holding a TD fund can be a strategic choice for many good reasons. No one should shy away from it by being made to feel they are less sophisticated than those that don’t. To each their own.

Cheers

[steve roy]

When Vanguard took over administration of my employer's 401(k) Plan, they migrated all participants into age-appropriate Target Retirement Funds.

Five years on, 85% of participants have elected to stay in the VG Target Retirement Funds (me included). I have had no problems with performance (mine is Target Date 2015) ... and in retrospect it was a savvy move letting everything ride. My take: most investors are well served by putting retirement dollars in asset allocation funds like Vanguard's. They're low cost, and they minimize the chances for major mistakes.

After decades of investing, my take-away is: it's not so important to maximize returns (value tilts, small-cap tilts, momentum, slice-and-dice) but VERY important to avoid big errors. LifeStrategy and Target Date funds are major helps in this regard.

[anil686]

When Vanguard took over administration of my employer's 401(k) Plan, they migrated all participants into age-appropriate Target Retirement Funds.

Five years on, 85% of participants have elected to stay in the VG Target Retirement Funds (me included). I have had no problems with performance (mine is Target Date 2015) ... and in retrospect it was a savvy move letting everything ride. My take: most investors are well served by putting retirement dollars in asset allocation funds like Vanguard's. They're low cost, and they minimize the chances for major mistakes.

After decades of investing, my take-away is: it's not so important to maximize returns (value tilts, small-cap tilts, momentum, slice-and-dice) but VERY important to avoid big errors. LifeStrategy and Target Date funds are major helps in this regard.

I agree with this and I use only LS and TR funds in my tax advantaged accounts for this purpose. I just adjust the bond percentages to account for the equities held in the taxable account. Hope this helps...

[BruinBones]

I am similar age as you, and am starting to transition to Life Strategy Fund, to get the AA percentage I want, and to make it easier for my spouse to handle if I died first, since she does not like dealing with our investments.

[Munir]

Adding a target retirement fund when you already have a Three Funds portfolio just muddies the water in my opinion. Target retirement funds are intended to be your first fund that someday you can graduate out of it.

Or graduate into Target Retirement Funds when you get to be 80 years old.

[Watty]

I retired a few years ago and we put almost all of out investments in the Vanguard 2015 fund since almost all of out money is in retirement accounts.

Prior to that my 401k was with a different company that did not have a low cost target date fund.

[BurnedBefore]

Thanks everybody.
I just read a yahoo article where Buffet says not to do TDR funds and he suggests investors use 90% of their funds on S&P 500 index fund (VOO) and 10% low cost Government bonds like VGSH and or VFIR. I'm thoroughly confused.

Thanks for the replies everybody it helps. One other question. I have a large sum of money. Should I slowly invest it over time (say a month) or lump it all into Mutual funds at once? I'm 55 and don't have time to waste.

John

[Taylor Larimore]

Thanks everybody.
I just read a yahoo article where Buffet says not to do TDR funds and he suggests investors use 90% of their funds on S&P 500 index fund (VOO) and 10% low cost Government bonds like VGSH and or VFIR. I'm thoroughly confused.
John

John:

No one can accurately forecast what stocks and bonds will do in the future. As long as you have a suitable stock/bond ratio, select a few low-cost, total market index funds, you should do just fine.

There is more than one road to Dublin.

Best wishes.
Taylor

[BurnedBefore]

Ok thanks Taylor.

quick question- Any reason why Buffett would pick an ETF fund over a mutual fund? I know the major differences between the two but not sure what advantage an ETF like VOO has vs. a mutual fund like VFIAX. They are both S&P 500 funds and one is priced per share and traded (VOO) and the other has an end of day price. (VFIX)

Thanks

[Munir]

Thanks everybody.
I just read a yahoo article where Buffet says not to do TDR funds and he suggests investors use 90% of their funds on S&P 500 index fund (VOO) and 10% low cost Government bonds like VGSH and or VFIR. I'm thoroughly confused.

Thanks for the replies everybody it helps. One other question. I have a large sum of money. Should I slowly invest it over time (say a month) or lump it all into Mutual funds at once? I'm 55 and don't have time to waste.

John

Hi BurnedBefore: What is appropriate for Buffet may not be appropriate for you. The same applies to huge endowment portfolios like Yale's or Harvard's. You may want to read some investment advice books recommended by Bogleheads to educate yourself first, and then develop an investment plan based on what you have read. Others may chip in with names of a few books they recommend.

[Silk McCue]

Ok thanks Taylor.

quick question- Any reason why Buffett would pick an ETF fund over a mutual fund? I know the major differences between the two but not sure what advantage an ETF like VOO has vs. a mutual fund like VFIAX. They are both S&P 500 funds and one is priced per share and traded (VOO) and the other has an end of day price. (VFIX)

Thanks

ETF vs Mutual Fund is an "in the weeds question" and will not have an impact on a successful investing strategy. Don't allow yourself to get distracted by nuance at this time. I would encourage you to figure out big picture asset allocation based upon your willingness, need and ability to take risk. Go to the main page, click on Start Here and take some time to learn about our very straight forward and non dramatic approach to investing. Until you understand, believe and appreciate the value of this approach to investing you will find yourself distracted by all sorts of siren songs being played on on the web trying to woo your ship of investing into the rocks.

