Target Date Retirement Fund or 3-Fund Portfolio

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Topic Author
justsomeguy2018
Posts: 262
Joined: Wed Oct 03, 2018 8:11 pm

Target Date Retirement Fund or 3-Fund Portfolio

Post by justsomeguy2018 » Sat Jan 12, 2019 4:05 pm

I feel like my HSA account has become rather messy with a lot of different index investments going on.

To simplify, would it be easier to just pick a Target Date fund (e.g. 2040) and contribute to that regularly and call it a day? That way the rebalancing is taken care of (I think) and the fund will be more diverse than what I can manage on my own probably (e.g. these often include some allocation towards TIPS it seems, and maybe Int'l bonds, and also a small cash portion).

Or do I simplify to a 3-fund (or similar) portfolio that I manage and re-balance on my own (e.g. 65% Total Stock Market, 15% total International, 20% total u.s. bond).

The Target Date fund has a higher E.R. (0.18%) but with the current balances being so small, seems like it isn't going to be much of a drag for a long time. If the portfolio gets to be a larger size then I may consider switching to lower E.R. funds and managing on my own. Or maybe not IDK.

Thoughts?

Living Free
Posts: 177
Joined: Thu Jul 19, 2018 7:31 pm

Re: Target Date Retirement Fund or 3-Fund Portfolio

Post by Living Free » Sat Jan 12, 2019 4:13 pm

Sure, particularly if the account is smaller then a target date fund would be a nice simple choice. Given it's a tax advantaged account you could always change it up in the future without worrying about capital gains taxes if you accumulated more in there or had some other reason to change
what target date fund is it? some of those are better than others. but yours does seem to have a low fee.

Topic Author
justsomeguy2018
Posts: 262
Joined: Wed Oct 03, 2018 8:11 pm

Re: Target Date Retirement Fund or 3-Fund Portfolio

Post by justsomeguy2018 » Sat Jan 12, 2019 4:21 pm

Living Free wrote:
Sat Jan 12, 2019 4:13 pm
Sure, particularly if the account is smaller then a target date fund would be a nice simple choice. Given it's a tax advantaged account you could always change it up in the future without worrying about capital gains taxes if you accumulated more in there or had some other reason to change
what target date fund is it? some of those are better than others. but yours does seem to have a low fee.
Would be Fidelity Target Date fund. Fidelity Freedom Index Investor or something.

Living Free
Posts: 177
Joined: Thu Jul 19, 2018 7:31 pm

Re: Target Date Retirement Fund or 3-Fund Portfolio

Post by Living Free » Sat Jan 12, 2019 4:40 pm

Those fidelity freedom index funds seem pretty nice. I have some in my wife's roth ira (will prob do stock index funds there eventually). it's basically a 3 fund portfolio with some long term treasuries thrown in.

augryphon
Posts: 50
Joined: Wed Mar 02, 2016 11:35 am

Re: Target Date Retirement Fund or 3-Fund Portfolio

Post by augryphon » Sat Jan 12, 2019 4:54 pm

I found I could reduce ER greatly by using 3 etfs in my HSA, rather than TDs or 3 mutual funds. the no-transaction fee funds my account offers didn't impress me, but the no-fee etfs are good. i got my ER down by 60%, to around .08%. I'm a little anal about it, but if I can reduce ER, its my money I keep. Occasionally I adjust my contributions to rebalance my asset allocation. In reality, I don't have enough money in there now to make a difference with ER, but everything I have in there I have earned and would like to keep.

Topic Author
justsomeguy2018
Posts: 262
Joined: Wed Oct 03, 2018 8:11 pm

Re: Target Date Retirement Fund or 3-Fund Portfolio

Post by justsomeguy2018 » Sat Jan 12, 2019 5:01 pm

augryphon wrote:
Sat Jan 12, 2019 4:54 pm
I found I could reduce ER greatly by using 3 etfs in my HSA, rather than TDs or 3 mutual funds. the no-transaction fee funds my account offers didn't impress me, but the no-fee etfs are good. i got my ER down by 60%, to around .08%. I'm a little anal about it, but if I can reduce ER, its my money I keep. Occasionally I adjust my contributions to rebalance my asset allocation. In reality, I don't have enough money in there now to make a difference with ER, but everything I have in there I have earned and would like to keep.
If I did the mutual funds it would be the Fidelity zero fee mutual funds most likely. That's part of the appeal of going that route vs. the TD retirement funds with the higher ER. But right now there is only $3,000 there (but this should increase +$7,000 per year)...

