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Should I change my Roth IRA fund?
Posted on 7/18/18 at 10:16 am
Posted on 7/18/18 at 10:16 am
I have a vanguard target retirement fund for my Roth IRA that I’ve been taking the “set it and forget it” approach.
I have 3 other funds in my 401k that are outperforming my target fund by a good bit. I feel like I’m missing out on some good gains in my IRA. Should I switch from a target fund for now and switch back as I get closer to retirement?
I’m 34 years old fwiw.
I have 3 other funds in my 401k that are outperforming my target fund by a good bit. I feel like I’m missing out on some good gains in my IRA. Should I switch from a target fund for now and switch back as I get closer to retirement?
I’m 34 years old fwiw.
3
Posted on 7/18/18 at 10:19 am to Simon Gruber
Yes. Those are for the lazy and as you see you are paying a price for it. I’m not a big fan of them at anytime.
This post was edited on 7/18/18 at 10:21 am
Posted on 7/18/18 at 10:24 am to Simon Gruber
quote:
I’m 34 years old fwiw.
You should be heavily in equities, with full advantage of DCA, up to your risk tolerance until you're ~5 years from retirement. THEN you need to do a full assessment of your risk profile, potential gains vs losses, and start getting out of equities during that 60 (possibly as short as 36) month period prior to actual retirement, at least IMHO.
You're losing actual gains in that target fund for some sort of mythical stability. You WANT the market to go down - a lot and several times during the next 25 to 30 years. And you want to be buying index funds every paycheck to fully DCA and leverage your retirement savings up with the rising tide.
That's the philosophy. That's the way to look at it, again, IMHO.
Posted on 7/18/18 at 10:29 am to Fat Bastard
I should be able to do this on the vanguard website within my Roth with no penalty or tax implications correct?
Posted on 7/18/18 at 10:33 am to Ace Midnight
I get paid weekly and try to buy 1 or 2 shares of VTI each week. Would you suggest any other index funds?
Posted on 7/18/18 at 10:34 am to Simon Gruber
Our company switched to using Paychex for 401K.
Unfortunately Paychex doesnt really have many options like Vanguard did.
I was told my 2050 target fund was a great option
Unfortunately Paychex doesnt really have many options like Vanguard did.
I was told my 2050 target fund was a great option
Posted on 7/18/18 at 10:38 am to YungFO
quote:
I get paid weekly and try to buy 1 or 2 shares of VTI each week. Would you suggest any other index funds?
At this point, I think you're okay with VTI as a single fund. If you want to diversify with funds, you want a large cap, small cap and international - at a minimum.
But, VTI is a good single fund solution. Much better than a target date fund, IMHO. (Full disclosure, I don't know shite - I cashed out of retirement - twice - something you're not ever, ever supposed to do even once - but I have gone from $0 to $150k in 8 years).
Posted on 7/18/18 at 11:08 am to Fat Bastard
Second that.
The target date funds are about as cookie cutter as you can get. (Not just Vangurd but all of ‘em)
It’s just a fund of vanguard funds. You get the same 4-5 funds regardless of what target date year you pick and they just adjust the % allocations to each fund over time....
i.e.
Vanguard Tgt Retirement 2045: VTIVX
55% VTSMX - Total Stock Mkt Index
35% VGTSX - Total Intl. Stock Mkt Index
7% VBMFX - Total Bond Mkt Index
3% VTIBX - Total Intl. Bond Mkt Index
Vanguard Tgt Retirement 2065: VLXVX
54% VTSMX - Total Stock Mkt Index
36% VGTSX - Total Intl. Stock Mkt Index
7% VBMFX - Total Bond Mkt Index
3% VTIBX - Total Intl. Bond Mkt Index
Good for people that have absolutely no clue what they’re doing and prefer to be ignorant on investing but extremely too cookie cutter for me.
The target date funds are about as cookie cutter as you can get. (Not just Vangurd but all of ‘em)
It’s just a fund of vanguard funds. You get the same 4-5 funds regardless of what target date year you pick and they just adjust the % allocations to each fund over time....
i.e.
Vanguard Tgt Retirement 2045: VTIVX
55% VTSMX - Total Stock Mkt Index
35% VGTSX - Total Intl. Stock Mkt Index
7% VBMFX - Total Bond Mkt Index
3% VTIBX - Total Intl. Bond Mkt Index
Vanguard Tgt Retirement 2065: VLXVX
54% VTSMX - Total Stock Mkt Index
36% VGTSX - Total Intl. Stock Mkt Index
7% VBMFX - Total Bond Mkt Index
3% VTIBX - Total Intl. Bond Mkt Index
Good for people that have absolutely no clue what they’re doing and prefer to be ignorant on investing but extremely too cookie cutter for me.