I am glad you are here and wish you the very best. This site turned my investing life around about 2 1/2 years ago and my wife and I are on a very solid path. You can be too.

Cheers.

[Taylor Larimore]

Ok thanks Taylor.

quick question- Any reason why Buffett would pick an ETF fund over a mutual fund? I know the major differences between the two but not sure what advantage an ETF like VOO has vs. a mutual fund like VFIAX. They are both S&P 500 funds and one is priced per share and traded (VOO) and the other has an end of day price. (VFIX)

Thanks

BurnedBefore:

Are you sure that Buffett would pick an ETF over a mutual fund?

This article reports that Mr. Buffet selected an S&P 500 Index Fund for his winning bet with a hedge fund manager and he also selected an S&P 500 Index Fund for his wife in his Will:

Warren Buffett: Why Index Funds Trump Hedge Funds

Using an Index Fund OR an ETF is far down on the list of what's important. Both are "winners."

Best wishes.
Taylor

[whodidntante]

If the money is in the same account then I wouldn't mix a target date fund with asset class funds. Just buy more of what you need to accomplish your desired asset allocation.

You could instead turn over decisions about asset allocation to a professional manager by buying a target date fund, but then I would not buy asset class funds.

[pkcrafter]

BurnedBefore, a little background for posters:

We know you are very risk averse
We know you have all taxable accounts
We know you are in the 15% tax bracket
We know you have a small business
We DON'T know portfolio value except it's 6 figures - Is it closer to 300k or 900k?

The answer to this question is needed to provide the best information for your situation.

The acceptable initial withdrawal rate is 4% of total portfolio value.

Your selection of a 40/60 portfolio is a goldilocks choice--not to risky, but not so safe that it won't provided the returns needed to keep the portfolio going while withdrawing.

This is my current distribution and I was thinking of dropping my total bond market investment to 40% instead of 50% and adding 10% of my money to the Target retirement fund. Just wondering what you guys think.

No, much better to use a TR or Lifestrategy fund in total because you get diversification, auto-rebalancing, and these funds tend to mask the severity of a stock market fall. In other words, if the market drops 20%, a 40/60 fund will experience an 8% drop. Better on the nerves. On the other hand, using individual funds and tax-efficient bonds is more tax-efficient

An alternative choice is Vanguard's Tax-Managed Balanced Fund 50/50. Since the AA is higher than your target 40/60 you could add a tax-exempt bond fund to get back down to 40/60.

You also might consider opening a self-employed account and maxing with cash you now have on hand.

https://investor.vanguard.com/what-we-o ... mpgn=PS:RE

Discussion on the choice of a tax-managed balanced fund

https://obliviousinvestor.com/what-are- ... ced-funds/

https://personal.vanguard.com/us/FundsS ... irect=true

http://portfolios.morningstar.com/fund/ ... ture=en_US

Paul

[Jordan4FI]

You can just as easy go all in on a TD Fund.. and if you want more stock as the years go by, switch to the next 5 years out fund.. I may do this as well in the future, or keep it all in a LifeStrategy Fund.... I just want to slowly add bonds as I age, not jump from 10% to 20% to 40% in one day... I will need the $ for much longer as I am goaling for age 45 or less.... and possibly no future "working" income..

[CoAndy]

I have a 401(k) and a 457. My entire 401(k) is in the Vanguard 2035 fund (VTTHX). I could do without the international bonds but am happy with the fund. Have been with this fund for several years now.

[vineviz]

The primary effect of the change you propose is to increase your allocation to stocks.

That change might very well be appropriate for you (I really have no way of knowing), but I definitely think you should ask yourself why that change and why now.

[BurnedBefore]

Thanks for all your replies

John

[Miriam2]

ETF vs Mutual Fund is an "in the weeds question" and will not have an impact on a successful investing strategy. Don't allow yourself to get distracted by nuance at this time. I would encourage you to figure out big picture asset allocation based upon your willingness, need and ability to take risk. Go to the main page, click on Start Here and take some time to learn about our very straight forward and non dramatic approach to investing. Until you understand, believe and appreciate the value of this approach to investing you will find yourself distracted by all sorts of siren songs being played on on the web trying to woo your ship of investing into the rocks.

I am glad you are here and wish you the very best. This site turned my investing life around about 2 1/2 years ago and my wife and I are on a very solid path. You can be too.

Very nice, helpful post Silk Enjoyed the "in the weeds" description and especially loved your imagery of "siren songs being played on the web trying to woo your ship of investing into the rocks"

[Taylor Larimore]

Anybody like the vanguard Target retirement funds?

BurnedBefore:

I love Vanguard Target Retirement Funds in portfolios with only tax-advantaged accounts. They are low-cost, designed by Vanguard Experts, maintenance free, and enjoy Morningstar's highest rating.

Harry Sit (The Finance Buff) wrote this article about Target Funds:

Target Date Funds Are Underrated

Best wishes.
Taylor

[LadyGeek]

dergon has a question which I've moved into a new thread. See: [Looking to update asset allocation]

(Thanks to the member who reported the post and requested the new thread.)