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question regarding target date retirement fund
Posted on 7/21/14 at 7:24 am
Posted on 7/21/14 at 7:24 am
This may be a dumb question so I apologize in advance 
If I currently hold a vanguard target retirement date fund in a roth ira, should I just max out my roth contribution with that?
I was debating going with more funds of total bond, total stock, and maybe total international
If I do that, then should any of those go into my roth, therefore lowering my contribution to my target date? Or just keep them in a taxable and contribute as I can after maxing roth?
If I currently hold a vanguard target retirement date fund in a roth ira, should I just max out my roth contribution with that?
I was debating going with more funds of total bond, total stock, and maybe total international
If I do that, then should any of those go into my roth, therefore lowering my contribution to my target date? Or just keep them in a taxable and contribute as I can after maxing roth?
3
Posted on 7/21/14 at 7:35 am to HailToTheChiz
Vanguard's target date funds are a fund of funds. They hold total stock, total international stock, total bond, and total international bond. The percentages shift toward the bond funds the closer you get to the retirement date.
Vanguard Target Retirement 2050
So to answer your question, no, the fund already does that for you. Just put it all in there.
Yes.
Vanguard Target Retirement 2050
So to answer your question, no, the fund already does that for you. Just put it all in there.
quote:
Or just keep them in a taxable and contribute as I can after maxing roth?
Yes.
Posted on 7/21/14 at 8:38 am to HailToTheChiz
I'm not sure what you are asking, but the target date funds are meant to be a single solution. They are made up of a bunch of underlying funds. In theory, you can put all your money in that one fund, and that fund diversifies itself via investing in other funds.
Posted on 7/21/14 at 9:21 am to HailToTheChiz
Until you have enough capital to mimic the target date fund with admiral shares, stay where you are.
Posted on 7/21/14 at 10:18 am to Joshjrn
Ok Thanks
That was more or less what I was asking.
I'm in a situation where I need to be investing more than 5500 a year in my roth limit so I was trying to figure out what others to do
No 401k or anything else
That was more or less what I was asking.
I'm in a situation where I need to be investing more than 5500 a year in my roth limit so I was trying to figure out what others to do
No 401k or anything else
Posted on 7/21/14 at 10:27 am to HailToTheChiz
I was actually in the middle of calculating the fee breakdown for recreating a Vanguard Target 2045. It's imperfect because it uses a domestic bond fund that isn't available to individual investors, but it came out to just over .185% in fees (I don't have the numbers in front of me as my girlfriend dragged me out to have breakfast by the pool...). When I get back inside, I'm going to finish the calculations, including the total fee for moving each element of the Target fund into Admiral shares.
Posted on 7/21/14 at 11:15 am to Joshjrn
Alright, with the aforementioned imperfection with the domestic bond fund and taking into consideration that I'm doing some half-assed early morning rounding, here are the numbers:
Fund . Percentage of Allocation . Investor Fee . Admiral Fee
Total Stock 63.1% (.17) (.05)
Total Int Stock 27% (.22) (.14)
Total Bond 7.9% (.20?) (.08?)
Total Int Bond 2% (.23) (.20)
Total investor shares fee - .1869
w/ Total Stock Adm - .1114
+Total Int Adm - .0898
+Total Bond Adm - .08032
+Total Int Bond Adm (all funds admiral shares)- .07972
Fund . Percentage of Allocation . Investor Fee . Admiral Fee
Total Stock 63.1% (.17) (.05)
Total Int Stock 27% (.22) (.14)
Total Bond 7.9% (.20?) (.08?)
Total Int Bond 2% (.23) (.20)
Total investor shares fee - .1869
w/ Total Stock Adm - .1114
+Total Int Adm - .0898
+Total Bond Adm - .08032
+Total Int Bond Adm (all funds admiral shares)- .07972
This post was edited on 7/22/14 at 8:42 am
Posted on 7/21/14 at 11:32 am to Joshjrn
quote:
Total investor fee - .1869
VFIFX has an ER of 0.18%. Moral: just let them do it!
Posted on 7/21/14 at 11:33 am to Joshjrn
Ok.
What do those numbers mean in the long run
What do those numbers mean in the long run
Posted on 7/21/14 at 11:37 am to Sigma
I'm a recent grad with no employee 401k or retirement set up. Thinking of doing the Vanguard target date and from reading this thread it seems as if I should:
1) open a Roth IRA
2) max fund it with Vanguard 2050 or a similar target date fund
Or am I misunderstanding all of this?
1) open a Roth IRA
2) max fund it with Vanguard 2050 or a similar target date fund
Or am I misunderstanding all of this?
Posted on 7/21/14 at 11:37 am to Sigma
quote:
VFIFX has an ER of 0.18%. Moral: just let them do it!
That's only if you have no admiral shares though. If you do, it's cheaper to DIY. Depends on what kind of a fee you're willing to pay to avoid manual rebalancing. I think at some OT Baller level of assets it becomes worth the money to take control yourself.
Posted on 7/21/14 at 11:45 am to Cold Cous Cous
quote:
That's only if you have no admiral shares though. If you do, it's cheaper to DIY.
Unless I misunderstood his post, the point of his calculations was to see how much it would cost to recreate the TD funds using admiral shares.
Posted on 7/21/14 at 11:46 am to Sigma
I should have been more clear. The "total investor fee" line is if you recreate the fund with all investor shares. Each line below that changes one fund to admiral shares. The bottom line is if you have all funds set to admiral.
Posted on 7/21/14 at 11:56 am to Joshjrn
quote:
I should have been more clear. The "total investor fee" line is if you recreate the fund with all investor shares. Each line below that changes one fund to admiral shares. The bottom line is if you have all funds set to admiral.
gotcha.
Moral: Sigma is willing to pay the premium for Vanguard to handle it
Plus, if you're like me, and contributing $211 every 2 weeks, the $100 minimum purchase makes DIY impossible, unless I'm not contributing equally to each individual fund every time.
This post was edited on 7/21/14 at 11:58 am
Posted on 7/21/14 at 11:58 am to Sigma
So is my best option just open Roth IRA and max fund a target date fund through that?
Posted on 7/21/14 at 12:00 pm to Sigma
I do $115 every week, so it's less of an option for me. I suppose I could set each week to buy one of the four funds, but that's a lot of market swing exposure.
At the end of the day, information is never a bad thing
At the end of the day, information is never a bad thing
Posted on 7/21/14 at 12:01 pm to ArchieWho22
If you have to ask, the answer is yes 
Posted on 7/21/14 at 12:01 pm to ArchieWho22
quote:
So is my best option just open Roth IRA and max fund a target date fund through that?
It's what I do.
Posted on 7/21/14 at 12:05 pm to Joshjrn
quote:
At the end of the day, information is never a bad thing
Agreed. This reminds me, I'm sure you've been over there, but the level of slice and dice calculations and keeping up with precise AA over at bogleheads truly boggles the mind (pun intended, I think
)Posted on 7/21/14 at 12:05 pm to Sigma
The white whale of cutting my fees by more than half will call to me, so we'll see where I end up over the years
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