TDF
Templeton Dragon Closed Fund
Mentions (24Hr)
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Reddit Posts
Is the expense difference between these two funds significant enough to steer the decision?
Target Date Funds (TDF) in Taxable Account for Money Needed in 4-5 Years?
Anything wrong with investing into TDF for both 401k and IRAs?
How to diversify between small cap, mid cap, large cap and international
should I dedicate all my investment accounts towards a TDF or dedicate one to a TDF and the other to funds?
How can you protect your 401k & IRAs from inflation/recession if you have TDF?
Target Date Fund (TDF) Okay for 401k, Traditional IRA & Roth IRA?
convert target date fund to my custom build fund in Roth IRA
Target Date Fund (TDF) for Traditional IRA and Roth IRA a good investment?
TDF or Index Fund for Traditional IRA and Roth IRA?
Is a Target Date Fund (TDF) okay for Traditional IRA and/or Roth IRA?
Having TDF for 401k during downturn/recession?
Can somebody explain why a target-date retirement fund is a good idea? Seems terrible to me
2065 Schwab TDF or VTI? 23 y/o Planning to retire at 62 (2061)
All About Asset Allocation and Protecting Your Wealth book summary by Richard Ferri
Is it okay to invest in similar Target Date Funds with different brokers?
How much of your portfolio is individuals stocks vs ETFs?
Should I move the money in my IRA out of Scwabs TDF and into the S&P?
Mentions
Yeah, just put it all in the 2065 TDF. Also, how much you save is really dependent on you short and long term goals. In your current situation you should probably be saving like 90% of your income. Life will get much more expensive quickly when you move into your own place. If you can set aside 30k or whatever now, that'll be a good start on a down payment that would take several years once you're also paying rent and bills.
Ridiculously easy in your position. Max the 401k and IRA every year. Both Roth. Zero reason for 3 target date funds. Zero reason for TDF plus other funds. 100% belongs in a target date INDEX fund, or just the total market index if you can ignore it for 50 years.
The international and small cap funds are redundant since the TDF already gives you exposure to the total market, so investing in those also means you have more exposure than market weight specifically in those two areas. It doesn't make sense to use multiple TDF investments. The differences between the different years are negligible this far out from the date. Choosing one other than the year range you expect to want to start drawing on it in retirement is kind of counterproductive. You're not locking in the decision anyway since it's in retirement accounts and you can buy/sell with no penalties or tax implications. Unless and until you have a thorough understanding of investing you should stay away from individual stocks, at least unless you are treating that money as disposable and not long term savings. The biggest thing is building the habit of living within your means at your young age. Treat retirement contributions like a bill, they're not optional. Any spending money you have left at the end of the month comes after the contributions to your savings goals, and that's not limited to retirement, but any foreseeable major purchase.
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Yes, _if_ holding onto SPY was what you'd do through retirement. However, [sequence of returns risk](https://www.schwab.com/learn/story/timing-matters-understanding-sequence-returns-risk) exists and is a serious threat to retirement. A well-reasoned investment plan would in my mind address that through increased diversification out of stocks, and so that is the plan we'd be comparing a TDF against.
I have Empower and the same lineup of available funds. I just recently relieved how bond heavy my TDF is. I’m currently moving it over to this same funds you listed . If you’re trying to match VTI, then the percentages of V500 and VEXT are 85% / 15% to match. Which for your 75% allocation would be closer to 64% / 11% of the total. Unless you’re purposely weighting VExt more.
If you have to ask if you should do a target-date fund, you should probably do a target-date fund. Most of the arguments against TDFs have been debunked: underperformance (US and international take decade-long turns outperforming each other), high fees (they’ve never been cheaper), and too much allocated to bonds (can always choose a TDF with a farther date).
Underperform compared to what? Most of what folks point to is looking at the globally diversified portfolio versus only US. US has done really well the last 15 years, but looking at longer timescales we see it doesn't retain that advantage. The risk profiles of a single country versus all countries are not the same as well. The other thing is bonds, but a TDF won't enter appreciable numbers of those until close to retirement. 4% APY is way lower than TDFs will have performed unless you're looking at the average well through retirement. At that point much of it is going to be mostly bonds, and so the risk profile is drastically different than someone who is 100% SPY. Most people would not advocate for that sort of portfolio in retirement though.
