Having both Vanguard Target and TIAA-CREF Lifecycle funds

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brucey
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Having both Vanguard Target and TIAA-CREF Lifecycle funds

Post by brucey » Sat Jun 08, 2019 7:29 pm

My employer offers both in a 403b:

Vanguard Institutional Target Retirement 2045 Fund
TIAA-CREF Lifecycle Index 2045 Fund (Institutional)

As a novice, I was having a tough time choosing between the two, so I chose both, splitting my contributions to each down the middle.

Is there a potential disadvantage to having both? Or advantage?

The expense ratios are just about the same. Vanguard looks to be performing slightly better.

I'm looking for set it and forget, but I'm wondering if I'd be better off choosing one rather than both.

student
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Re: Having both Vanguard Target and TIAA-CREF Lifecycle funds

Post by student » Sat Jun 08, 2019 7:52 pm

Different target date funds may have different asset allocations. For example, I think Fidelity is quite aggressive and American Century is more conservative. Given the ER are similar, pick one that fits your asset allocation. There is nothing wrong with what you are doing, by investing in both. In fact, you may learn something (if so desired) by comparing the two as you invest. Since they are in a 403b, there is no tax consequence if you decide to move from Vanguard to TIAA or vice versa.

YoungBogle
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Re: Having both Vanguard Target and TIAA-CREF Lifecycle funds

Post by YoungBogle » Sat Jun 08, 2019 8:16 pm

I agree with student, also would like to add I would imagine Vanguard has a higher proportion of intl stocks in the stocks allocation than most other firms TDF.

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fortfun
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Re: Having both Vanguard Target and TIAA-CREF Lifecycle funds

Post by fortfun » Sat Jun 08, 2019 8:41 pm

According to this PDF
https://www.tiaa.org/public/pdf/ffs/886315597.pdf
fees on the TIAA are significantly higher than Vanguards. Would you mind posting the fees on both funds? That way, we can compare apples to apples. It appears that TIAAs fees are .4% higher, which will add up to a big difference over 30 years.

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brucey
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Re: Having both Vanguard Target and TIAA-CREF Lifecycle funds

Post by brucey » Sat Jun 08, 2019 8:58 pm

Thanks for the replies. Student -- good point on potentially learning something by comparing the two.

The Fees are:
TIAA .1%
Vanguard .09%

https://www.tiaa.org/public/investment- ... r=21066478

https://investor.vanguard.com/mutual-fu ... tPort=1669

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fortfun
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Re: Having both Vanguard Target and TIAA-CREF Lifecycle funds

Post by fortfun » Sat Jun 08, 2019 10:40 pm

brucey wrote:
Sat Jun 08, 2019 8:58 pm
Thanks for the replies. Student -- good point on potentially learning something by comparing the two.

The Fees are:
TIAA .1%
Vanguard .09%

https://www.tiaa.org/public/investment- ... r=21066478

https://investor.vanguard.com/mutual-fu ... tPort=1669
Good. Looks like TIAA lowered its fees recently (probably thanks to Vanguard).

Northern Flicker
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Re: Having both Vanguard Target and TIAA-CREF Lifecycle funds

Post by Northern Flicker » Sat Jun 08, 2019 11:47 pm

Incorrect info deleted
Last edited by Northern Flicker on Sun Jun 09, 2019 1:35 pm, edited 1 time in total.

Culbretd
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Re: Having both Vanguard Target and TIAA-CREF Lifecycle funds

Post by Culbretd » Sun Jun 09, 2019 4:43 am

Check the underlying funds in the TIAA lifecycle fund. TIAA has 2 lifecycle funds but only one uses index funds while the other lifecycle fund is loaded with TIAA actively managed funds. If yours is the index version it should say so in the name ... example TIAA Lifecyle Index 2045 or so.

My wifes 401(a) did not offer the index version and upon looking at the funds inside her lifecycle they were all TIAA actively managed funds.

student
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Re: Having both Vanguard Target and TIAA-CREF Lifecycle funds

Post by student » Sun Jun 09, 2019 5:36 am

Culbretd wrote:
Sun Jun 09, 2019 4:43 am
Check the underlying funds in the TIAA lifecycle fund. TIAA has 2 lifecycle funds but only one uses index funds while the other lifecycle fund is loaded with TIAA actively managed funds. If yours is the index version it should say so in the name ... example TIAA Lifecyle Index 2045 or so.

My wifes 401(a) did not offer the index version and upon looking at the funds inside her lifecycle they were all TIAA actively managed funds.
At 0.1% ER, it has to be index and OP's one has index in its name.
Last edited by student on Sun Jun 09, 2019 5:50 am, edited 2 times in total.

student
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Re: Having both Vanguard Target and TIAA-CREF Lifecycle funds

Post by student » Sun Jun 09, 2019 5:44 am

fortfun wrote:
Sat Jun 08, 2019 10:40 pm
brucey wrote:
Sat Jun 08, 2019 8:58 pm
Thanks for the replies. Student -- good point on potentially learning something by comparing the two.

