Vanguard retirement funds

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jaymeetme
Posts: 8
Joined: Wed May 08, 2019 1:44 pm

Vanguard retirement funds

Post by jaymeetme » Tue May 14, 2019 3:34 pm

Hello All,

First of all I want to say thank you for providing answers on different topics. I have learned a lot in just few days.

I am helping my wife pick right investment option for her retirement fund in employer provided 401K. There are different Vanguard Target Retirement options like 2045 Trust I, 2050 Trust I, 2055 Trust I etc. I don't know the difference between them and don't know what is the significance of numbers 2045, 2050, 2055 etc. Does it mean you get your money back at the end of that year (gain or loss) and they cease to exist after that year? Also I would appreciate if you could suggest some funds that my wife can put her retirement fund in.

fabdog
Posts: 490
Joined: Wed Jan 16, 2013 1:59 pm
Location: Williamsburg VA

Re: Vanguard retirement funds

Post by fabdog » Tue May 14, 2019 3:37 pm

the years (2045, etc) are the years you would target to retire.

The funds have different mixes of stocks and bonds. In general, the further out in the future the date, the greater will be the stock allocation.

They won't go out of business then, they usually hit their final allocation and stick with it in that year

Perhaps this Vanguard page will be helpful

https://investor.vanguard.com/mutual-fu ... etirement/#/

Mike

billfromct
Posts: 895
Joined: Tue Dec 03, 2013 9:05 am

Re: Vanguard retirement funds

Post by billfromct » Tue May 14, 2019 4:06 pm

The target year is a projected retirement year.

The asset allocation starts out with a higher stock (domestic/international) allocation & gradually moves to a higher bond (domestic/international) allocation as the years go by.

In the case of the Vanguard Target Retirement 2045 Fund, it is 90% stocks & 10% bonds now. It slowly moves to 50%/50% at the target year, then 30%/70%, 7 years after the target year, & would stay at that allocation. So people can start out with a target retirement fund & wouldn't have to do anything throughout their working & retirement years to change their asset allocation.

These are basically "set it & forget" type funds.

These Vanguard target retirement funds also have a $1,000 initial contribution requirement, which would not apply to 401k participates but is very helpful for new IRA contributors. Most Vanguard funds have a $3,000 initial contribution requirement.

bill

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southerndoc
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Location: Atlanta

Re: Vanguard retirement funds

Post by southerndoc » Tue May 14, 2019 4:47 pm

If you're retiring in 2045, you don't have to choose a 2045 fund. If you can't stand the risk of stocks, you could select the 2035 or 2040 fund. If you can tolerate more risk and want potentially better returns, you can choose the 2050 or 2055 fund.

Topic Author
jaymeetme
Posts: 8
Joined: Wed May 08, 2019 1:44 pm

Re: Vanguard retirement funds

Post by jaymeetme » Tue May 14, 2019 5:48 pm

Thank you everyone for the explanation. I am more clear on this now. I will spend some time reading about these funds and help my wife pick the best option. So far 2055 option looks better.

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