There are a lot of different things going on here, without any specific question that I can see. So I'm going to just comment on things. > Wife and I invest $36k a year between our two retirement accounts (work) and 2 Roth IRA’s (max). My TSP and IRA is essentially 100% S&P 500 bc I’m in my low 20s. I would diversify that to avoid single country risk, personally. > Wife is late 20s and is a mix between S&P 500 and a target fund set for 2055. (default). That's going to bring her overweight to US large cap, since the TDF is assuming it is the only investment. > Our IRA’s are FXIAX 99% and 1% FZROX And even more US bias here. > Somehow she is up 14% on the year in her 403b, but didn’t know if target funds are the move? The expense ratios are somewhat high IMO. Six months of performance is useless data for longterm investing. You care about how these asset classes have performed for _decades_. Or if you're not going to build your own portfolio, just stop looking at performance of this account at all. How high is the expense ratio? How high are the alternatives? How long do you expect she'll stay at this employer? Sometimes it doesn't matter that much because it'll be only a few years and then you roll it over into a better plan. > Could invest more but we also want to live our lives lol. Just curious on what else I could be doing? I would suggest picking up a copy or two of the book Money for Couples and working through it together. It's not going to be quick; it is going to be work. But it will help you figure out direction, together. > HSA could be useful but I don’t pay for healthcare at all and should be covered for life (along with wife). Even if this is true, an HSA will act like a traditional IRA if you wait to withdraw until 65. > We have around $100k saved up and will continue to save here and there, as we do want to buy a house. Good. > No kids, no real plans for them either, still young tho. I would recommend that the two of you decide whether or not you want kids, regardless of _when_ that would happen. In fact, I recommend that before getting married because it's such a big important question, but we can only change the future. > Only debt is my wife’s car, $32k left. Depending on the rate of that, you may want to prioritize paying it off before doing some of your retirement savings: https://www.reddit.com/r/personalfinance/wiki/commontopics/ > May assume more debt, as I am eyeing a new Prius for longevity. I would recommend instead creating a "sinking fund". The way this works is you open a new bank account (I do this at our credit union because it takes only a few minutes), name it "prius fund", set up the automatic transfers into it as if you're paying for the car, and then once you have the cash, buy it. Then you don't pay any interest and don't get yourself trapped into more debt. > EDIT: I have a taxable brokerage account with $1k in it, but I’m not even sure why. It’s mostly ITOT for diversity and for tax benefits (I heard?). Decide if this money is part of retirement money, or house, or car, or school, or whatever, and then act on it accordingly.
TDF contains international exposure which has over performed. It doesn't always, but that's why many of us replicate the world market for diversity.
3k away from 7 figures in my IRA I took over from the previous TDF it was in. Over 170k up in that one. Just over 7 figures in the taxable account over 80k up on that one.
Your dad needs a plan. 401ks are governed under ERISA. The plan administrator for his company’s 401k should have had X number of funds that he and the other employees can choose from (typical TDF (target date funds like vanguard 2030, meaning by 2030 the fund managers expect the fund holders to start liquidating part to use as that’s the target retirement year). It’s rare but MS (Morgan Stanley) may also offer advisors to manage for a % fee. What is important now is: - what is his age - what is his current cash flow (income (wages, social security, pension, etc.) vs expenses (mortgage, rent, utilities, food, etc.) - assets? How is it allocated? What funds? - liabilities? Debt? - what does he have saved besides 401k? - is it him and a partner or just him? - any other large expenses or considerations in retirement we need to know? If your dad doesn’t know those off top of his head and if he has no desire to learn, he may need to hire an advisor. But I’d also be cautious of that, because fees can add up fast over time and there are more sales advisors than advisor advisors out there.
I'm not sure what "Static" means in this case. Someone mentioned moving my TDF up to a further future date but said even then it was more conservative than they liked . I just wonder if I move to something with less bonds and more stocks, do I have enough time to make up if the market does a big downturn.
I would not say TDFs put people in too conservative of portfolios when they're close to retirement, no. They're designed to avoid [sequence of returns risk](https://www.schwab.com/learn/story/timing-matters-understanding-sequence-returns-risk), which is what you saw with your dad. In your case, it sounds like you _need_ the risk. Here's the rough way I'd think about it: you can choose between: * 100% chance of not retiring due to not saving enough, or * 50% chance of not retiring due to the market crashing Whatever the number for the second one is, it's better than 0, yes? The easiest move is probably to just switch to a later date TDF. You can also switch to a more static allocation if you want; I would do that via [a managed fund](https://www.schwab.com/mutual-funds/types/asset-allocation-mutual-funds) (https://www.ishares.com/us/literature/product-brief/ishares-core-esg-allocation-brief.pdf, or https://www.schwab.com/mutual-funds/invest-in-a-portfolio-solution) for simplicity's sake.
