28.5 years old, currently 70/30 VTSAX/VTIAX. Should I stick or go 100% VTWAX or 100% VFFVX (2055 Target Date)?

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buffet123
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28.5 years old, currently 70/30 VTSAX/VTIAX. Should I stick or go 100% VTWAX or 100% VFFVX (2055 Target Date)?

Post by buffet123 »

Currently all in Vanguard:
Taxable / 401K / Roth IRA / SEP IRA = All 70% VTSAX / 30% VTIAX

A friend of mine (same age) is 100% VFFVX which I am intrigued with for simplicity's sake, but I'm not sure if being in any portion of bonds at my age is wise since I have time on my side (I believe ~10% of this target-date fund is in bonds?). I've been reading on VTWAX (simpler than what I am currently in since it auto-allocates).

My gut is saying with US stock valuations sky-high, political uncertainty, stimulus, fed pumping, low rates, who knows which direction the US markets will go.

I am up a good amount in all of my accounts, so if I use the exchange feature on Vanguard to switch from current allocations into another, I assume it would create a taxable event so I am not sure what to do.

Any suggestions are appreciated! Thanks!
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Brianmcg321
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Re: 28.5 years old, currently 70/30 VTSAX/VTIAX. Should I stick or go 100% VTWAX or 100% VFFVX (2055 Target Date)?

Post by Brianmcg321 »

At your age I like the 70/30 better. I do not like target date funds.

If your funds are in IRAs there are no taxable events for exchanging funds.

What is actually in your Taxable account?
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.
Buy_N_Hold
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Re: 28.5 years old, currently 70/30 VTSAX/VTIAX. Should I stick or go 100% VTWAX or 100% VFFVX (2055 Target Date)?

Post by Buy_N_Hold »

buffet123 wrote: Tue Jan 12, 2021 6:07 pm Currently all in Vanguard:
Taxable / 401K / Roth IRA / SEP IRA = All 70% VTSAX / 30% VTIAX

A friend of mine (same age) is 100% VFFVX which I am intrigued with for simplicity's sake, but I'm not sure if being in any portion of bonds at my age is wise since I have time on my side (I believe ~10% of this target-date fund is in bonds?). I've been reading on VTWAX (simpler than what I am currently in since it auto-allocates).

My gut is saying with US stock valuations sky-high, political uncertainty, stimulus, fed pumping, low rates, who knows which direction the US markets will go.

I am up a good amount in all of my accounts, so if I use the exchange feature on Vanguard to switch from current allocations into another, I assume it would create a taxable event so I am not sure what to do.

Any suggestions are appreciated! Thanks!
I am similar age and AA. Just stay the course with what you have going. 70/30 gives you the chance to rebalance out of relative strength. One day we will be sipping mai tai’s in Aruba. 💪
“To turn $100 into $110 is work. To turn $100 million into $110 million is inevitable.” -Edgar Bronfman
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Scott S
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Re: 28.5 years old, currently 70/30 VTSAX/VTIAX. Should I stick or go 100% VTWAX or 100% VFFVX (2055 Target Date)?

Post by Scott S »

buffet123 wrote: Tue Jan 12, 2021 6:07 pmMy gut is saying with US stock valuations sky-high, political uncertainty, stimulus, fed pumping, low rates, who knows which direction the US markets will go.
People have lost a lot of money listening to their guts.
bogledogle87
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Re: 28.5 years old, currently 70/30 VTSAX/VTIAX. Should I stick or go 100% VTWAX or 100% VFFVX (2055 Target Date)?

Post by bogledogle87 »

When it comes to equities, I have learned over the years not to prioritize the mathematically optimal portfolio, but the behaviorally durable one. We have no idea what stocks will deliver optimal returns, even though we will debate it on this forum ad nauseum. The correct answer for you is whichever one you will stick with and be least likely to stray from during turbulent times. For me, that portfolio is VTWAX - for many others, either of the alternatives you have called may be the right answer for them.

For me, VTWAX removes the concept of rebalancing between equities based on location. Since I personally have no compelling reasons to tilt by geography, choosing not to do so increases my personal durability. I could talk myself into questioning the allocations of fixed portfolios based on performance - I don't do this with VTWAX, because it's always moving with the global market. I no longer have any reason to compare performance as better or worse than the average investor, because I am the average investor. That's good enough for me.
VTWAX and chill
chassis
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Re: 28.5 years old, currently 70/30 VTSAX/VTIAX. Should I stick or go 100% VTWAX or 100% VFFVX (2055 Target Date)?

Post by chassis »

Ignore today’s events. They will be over in a blink of an eye.

You are 28.5 years old, be aggressive. Very aggressive.

100% QQQ
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Wiggums
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Re: 28.5 years old, currently 70/30 VTSAX/VTIAX. Should I stick or go 100% VTWAX or 100% VFFVX (2055 Target Date)?

Post by Wiggums »

QQQ tracks the NASDAQ 100 that would not be diversified or appropriate.

