Vanguard Target Retirement 2045 (VTIVX) OR VFIAX (S&P 500 index fund)

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tejas24478
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Vanguard Target Retirement 2045 (VTIVX) OR VFIAX (S&P 500 index fund)

Post by tejas24478 »

Hi,
I have just rolled over my 401K to IRA and I have around 45K in IRA waiting to be invested.
While the fund was in 401K, they were invested in Vanguard Target Retirement 2045 (VTIVX).
Which is better - investing 45K again in VTIVX again or in VFIAX (S&P 500 index fund)? Also, should I all invest all at once or should I use any other strategy.
retiredjg
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Re: Vanguard Target Retirement 2045 (VTIVX) OR VFIAX (S&P 500 index fund)

Post by retiredjg »

Welcome to the forum. :happy

A rollover should be invested immediately. This is just moving investments from your left pocket to your right pocket - any strategy other than immediate investment would be questionable.

There is a reason you were invested in the Target Date fund. Is there a reason to change that now? Your target date is well diversified and contains several things in addition to the 500 index. Without a clear reason to change, you should not.
Fishing2retire
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Re: Vanguard Target Retirement 2045 (VTIVX) OR VFIAX (S&P 500 index fund)

Post by Fishing2retire »

Me and my wife have TDF and are very happy. Set it and forget it check it once a year and your good.
cuendillar
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Re: Vanguard Target Retirement 2045 (VTIVX) OR VFIAX (S&P 500 index fund)

Post by cuendillar »

Through the plan offered at my work, the target date funds carry an expense ratio (ER) of .25 in addition to the fee charged to have an account (.23). So the aggregate fee for TD funds is .48. For FXAIX (Fidelity S&P 500 index), the fee is .02. So the aggregate fee is .25. Overall using FXAIX instead of the TD fund currently saves me about 50% in overall fees.
billfromct
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Re: Vanguard Target Retirement 2045 (VTIVX) OR VFIAX (S&P 500 index fund)

Post by billfromct »

The Vanguard Target Retirement Funds move to about a 50% stock (60% domestic/40% international)/50% bonds at the target year.

Then it moves to about a 30% stock/70% bond asset allocation 7 years after the target year.

You just need to be aware & make sure that asset allocation is OK.

Personally, I think the international allocation is too high (I have about 20% international allocation in my retirement accounts) & my overall retirement allocation is about 60%/40%. My bond allocation will cover 8-10 years of required minimum distributions (RMDs) so I feel very comfortable with that allocation being in my early 70s.

bill
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ruralavalon
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Re: Vanguard Target Retirement 2045 (VTIVX) OR VFIAX (S&P 500 index fund)

Post by ruralavalon »

Welcome to the forum :) .

tejas24478 wrote: Tue Jul 20, 2021 10:09 pm Hi,
I have just rolled over my 401K to IRA and I have around 45K in IRA waiting to be invested.
While the fund was in 401K, they were invested in Vanguard Target Retirement 2045 (VTIVX).
Which is better - investing 45K again in VTIVX again or in VFIAX (S&P 500 index fund)? Also, should I all invest all at once or should I use any other strategy.
Invest it all at once as soon as the rollover is complete. I see no benefit in a delay.

Reinvest in Vanguard Target Retirement 2045 (VTIVX), unless your original reasons for picking that fund no longer apply for some reason.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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David Jay
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Re: Vanguard Target Retirement 2045 (VTIVX) OR VFIAX (S&P 500 index fund)

Post by David Jay »

Another vote for TR 2045.

We have a regular here who has this statement in his signature line; "If you don't know if a Target Date fund is right for you, it is."

You can easily change funds inside an IRA if you decide you want something different after more study.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
Destiple
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Re: Vanguard Target Retirement 2045 (VTIVX) OR VFIAX (S&P 500 index fund)

Post by Destiple »

billfromct wrote: Wed Jul 21, 2021 2:42 pm The Vanguard Target Retirement Funds move to about a 50% stock (60% domestic/40% international)/50% bonds at the target year.

Then it moves to about a 30% stock/70% bond asset allocation 7 years after the target year.

You just need to be aware & make sure that asset allocation is OK.

Personally, I think the international allocation is too high (I have about 20% international allocation in my retirement accounts) & my overall retirement allocation is about 60%/40%. My bond allocation will cover 8-10 years of required minimum distributions (RMDs) so I feel very comfortable with that allocation being in my early 70s.

bill
Would you recommend TDF if one is only 23 yrs away from retirement?
Will this be sufficient time to recover from losses given bonds might be giving very low returns for a very long time
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David Jay
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Re: Vanguard Target Retirement 2045 (VTIVX) OR VFIAX (S&P 500 index fund)

Post by David Jay »

Destiple wrote: Wed Jul 21, 2021 8:48 pm Would you recommend TDF if one is only 23 yrs away from retirement?
Will this be sufficient time to recover from losses given bonds might be giving very low returns for a very long time
Bonds are for safety, not for “returns”. Equities are the growth portion of a portfolio.

If one selected the TR2045 (for retirement 23 years away), the current AA is 89% stocks, 11% bonds.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
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ruralavalon
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Re: Vanguard Target Retirement 2045 (VTIVX) OR VFIAX (S&P 500 index fund)

Post by ruralavalon »

David Jay wrote: Wed Jul 21, 2021 10:15 pm
Destiple wrote: Wed Jul 21, 2021 8:48 pm Would you recommend TDF if one is only 23 yrs away from retirement?
Will this be sufficient time to recover from losses given bonds might be giving very low returns for a very long time
Bonds are for safety, not for “returns”. Equities are the growth portion of a portfolio.

If one selected the TR2045 (for retirement 23 years away), the current AA is 89% stocks, 11% bonds.
In my opinion Vanguard Target Retirement 2045 (VTIVX) is a reasonable choice for retirement 23 years away. The bond allocation is currently fairly small, but changes as retirement approaches.

When interest rates rise most expect that losses in bond fund share prices will likely be small and temporary. That's what has happened in the past.

In the years 2009-2018 the federal funds target rate increased from 0.00-0.25% to 2.25-2.50%, link. There was no deep or prolonged drop in bond funds. Portfolio Visualizer, 2008-2018.

Higher interest rates are good for the long-term bond investor.

I still think it's important to know what funds are offered in your employer's 401k plan. It's often better to coordinate investments among all accounts. Because you have a taxable brokerage account and will probably want to use very tax-efficient stock index funds in the taxable account, and it may be better to place your fixed income (bond) allocation in the 401k account rather than use a target date fund.
Last edited by ruralavalon on Thu Jul 22, 2021 9:27 am, edited 5 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
dbr
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Re: Vanguard Target Retirement 2045 (VTIVX) OR VFIAX (S&P 500 index fund)

Post by dbr »

tejas24478 wrote: Tue Jul 20, 2021 10:09 pm Hi,
I have just rolled over my 401K to IRA and I have around 45K in IRA waiting to be invested.
While the fund was in 401K, they were invested in Vanguard Target Retirement 2045 (VTIVX).
Which is better - investing 45K again in VTIVX again or in VFIAX (S&P 500 index fund)? Also, should I all invest all at once or should I use any other strategy.
The answer to this question and ones like it is not to try to find a "better" or "best" fund but to be invested in an asset allocation that matches your objectives.

It might be working through the basics of investing from "getting started" would be helpful: https://www.bogleheads.org/wiki/Getting_started

There are some good books out there such as Swedroe and Ferri as well.
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