TDFs are designed to be the entirety of your portfolio. If you hold a TDF in one account, and VTI in the other, then you're overweighting US stocks (as compared to what the fund manager believes to be correct). VT would be closer, but doesn't hold bonds or whatever else your TDF has. That being said, if you aren't doing tax optimization or trying to get everything exactly balanced, VT or VTI+VXUS would be pretty fine in the taxable account. Btw: no 401k available? Are you eligible for an HSA?
You can also include BND (Vanguard's bond ETF) if you want something that will mirror a target date fund. VTI, VXUS, and BND are a common "three fund portfolio" that's recommended over in r/Bogleheads People choose different ratios depending on their age and risk tolerance, and then increase BND at the expense of the others as they get closer to their anticipated retirement age. That way they can mirror a TDF without paying the expense ratio of a managed fund.
I'd suggest choosing something like VT. It has very high volume and contains the global equity market at cap weight. It's like the TDF minus bonds. At 16, she has a big runway. Fixed income assets are probably better off in a pre-tax account later on her investing journey anyway.
I keep 9-12 months worth of expenses in cash as an emergency fund. If you’re asking percentage of overall portfolio? I’ve never even looked at it that way. I don’t think of my cash as anything other than the funds that would keep me alive if I lost my job or insurance or if I need a new roof or something. It’s about 8% of what my retirement portfolio is, though. At age 41 my retirement portfolio is 75% ~ stocks (mostly broad market index funds and a TDF) and 25% ~ physical real estate (residential rental property). I plan to retire around age 65, so when I’m about age 50 (15 years from retirement) I’ll shift from growth/accumulation mode to preservation mode and I’ll start aggressively adding things like BND/SGOV/maybe some cash to my retirement portfolio, but until then, I just keep buying VTI/VXUS 80/20 every two weeks automatically out of my paycheck in my taxable account and the TDF in my 401(k) and HSA.
If you really think this then you really have no business picking individual stocks. Pick VT or a TDF. Let the professionals do their thing.
> Nearly half of the fund is just a collection of other ETFs. this type of thing is not necessarily a problem. there are "funds of funds" where a given fund has sub-holdings of other funds. the typical TDF might hold an S&P 500 fund + US small cap fund + international fund + bonds, and re-balance between those 4 funds as needed. Or look at something like GAA from Cambria Funds and it's entirely made up of other ETFs. However, FFOX looks weird IMO. If it's based on mega-trends they believe are boosting small and medium size companies, I can't see any reason to hold 0.16% in EFA, which is a developed-markets large company index. It holds 0.19% in VTI (total US market, heavy on mega-large companies), and also holds 0.01% in IHE the iShares U.S. Pharmaceuticals ETF, which has 97% overlap with VTI. In contrast, a TDF or GAA have reasonable fees and a much clearer investing thesis to justify their decisions. the fact that it's brand-spanking new is also an issue to me. I'm not necessarily opposed to active management, but anything brand-new is cause for suspicion and those fees are very high. You can get decent active management from Vanguard, Fidelity, Capital Group, Dodge & Cox, etc for ~.5% or under.
"Comparison is the thief of joy" People lie and run their credit to the moon to appear they are loaded. You are doin great. Invest 20% or more of ur salary in index funds or a TDF to keep it simple. You are doing great.