Would you still do ETFs over a zero fee mutual fund? I can't use the Vanguard ETFs because they incur trading fees. Would have to be iShare thru Fidelity.

KlangFool
Posts: 11598
Joined: Sat Oct 11, 2008 12:35 pm

Re: Target Date Retirement Fund or 3-Fund Portfolio

Post by KlangFool » Sat Jan 12, 2019 5:05 pm

justsomeguy2018 wrote:
Sat Jan 12, 2019 5:01 pm
augryphon wrote:
Sat Jan 12, 2019 4:54 pm
I found I could reduce ER greatly by using 3 etfs in my HSA, rather than TDs or 3 mutual funds. the no-transaction fee funds my account offers didn't impress me, but the no-fee etfs are good. i got my ER down by 60%, to around .08%. I'm a little anal about it, but if I can reduce ER, its my money I keep. Occasionally I adjust my contributions to rebalance my asset allocation. In reality, I don't have enough money in there now to make a difference with ER, but everything I have in there I have earned and would like to keep.
If I did the mutual funds it would be the Fidelity zero fee mutual funds most likely. That's part of the appeal of going that route vs. the TD retirement funds with the higher ER. But right now there is only $3,000 there (but this should increase +$7,000 per year)...

Would you still do ETFs over a zero fee mutual fund? I can't use the Vanguard ETFs because they incur trading fees. Would have to be iShare thru Fidelity.
justsomeguy2018,

Why waste your time on things that don't matters? If and when the HSA portfolio is big enough, then, you may change your mind.

How much do you save? 0.1% of $3,000? 0.1% of $10,000? How much time would you spend to rebalance the fund? Is it worth $3? Is it worth $10?

KlangFool

augryphon
Posts: 50
Joined: Wed Mar 02, 2016 11:35 am

Re: Target Date Retirement Fund or 3-Fund Portfolio

Post by augryphon » Sat Jan 12, 2019 5:40 pm

justsomeguy2018 wrote:
Sat Jan 12, 2019 5:01 pm
augryphon wrote:
Sat Jan 12, 2019 4:54 pm
I found I could reduce ER greatly by using 3 etfs in my HSA, rather than TDs or 3 mutual funds. the no-transaction fee funds my account offers didn't impress me, but the no-fee etfs are good. i got my ER down by 60%, to around .08%. I'm a little anal about it, but if I can reduce ER, its my money I keep. Occasionally I adjust my contributions to rebalance my asset allocation. In reality, I don't have enough money in there now to make a difference with ER, but everything I have in there I have earned and would like to keep.
If I did the mutual funds it would be the Fidelity zero fee mutual funds most likely. That's part of the appeal of going that route vs. the TD retirement funds with the higher ER. But right now there is only $3,000 there (but this should increase +$7,000 per year)...

Would you still do ETFs over a zero fee mutual fund? I can't use the Vanguard ETFs because they incur trading fees. Would have to be iShare thru Fidelity.
No sir, if I had access to no expense funds, I'd use those for sure. I-shares are inexpensive also. I make a habit to keep all my account ERs low. Like you appear to be doing, I'm not taking anything out of my HSA and its become substantial, at least to me. If I save $50 bucks, its my $50 bucks, and I'm old enough to have worked an entire week for less than $50!

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BroIceCream
Posts: 5
Joined: Tue Oct 30, 2018 11:31 pm
Location: California

Re: Target Date Retirement Fund or 3-Fund Portfolio

Post by BroIceCream » Sat Jan 12, 2019 11:30 pm

I just opened a Fidelity HSA, and am using a TDF+Small cap ETF for a tilt. I like the approach. So easy to maintain, and forget about.
Read this article first.
http://twofundsforlife.com

I have a more complex asset allocation with more asset classes in my 401K, where it is easier to rebalance between different positions.

Topic Author
justsomeguy2018
Posts: 262
Joined: Wed Oct 03, 2018 8:11 pm

Re: Target Date Retirement Fund or 3-Fund Portfolio

Post by justsomeguy2018 » Sun Jan 13, 2019 10:17 am

What are thoughts on this AA?


Total U.S. Stock Market - 55.00%
US Small Cap - 15.00%
Intl Stock Market -10.00%
Total US Bond Market -20.00%

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