The other funds mentioned would be more diversified, long term all-in-one funds.

Good luck to you.
hoffse
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Re: 28.5 years old, currently 70/30 VTSAX/VTIAX. Should I stick or go 100% VTWAX or 100% VFFVX (2055 Target Date)?

Post by hoffse »

Husband and I are 33 and 34. We are all-in on S&P 500 index funds in our 401ks, all in on VT (ETF version of VTWAX) in our Roth IRAs, all in on VTI (ETF version of VTSAX) in our taxable account for tax efficiency, and all in on QQQ in our HSA, though that is by far our smallest balance.

So we are all equity for now, but other than our small position in QQQ it’s broad-based total market type funds.

Our view is that our investment horizon is still more than 20 years before we need to withdraw any of it. My husband doesn’t pay attention to it at all, but I do - I had investments in 2008 (I started investing in middle school!), 2018, and now 2020 and didn’t flinch through any of them. Bond yields are so low right now that I don’t find them appealing, and we have plenty of time to ride some crazy markets before we need bonds.

I also don’t keep a lot of cash around either because our taxable account is high enough that we don’t really need a dedicated emergency fund. I only accumulate cash for planned expenses (taxes, home renos, etc). I certainly don’t keep cash around as dry powder waiting for a market dip, so I don’t see a reason to do that with bonds either.

If the bond market hasn’t recovered by the time I turn 40, I will start buying EE bonds. But I’m hoping things are looking better by then.

For now, I view our employment as a bond. We have stable careers and have not even hit our prime earning years yet. We would have to fire ourselves or do something truly stupid or illegal in order to lose our jobs at this point, and we have no intention of doing any of those things!

YMMV.
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WarAdmiral
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Re: 28.5 years old, currently 70/30 VTSAX/VTIAX. Should I stick or go 100% VTWAX or 100% VFFVX (2055 Target Date)?

Post by WarAdmiral »

buffet123 wrote: Tue Jan 12, 2021 6:07 pm Currently all in Vanguard:
Taxable / 401K / Roth IRA / SEP IRA = All 70% VTSAX / 30% VTIAX

A friend of mine (same age) is 100% VFFVX which I am intrigued with for simplicity's sake, but I'm not sure if being in any portion of bonds at my age is wise since I have time on my side (I believe ~10% of this target-date fund is in bonds?). I've been reading on VTWAX (simpler than what I am currently in since it auto-allocates).

My gut is saying with US stock valuations sky-high, political uncertainty, stimulus, fed pumping, low rates, who knows which direction the US markets will go.

I am up a good amount in all of my accounts, so if I use the exchange feature on Vanguard to switch from current allocations into another, I assume it would create a taxable event so I am not sure what to do.

Any suggestions are appreciated! Thanks!
Looks like you are on the right track. As long as you don't have the need to liquidate your holdings for any emergencies
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ruralavalon
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Re: 28.5 years old, currently 70/30 VTSAX/VTIAX. Should I stick or go 100% VTWAX or 100% VFFVX (2055 Target Date)?

Post by ruralavalon »

buffet123 wrote: Tue Jan 12, 2021 6:07 pm Currently all in Vanguard:
Taxable / 401K / Roth IRA / SEP IRA = All 70% VTSAX / 30% VTIAX

A friend of mine (same age) is 100% VFFVX which I am intrigued with for simplicity's sake, but I'm not sure if being in any portion of bonds at my age is wise since I have time on my side (I believe ~10% of this target-date fund is in bonds?). I've been reading on VTWAX (simpler than what I am currently in since it auto-allocates).

My gut is saying with US stock valuations sky-high, political uncertainty, stimulus, fed pumping, low rates, who knows which direction the US markets will go.

I am up a good amount in all of my accounts, so if I use the exchange feature on Vanguard to switch from current allocations into another, I assume it would create a taxable event so I am not sure what to do.

Any suggestions are appreciated! Thanks!
At age 28 an asset allocation of 70/30 is within the range of what is reasonable in my opinion. You could just stick with that. This is expected to substantially reduce portfolio volatility (risk), with only a relatively modest decrease in portfolio return. Graph, "An Efficient Frontier: the power of diversification". Please see:
1) Wiki article Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk"; and
2) Wiki article, "Asset allocation".

Don't be switching asset allocation based on "gut" feelings. That is a huge mistake. Most predictions about the effects of things like valuations, political uncertainty, stimulus, fed pumping, low rates have turned out to be wrong. As you said "who knows which direction the US markets will go."

If troubled by your gut feelings a simple target date fund is a good idea, at least in the tax-advantaged accounts. Use of target date funds seems to protect investors against behavioral mistakes, and so give higher investor returns. Morningstar (8/15/2019) "Mind the Gap 2019", link.

Switching funds inside the tax-advantaged accounts will not create a taxable event.

Vanguard Target Retirement 2055 Fund (VFFVX) is currently about 10% bonds.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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