What do you think? My wife and I are so late to the investing game. I need to make up some ground.... Apologies for the length of this.... I'm struggling every day trying to decide what to do and it is exhausting! I don't have a lot, so i cant afford to pay for management. Maybe a fee only deal to get advice? That's if I could find someone I trust.... No luck yet. We met with a CFP through my Credit union. When we didnt show interest in an annuity he was pushing, he dropped us like a hot potato. One of my thoughts is to draw SS early (because of the uncertainty of its longevity) and start a brokerage account (I am thinking of opening a brokerage account right away, anyway), maybe with a TDF? It would be earmarked for end of life issues for the most part, so estimating a minimum horizon of 15 to 20 yrs., which would have my wife 82 to 87 yrs of age and me at 76 to 81. So, would I be better off to wait until FRA and draw, or draw early and invest it? I know there would be risk investing, but i would probably want it to be bond heavy? If I draw SS early: $1,650, or FRA: $2,400 Would I have a similar outcome drawing early and investing as I would waiting for FRA to draw? I know I'm cash heavy but i have been taking out 15 mo. CDs that have a one-time lump sum addition allowance. So upon maturity I have another one waiting and dump the matured one into it, for the remainder of its life. Been doing this since covid. Started out at 5.12%. Unmatured CD's now at 4.91, 4.85, 4.45. I have several waiting that will carry me into June of 2026. The rates have dropped though. I have 2 at 3.87% and 1 at 3.61%, which is the current rate on a 15 mo. cd. I will probably open 1 more before the rate drops again. This will get me to Sept. 2026. Then what, as rate will be terrible most likely? Based on the below info, what would you do? Me: 61.5 yrs young. (5.5 yrs from FRA) Wife: 67 (drawing full SS) Monthly income: $7,950 net It includes: 2 Pensions: $3,006 n (@ 12% tax bracket). SS (wife): $2,152 n Part time work (me): $2,793 n (plan to work to 64 yrs of age, so 2.5 more yrs). Debt: $550 mortgage (included in expenses). Equity: $200k No other debt. Expenses avg: $ 5,800/mo. Investments: $145k (401K 457B, & 2 small Roth IRA's). Savings: $345k (see belowl Breakedown of Savings/CD ladder: Savings: $15k, CD's:$265k, Emergency fund: $35k, savings: $30k (earmarked for a vehicle) I just started maxing out one of the small Roth IRA's. I now understand i should have been doing this all along. I screwed that up. Any additional direction/thoughts are immensely appreciated! Thank you.
A friend taught me about IRAs and swing trading at the same time, so I combined those for about a year. Got out with roughly a 20% APY thankfully before I lost a lot of money. Went a decade-ish just plugging as much as I could automatically into 401(k)s and IRAs (until I hit income limits, and couldn't be bothered to do a backdoor), fully invested in target date funds. Then last year while taking a sabbatical, I spent some time doing the things we'd put off doing forever, which included tracking down all my old 401(k)s. This in turn triggered an investing [special interest](https://en.wikipedia.org/wiki/Special_interest_%28autism%29?wprov=sfla1), and now here we are after consuming a shitton of Bogleheads threads. I point people towards http://efficientfrontier.com/ef/0adhoc/ifyoucan.pdf , or The Simple Path to Wealth. And https://www.kitces.com/blog/dont-save-10-of-income-spend-just-50-of-every-raise-and-systematically-save-more-tomorrow/ if they're going into a high-paying career. Investing is a solved problem, and we keep making it easier to do the right thing. The hard part of investing largely is not letting yourself try to be smarter than everyone else, and for most folks the best thing to do is fully automate a TDF and then put their efforts on making more money and spending less.
Admittedly, I was only considering qqqm bc my Roth IRA holds something similar in and has done well, but Ive only recently considered scv and am still learning. Her 401k is a TDF. And doing so incase something happens to you makes a lot of sense. I believe Paul Merriman now suggests a 2-fund portfolio of a TDF with AVUV, have you considered something like this for your wife? That was my 2nd consideration for simplicity sake and just hold a 15-20% allocation to AVUV. She’s started late on a Roth IRA at 33 and wants me to manage it so I’m not set on a strategy yet. I appreciate your suggestions.
In order to not try to make sense of this kind of chaos, investing is simply part of my recording budget. I invest $x out of every paycheck. It automatically goes out of my paycheck into my retirement accounts and HSA and taxable brokerage and it automatically buys a TDF in my 401(k) and VTWAX in my HSA (which only recently became available, I’m super excited to be able to buy something like this in my HSA). I buy 80/20 VTI/VXUS in my taxable account. Same process with 529s for the kids except there are lump sums from grand parents and the like on birthdays. But it’s always still an immediate buy of the same index funds. That’s it. No picking or timing or trying to figure out charts. The only exception is when RSUs vest. I just sell them asap and immediately buy 80/20 VTI/VXUS. Same concept but vesting schedules aren’t as clean as paycheck schedules. If I were still buying individual stocks (which I used to do and still hold some in my taxable brokerage acct, although I have not bought any in years), I’d do the same thing. If I had $2,000 per month to invest and my stocks were BRK-B and GS and MSFT, for example, I’d auto deposit the $1,000 from each paycheck and buy the shares. Obviously fractional shares could be a problem to match the exact amounts, so in that case I’d leave the excess cash in the brokerage until the next paycheck and round off the dollar amounts to buy the shares as enough cash was available.
If you're in a self-directed account, where you'd be able to buy VOO, then you can buy a good TDF. The best 10% are at or under .08% ER, which is indeed close to VOO's .03%. If this is a 401k, then it all depends on what's in the plan. I've personally always had Vanguard or similarly cheap options; I know a lot of people have the worse ones.