Posted on 7/18/18 at 11:36 am to Fat Bastard
quote:
Those are for the lazy
... and also for the many people who don't know very much, or maybe have the wrong instincts, etc. etc.
I personally don't have a target fund, but that's because my master's is in the subject and I worked 4 years with a RIA. I know to pay attention to the prospectus so that I can get a sense of which funds are likely to have correlated returns and therefore not really be diversified, for example.
No offense to the OP, but if he's asking questions like this he's likely better off in the long run with a target fund so he won't get himself in trouble.
Posted on 7/18/18 at 11:40 am to foshizzle
I just moved my 401k over to a traditional IRA at Vanguard. I'm 26. What's the most aggressive fund I can get into with ~$14k.
This post was edited on 7/18/18 at 11:41 am
Posted on 7/18/18 at 11:59 am to foshizzle
No offense taken, but even though I don’t deal with the stock market on a day to day basis, I have a grasp on what to look for. I’m not gonna dump my target fund for some penny stocks.
Posted on 7/18/18 at 12:01 pm to LSUShock
I am the OP’s age and a huge fan of index funds especially with Vanguard. Institutional expense rates are about 2 BP for index funds. Like previously stated, I want markets to dip several times in my career for buying opportunities. I contribute the max each year and allowed post tax contribution to the limit. Target funds are expensive and too conservative for my taste. Just my .02
Posted on 7/18/18 at 12:08 pm to hottub
i dont think there is anything wrong with a target date fund?
Posted on 7/18/18 at 12:11 pm to HailToTheChiz
I think the expenses are high relatively speaking especially for someone who is younger
Posted on 7/18/18 at 12:27 pm to hottub
Expensive?!? The Vanguard tgt funds are .15% per year. That’s almost nothing.
There are reasons I don’t like the tgt date retirement funds but expense is not one of them.
There are reasons I don’t like the tgt date retirement funds but expense is not one of them.
Posted on 7/18/18 at 12:36 pm to hottub
I went to exchange funds on the vanguard site and it’s only showing me mutual funds. Are these the only funds available within my Roth?
Posted on 7/18/18 at 12:44 pm to tigerfan337
Relative to index(.02%) they are for someone who is young
Posted on 7/18/18 at 1:09 pm to hottub
Hmmm you may need to check your info.
There are zero Vanguard funds that have a .02% expense ratio.
And there are only two of the admiral share class funds have a .04% expense ratio.
Also, admiral share class = a $10,000 minimum investment, so I wouldn’t think a young investor would be starting in an admiral share class anyways.
Most of the investor share class Vangurd funds have an expense ratio between .12% - .20%
There are a handful of admiral share class funds that are between .06% - .08% and that’s it.
The tgt date retirement funds for Vanguard are not expensive, they are on par with the rest of their funds.... still wouldn’t recommend them though. But they aren’t expensive for young investors or anyone for that matter.
There are zero Vanguard funds that have a .02% expense ratio.
And there are only two of the admiral share class funds have a .04% expense ratio.
Also, admiral share class = a $10,000 minimum investment, so I wouldn’t think a young investor would be starting in an admiral share class anyways.
Most of the investor share class Vangurd funds have an expense ratio between .12% - .20%
There are a handful of admiral share class funds that are between .06% - .08% and that’s it.
The tgt date retirement funds for Vanguard are not expensive, they are on par with the rest of their funds.... still wouldn’t recommend them though. But they aren’t expensive for young investors or anyone for that matter.
This post was edited on 7/18/18 at 1:16 pm
Posted on 7/18/18 at 1:48 pm to tigerfan337
My index fund is at 2 BP. It is an institutional rate, but you are right about most personal are at 4 BP.
Posted on 7/18/18 at 1:53 pm to Fat Bastard
quote:
Those are for the lazy
Give me a break.
OP, target date funds are fine. Both Vanguard and Blackrock TDFs perform consistently well. The funds contained in the Vanguard TDFs are good funds, and unless you're really going to start paying near daily attention to domestic and international market fluctuations, or you really want to study investment strategy, you will be fine keeping your money in them.
Also, Vanguard TDFs are not expensive. Not sure where y'all are getting that idea. They will also likely remain significantly more stable during market fluctuations considering they're professionally managed. The only "bad" thing about Vanguard's TDFs, IMO, is that they do not offer admiral shares. They are also slightly less tax efficient if used in a taxable investment account.
This post was edited on 7/18/18 at 1:58 pm
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