VFIAX (S&P500) or Target Date Fund (VFORX)

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buddymendo
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Joined: Wed Dec 19, 2018 11:43 am

VFIAX (S&P500) or Target Date Fund (VFORX)

Post by buddymendo » Thu Mar 14, 2019 11:52 am

For my 401k, I need advice.

Should I keep it in the target data fund (VFORX) where there is international and bond funds or put it all into an S&P500 index fund like VFIAX.

What is the best plan here given where we are in the market cycle?

Thanks!

bloom2708
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Re: VFIAX (S&P500) or Target Date Fund (VFORX)

Post by bloom2708 » Thu Mar 14, 2019 12:58 pm

The market cycle shouldn't have anything to do with your selections. What are the options and what are the expense ratios for each?

Think of your entire portfolio as one entity.

401k/403b (workplace plan) - All your bond allocation, balance in stock index funds
Roth IRAs - Stock index funds (Total US and/or Total International)
HSA - Depends on availability and options/costs
Taxable - Stock index funds like Total US and/or Total International

Target date funds are good if the expense ratio is low. If you have a good low cost intermediate bond fund in your 401k + Total market funds, it may be easier to keep things in balance.

Let's say you want 20% bonds. You could pick the Target Date fund with the percentage of bonds (say 30%) that is close to your desired bond amount across your various funds. It depends on how much investments outside of the 401ks.

S&P 500 has ~500 stocks. Target Date is made up of 4 funds. Total US, Total International, Total US Bond and Total International Bond. A slice of everything.

To get the best advice it helps to see what else you have and what the other fund options are. Then you put the little puzzle together with 1, 2 and maybe 3 funds max in each place. No need to duplicate funds if you don't have to.

If you go with the Target Date fund, pick the one with the percentage of bonds you need, not based on the year.

Hopefully others add their ideas.
"We are not here to agree with you; we are here to provoke thoughtfulness..." Unknown Boglehead

DarkHelmetII
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Re: VFIAX (S&P500) or Target Date Fund (VFORX)

Post by DarkHelmetII » Thu Mar 14, 2019 12:59 pm

I would argue that "What is the best plan here given where we are in the market cycle?" (emphasis added) is the wrong question to ask. To answer that question is to essentially make a prediction on what the markets will do, which generally contradicts boglehead philosophy.

1) For the immediate future, choose either one. Put the money to work.

2) Define an asset allocation that encompasses tax-advantaged (including your 401k) and taxable accounts. From there, decide how to best utilize the 401k from a tax-efficiency standpoint (for example, if you have a lot of $$ in taxable, typically makes more sense tax-wise to keep bonds in 401k).

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Taylor Larimore
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Re: VFIAX (S&P500) or Target Date Fund (VFORX)

Post by Taylor Larimore » Thu Mar 14, 2019 1:21 pm

buddymendo wrote:
Thu Mar 14, 2019 11:52 am
For my 401k, I need advice.

Should I keep it in the target data fund (VFORX) where there is international and bond funds or put it all into an S&P500 index fund like VFIAX.

What is the best plan here given where we are in the market cycle?

Thanks!
It is impossible to give sound advice with limited information.

If all your family investments are in your 401k, I would simply keep everything in the appropriate Target Fund.

If you have family investments scattered about, especially if you have taxable securities, please use this link to help you provide more information.

ASKING PORTFOLIO QUESTIONS

Forget "Market Cycles" and Market Timing.

Best wishes
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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abuss368
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Re: VFIAX (S&P500) or Target Date Fund (VFORX)

Post by abuss368 » Fri Mar 15, 2019 3:39 pm

buddymendo wrote:
Thu Mar 14, 2019 11:52 am
For my 401k, I need advice.

Should I keep it in the target data fund (VFORX) where there is international and bond funds or put it all into an S&P500 index fund like VFIAX.

What is the best plan here given where we are in the market cycle?

Thanks!
Welcome to the Bogleheads! Considering this is a tax advantaged account, and based on what information you provided, I would definitely keep the Target fund. This is a simple, low cost, and diversified strategy that over time you will be happy and thankful for.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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