Per Chat GPT: Vanguard's TDF's are about .08% Schwab's Index TDF's are about .08% Black Rock's are about .1% Fidelity's Index TDFs are about .12% A TDF is giving you a broadly diversified portfolio that automatically adjusts risk profile VOO is a single asset class, which granted has performed extremely well over the last 15 years. The difference between a .03% and .08% is $50 a year / $100,000 invested.
VOO's expense ratio is .03%. Most TDF's are more than 10x that number. While you may consider TDF's to be reasonable, I don't. Again, over a long enough period of time, even a little adds up to a lot.
If you're targeting a retirement far in the future, in your early years a target date fund will be highly or entirely focused on equities, so there may not be much of a difference. It's as you approach retirement, TDF funds gradually de-risk to protect from downside risk. You can still tailor your risk/growth profile with target date funds. For example if you plan on retiring in 2040 but want to be more risk tolerant, you could buy into a 2050 date fund. > Obviously, the market could totally tank It's not "could." The market *will* tank. It's a natural part of the business cycle; you will see many recessions in your lifetime. You don't know when the next will be. So it's a question of how that times up with your retirement. For example, when I started my career, I had coworkers in their mid-50's heavily invested in stocks, looking forward to retiring at like 55. It was right around the corner. Then we had the global financial crisis, and practically "I can retire at 55" turned into "I'm going to be working indefinitely, I'll be lucky if I can retire at 65." So as to "which is stronger" it depends what you mean by that. A TDF can "beat the market" if you're close to retirement and we have an economic downturn. Gotta weigh the big picture. When you're retiring, what your expenses are, whether you'll have other passive income, when you take social security, all these things. How much are you going to be dependent on this retirement portfolio and how much do you have to protect it.
Why are you doing a TDF plus US large cap? That will make it much harder to balance the asset allocation of your portfolio.
You mentioned that you were trying to minimize bond exposure, moving the TDF to the latest date will reduce bond exposure. However, the better solution would be to just do 65% USA and 35% international. No bond exposure, just growth focused. Your pension already fills the defensive role of bonds.
Investing in index funds takes time. It isn't going to make you rich over night. It sounds like you're doing it right. Remember, it's a marathon not a sprint. Personally, I don't like having more than 20% of international in an account, so my allocation might look like 70/20/10. Another possible idea might be to switch to a 2070 TDF, if available, because it would contain slightly more stocks than the 2065 fund.
Honestly just this and my 401k that’s only invested into Vanguard TDF 2065. Through nearly 8.5 years of investing, amounted to only about $330k.
Can't answer without telling us how aggressive you want to be. You could do a TDF for 2035/2040, 100% VT with no bonds, or a [3 fund portfolio](https://www.bogleheads.org/wiki/Three-fund_portfolio) with your preferred allocation. Nobody here can answer without more info.
https://www.bogleheads.org/wiki/Target_date_funds Basically a fund provider puts together a set of extremely well-diversified investments that would be about correct for most people of a certain age, and you dump all of your retirement money into that. Over time it adjusts according to your age, so there is zero work on your part. Setting up automatic investments into a TDF and then forgetting you've done so is a great path towards financial success. If you tell us where you're opening your IRA we can find the specific ticker for you.
There is a morningstar article explaining why almost every TDF has lower performance - mostly due to international exposure. I stay away from it after I realized this. It is probably suitable for people who dont want to invest any time into wealth building. Just my 2 cents and not financial advice.
VT or a Target Date Fund. Target Date Fund has the advantage of buying bonds for him as he gets older so all he ever has to do is put more money in it. He never has to know anything, just put money in and he'll be rich. The psychological effect is powerful as the more you mess with your investments the more you're likely to fuck it it. The downside of a TDF is it will be 10% bonds right now and arguably at his age he shouldn't have any bonds. VT is the same thing as a TDF just sans bonds. Since he'll probably want to look at his investment at some point when he gets back it'll be safe in VT for a while and then he can add some bonds later as he gets closer to retirement. The reason it's 10% bonds is again for the psychological effect. The brokerage feels that with a little bit of bonds in there to reduce volatility people are less likely to freak out during a market crash or whatever and get off the program. And with rebalancing effect (which the TDF does for you) you aren't losing that much growth anyway.