The Fees are:
TIAA .1%
Vanguard .09%

https://www.tiaa.org/public/investment- ... r=21066478

https://investor.vanguard.com/mutual-fu ... tPort=1669
Good. Looks like TIAA lowered its fees recently (probably thanks to Vanguard).
The one you quoted is a different fund from the OP's. Your quoted an active fund and the OP's one is an index fund. I am not sure that one should credit Vanguard per se. TIAA is a pretty good place although I think it may not be as good as 20 years ago due to new leadership. It is non-profit but it does cost more than Vanguard in many of the share classes. However, once you have institutional class, it is competitive.

Culbretd
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Re: Having both Vanguard Target and TIAA-CREF Lifecycle funds

Post by Culbretd » Sun Jun 09, 2019 6:20 am

student wrote:
Sun Jun 09, 2019 5:36 am
Culbretd wrote:
Sun Jun 09, 2019 4:43 am
Check the underlying funds in the TIAA lifecycle fund. TIAA has 2 lifecycle funds but only one uses index funds while the other lifecycle fund is loaded with TIAA actively managed funds. If yours is the index version it should say so in the name ... example TIAA Lifecyle Index 2045 or so.

My wifes 401(a) did not offer the index version and upon looking at the funds inside her lifecycle they were all TIAA actively managed funds.
At 0.1% ER, it has to be index and OP's one has index in its name.

Reading this at 5:00am the morning I must have missed the word index in there. Lol

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vineviz
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Re: Having both Vanguard Target and TIAA-CREF Lifecycle funds

Post by vineviz » Sun Jun 09, 2019 8:07 am

brucey wrote:
Sat Jun 08, 2019 7:29 pm
As a novice, I was having a tough time choosing between the two, so I chose both, splitting my contributions to each down the middle.

Is there a potential disadvantage to having both? Or advantage?
You've received some good advice already, and I just mention one red flag that I see raised by holding both. Or maybe, more specifically with having trouble choosing.

The red flag is this: you should know that with almost 100% certainty, it doesn't matter at all, and with ABSOLUTE certainty it doesn't matter much, which one you choose.

Investors at all levels of experience should resist the temptation of obsessing over details that won't impact their outcomes. Such obsession can lead to frequent "fiddling" in an attempt to optimize the portfolio, which is dangerous in a realm like investing where the more changes you make the less well off you likely end up.

How long you work, how much you earn, how much you save, how much your investments cost, and whether your portfolio is diversified all have (literally) an order of magnitude greater impact over your investment success than which brand of mutual fund you own.

So while I don't think there is anything wrong with having two TDFs, I do hope you consider the reasons that you had such a difficulty making a decision that has such low stakes*. When choosing between two great funds, it's probably optimal to spend very LITTLE effort on the decision.

If you're a reader, I recommend looking for a copy of Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts by Annie Duke. It's not an investment book, but it's one I think every new investor should read.

* Edit: I hope that doesn't sound patronizing to you, because I don't mean it to be. Just couldn't find a more articulate way of expressing my advice.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

Topic Author
brucey
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Re: Having both Vanguard Target and TIAA-CREF Lifecycle funds

Post by brucey » Sun Jun 09, 2019 12:38 pm

vineviz wrote:
Sun Jun 09, 2019 8:07 am
So while I don't think there is anything wrong with having two TDFs, I do hope you consider the reasons that you had such a difficulty making a decision that has such low stakes*. When choosing between two great funds, it's probably optimal to spend very LITTLE effort on the decision.
Not patronizing at all, I get what you're saying. I maybe overstated my 'difficulty' making a decision. I definitely wasn't obsessing, quite the opposite. What I really meant was they both seemed like good funds with comparable fees, and in an effort to ' spend very LITTLE effort on the decision' as you said, I decided to just not make a decision at all and simply go for both.

Just being such a novice I was wondering if there some glaring red flag I was missing. I do have a lot to learn here and looking closer at the two funds will be a good learning tool.

Vineviz - I'll take a look at the book!

KyleAAA
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Re: Having both Vanguard Target and TIAA-CREF Lifecycle funds

Post by KyleAAA » Sun Jun 09, 2019 12:56 pm

You can just flip a coin between the two or continue splitting your contributions between both. It isn’t a decision that will make any difference in the long term. It seems odd that your employer would offer both. Kinda defeats the point IMO.

Northern Flicker
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Re: Having both Vanguard Target and TIAA-CREF Lifecycle funds

Post by Northern Flicker » Sun Jun 09, 2019 1:05 pm

incorrect info deleted
Last edited by Northern Flicker on Sun Jun 09, 2019 1:35 pm, edited 1 time in total.

KyleAAA
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Re: Having both Vanguard Target and TIAA-CREF Lifecycle funds

Post by KyleAAA » Sun Jun 09, 2019 1:09 pm

Northern Flicker wrote:
Sun Jun 09, 2019 1:05 pm
Most likely the employer offers both so that participants can choose between active (TIAA) and passive (Vanguard) management.
The TIAA target funds are passive as well.

Northern Flicker
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Re: Having both Vanguard Target and TIAA-CREF Lifecycle funds

Post by Northern Flicker » Sun Jun 09, 2019 1:34 pm

Sorry, I was referencing the TIAA fund family referenced in the thread title which is inconsistent with the original posting text.

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