Some will say just stick with a TDF. But what chose was 80% TDF and 20% "Value" income fund. The reason I did this was because the value/income funds tend to have less drawdown than the total U.S. market which is still heavily weighted in the large cap stocks. And the value index provides a bit more growth as the TDF glides towards bonds but is a smaller % to minimize dips. So I like the TDF+ value fund approach, but I think it's more beneficial to help smooth out market dips than your choice of adding moar growth. Your TDF + growth fund choice will make your portfolio a bit more volatile because will be very heavy in the top large caps.
Do you have access to a self directed brokerage option? TDF’s are too conservative for me so I switched to a SDB with all ETFs many years ago.
The TDF at least in question is just a fund of funds with re-adjusting allocations for the years of targeted retirement. Then a few years after the target date provided those funds pass a board vote they get rolled into a retirement income fund. To what you said to him on that timeline you should definitely be asking yourself if you feel that’s suitable to be tied to one asset class for so long. But to his point TDF’s aren’t “secret sauce” (maybe in the fact the underlying bond funds of the in question TDF are currently closed to new investors?) but it’s also likely something evaluating your own personal situation with the lens of financial literacy you may be able to do better for yourself. As a set it and forget it investor? I believe everyone should take their investing success into their own hands but also these types funds exist to give that type of sector drawdown people don’t even know is necessary
What is the reason for the change in your portfolio? TDFs are fine. If you want to be more aggressive, just switch to a TDF with a later retirement date, if you want to be more conservative, switch to a TDF with a closer retirement date.
Sure, TDF's exist for a reason. They're a tool in the toolbox. Like any tool, it's a question of the job and task you're after, and whether that tool is appropriate. If you want a "set it and forget it" approach where your investments are automatically adjusted to be more geared more towards growth when you're young, and more defensive closer to retirement, then TDF is great. You can choose a TDF that is earlier or later than your actual target retirement date, if you want to adjust the general risk level. If you want to be more in control of your own investment mix, then by all means you can do that too. Comes with the responsibility of rebalancing as appropriate as time goes on.
> I will also say that I’ve been told from a professional to put money into a taxable account due to my parents being relatively well off and any inheritance that will happen someday. I don’t fully understand that but it somewhat makes sense. Depends on what any sort of inheritance is. And it also doesn't mean that you have to put money in a taxable account *now*, beforehand. In the event you were to inherit a bunch of cash, then yes a taxable account has no limit to what you can put in and invest. Could put in $100k in one shot, no big deal. Whereas a 401k, IRA, HSA, etc. all have limits to what and how you can contribute. If you were to inherit someone's investment portfolio, well, it just becomes yours. I'll say it's not really clear what you're aiming for in each of these accounts, like why the mix of TDF years. Or why TDF *and* a mix of other indices, as opposed to one or the other.
VT and VTSAX are about equivalent to a TDF without bonds. VT is the ETF fund that you can buy at any broker. VTSAX is the mutual fund version of the same fund that you can only buy at Vanguard. The funds are a combination of total US stock market and total ex-US stock market in proportion to the world market capitalization. That is currently about 63% US, 37% ex-US. It automatically rebalances as the world market cap changes. If you want bonds put them in a tax advantaged account or just accept the minor tax drag of a TDF in a taxable account. Getting money invested is more important than agonizing about TDF tax drag and not investing.
TDFs with bonds are not optimum in taxable accounts because there will be increased taxable dividends from the bonds that are taxed yearly. What you want are stocks/stock index funds that increase in share value that are held for over a year so that the cap gain is taxed at the lower long term cap gain tax rate. It's no big deal if someone wants a TDF in a taxable account for simplicity. It's not that big of a difference.
That would be a reason, but OP has a Vanguard TDF so it's expense ratio is going to be closer to .15%, which means it isn't a reason _for them_ (and this is personalized advice). Incidentally, your plan's option is [in the 10th worst percentile](https://www.callan.com/target-date-index/) of all target date funds' expense ratios. You might try [getting it changed](https://www.bogleheads.org/wiki/How_to_campaign_for_a_better_401(k\)_plan) if you're motivated that direction.
The TDF in my 401k has an expense ratio of .76 but the s&p is .03. I get the point of a TDF but the difference in fees is *considerable* over several decades.
Maxing your 401k annually and investing in a low cost, globally diversified TDF? Yup you're doing just fine
Yeah, that’s what I did. I was and told and did notice TDF can start gliding into bonds/treasuries pretty fast. Was originally 2050 and bumped it to 2065. Thanks for the reassurance.
No - I'm not referring to a TDF (target date fund). A target maturity bond fund is a fund that acts like a bond. It holds a basket of bonds that tracks to a maturity date based on credit quality. So - when the target maturity date is reached - the fund will liquidate which simulates a bond maturing. The funds commonly mature in Dec of the maturity year. Afaik - there are only 3 investment managers offering these products at the moment - SSgA's MyIncome funds, Blackrock iBonds, and Invesco Bulletshares. If you have a fixed timeframe or you want to control your credit quality - or build a ladder - they can be useful products to use. [https://www.ishares.com/us/strategies/bond-etfs/build-better-bond-ladders](https://www.ishares.com/us/strategies/bond-etfs/build-better-bond-ladders) [https://www.invesco.com/us/en/solutions/invesco-etfs/bulletshares-fixed-income-etfs.html](https://www.invesco.com/us/en/solutions/invesco-etfs/bulletshares-fixed-income-etfs.html) [https://www.ssga.com/us/en/individual/capabilities/fixed-income/bond-ladder-etfs](https://www.ssga.com/us/en/individual/capabilities/fixed-income/bond-ladder-etfs)
>people shit on them mostly because they want to be invested solely in US equities. also recency bias. the typical TDF has lagged the S&P 500 the last 5-10 years. but in other periods TDFs might perform much better than the S&P 500. circa 2000 to 2012 the S&P 500 was practically flat while international and US small cap performed much better.
>I know most would opt out from investing into a TDF, but if I were to get out, only best investment is Fidelity S&P 500 (FXAIX) with expense ratio of 0.015%. Maybe add FSMDX (mid-cap; 0.025%) and TSCSX (small-cap; 0.78%)? FSPSX (International; 0.035%)? why would you get out of the TDF and then re-assemble a TDF?
VLXVX "and chill" for 40 years. Yeah, its a target date fund (TDF). But a low cost one and is about what a financial advisor would do. [https://www.morningstar.com/funds/xnas/vlxvx/quote](https://www.morningstar.com/funds/xnas/vlxvx/quote) For more on TDFs: [https://www.bogleheads.org/wiki/Target\_date\_funds](https://www.bogleheads.org/wiki/Target_date_funds) [https://www.bogleheads.org/wiki/Vanguard\_target\_retirement\_funds](https://www.bogleheads.org/wiki/Vanguard_target_retirement_funds) I also would not place much weight on investment advice from Reddit. Alternately, a lifestyle fund that matches your risk tolerance and time horizon: [https://investor.vanguard.com/investment-products/mutual-funds/life-strategy-funds](https://investor.vanguard.com/investment-products/mutual-funds/life-strategy-funds)
I pretty much follow what TDF's do for a blend. I plan on retiring in 5 years, so I'm basically 60/40 at this point of my life. It's conservative but I feel like the market is at full value. If things head south in a big way, I'll probably start to be a little more aggressive.
It depends on your risk tolerance mostly. * If you can stand there during the next 2008 and watch your 401k drop 50% and not recover for 5+ years, then congratulations you have a high risk tolerance and can probably be 100% stocks for a good while. * If you cannot stomach that scenario, then you have a "normal" to low risk tolerance, and should probably have some bonds by your 30s and certainly your 40s. You can look at how the professionals do it: Target date funds start a slow ["glide path" into bonds usually around age 40](https://institutional.vanguard.com/investment/solutions/target-date-funds.html?cmpgn=IIG:XX:TDF:TDF24:SRCH:PS:XX:TL:GG:Unknown:Exact:TDF:20211220:BD:NONE:NONE:KW:GlidePath&gclsrc=aw.ds&gad_source=1&gad_campaignid=15615614071&gbraid=0AAAAADyd_RV_6uYS2dPm3m8G-hkCGcVDj&gclid=CjwKCAjwi-DBBhA5EiwAXOHsGfuVqEE0ilPj23FS3riwq1fK_XPmqwXOG0vQVAZvCTRzKrGqHlNvHRoCtJcQAvD_BwE). Keep in mind they start at 10% bonds already. You don't have to follow this exactly, but it may help as a benchmark.
Yea I read that also.. A thought is that I had 2 TDF's so perhaps there are multiples per person. Additionally account balances should be factored in. Even so not anywhere near the tax paid. Last check SEC does not have any recent updates on the dispersal activity.
It's not about the money being moved around, it's the actual funds that it's invested in. The vast majority of target date funds remove the ability to pick something stupid that causes you to only get half of the expected market returns. Your question was when you're going to hit $100k. The answer, currently, is probably in a couple of months. If you had been 100% in mediocre TDF it would have been 2 years ago.
Yeah, thatʻs kinda wild it would be that high. You sure you donʻt need to carry the decimal?? Our companyʻs TDF offerings have an ER of 0.0375%, and the offering we have with the highest ER is an International Small-Cap at 0.85%.
VOO and chill is inferior to TDF and chill.
Rather see people all sp500, TDF are too conservative. I’ve worked in the industry a long time… never have I seen someone start drawing on the year of the “target date”, more like 10 years after that target date. Basically missing an entire double of wealth. If that was 500k on retirement date, it should have been a million when they actually started drawing from it, of course it wasn’t, because it was set to conservative. No thanks. I understand the practice of VT, I understand the brainy reasons for international, also no thanks. The rest of the world is not held to standard the USA is, how do I know? I’m foreign. They will chop up the little guy in other countries without batting an eyelash. This country will too, but I trust law suits more here. End of the day I ain’t giving nobody any real advice, just basically invest auto. They want to use it great, if not, no worries either…
Thanks. I might go with a later TDF. Any reason to DCA into that or go lump sum?
Simplest method is to just do something similar as your previous TDF, but increase your allocation with more equities. If you want more risk - you can also increase the growth sleeve of your equity allocation. Equities are easier since there are lots of funds that you can choose - from value US, to US large-cap growth, and various ex-US funds. For your fixed income allocation - I'm not a fan of constant duration funds so you could consider target maturity funds instead. Only downside of target maturity funds is that longest maturity is 10 years but that may suit you. If you want to have shorter duration - you can always ladder the fixed income allocation. Since you want more risk-on - you can increase the high-yield sleeve of the fixed income allocation. It all really just depends on your financial situation, knowledge of investing, risk tolerance, how active you want to manage your portfolio, etc. etc. If any terminology that I said doesn't make sense, just ask.
I would be okay with more risk than my 2040 TDF
Maybe the point is if you market a product to the wannabe Lance Armstrong's only instead of a wider market that might not be trying out for the TDF you will not sell a lot of the product.
Where I would generally advise you to put the $35k you have in your retirement account is FFIJX, which is Fidelity's index fund target date 2065 fund, because that will do something approximately correct and is very easy. There are many reasonable answers. Even if you abide by boglehead principles, there are a bunch of different ways you could implement it and different equity/bond and US/ex-US ratios. But whatever it is you get to, you should have solid reasoning for why this is how you're choosing to invest. If you do and want feedback, we can certainly talk through them. If you don't, a TDF is a good default.
FWIW they can’t “not elect where to invest it”, if they don’t choose otherwise, there’s a negative election into the plan’s QDIA, which more and more is a TDF nowadays. But you’re right if OP has it in one of the stable funds.
It all depends on your goals and risk tolerance, but assuming you’ve got a decent grasp of both of those things - the best advice you can get is to stick to your plan over a 40 year or whatever horizon and avoid selling and buying based on market timing. It usually ends really poorly. Mirroring the concept of a TDF is usually a great idea. Being 80-10% equities (in highly diversified index funds like VT or VTI, etc) and 0-20% bonds/cash/treasuries usually makes sense in your 20s and 30s and maybe 40s and shifting to a lower equity position as you near retirement. That’s super broad / generic advice but it works really really well.
my retirement is in a TDF that I am not planning to touch, however my trading account is moving to cash because I think we are in for some big losses, and I think they will be big enough that I can catch the rebound before it hits current levels. Even if I lose some on this, its only play money....that said I am not expecting life changing money out of this anyway. It gives me the illusion of doing something as this tsunami is approaching.
Target Date Funds (TDF's), intended to be purchased and held in retirement accounts, keep buying equities every month, because TDF's (before their target date) constantly get cash inflow from monthly contributions people make into their 401k/403b. Currently, the combined value of all TDF's is over 4 TRILLION dollars.
If you're just looking to buy and forget then you may want to consider a target date fund (TDF) like [the ones that Vanguard offers](https://investor.vanguard.com/investment-products/mutual-funds/target-retirement-funds). That way you're guaranteed a diversified portfolio which will gradually invest more conservatively the closer you are to the target date
Agree that the contribution to a Roth IRA is the most important step for someone who is 18. And obviously you're right about TDF's.
If she is uninterested, I would go with VT or a TDF. I was in a similar situation and my partner chose to go with VT.
A lot of people have claimed that TDFs are too conservative for a young investor. I disagree, though it does depend on the fund & the investor. Bonds account for very little of the difference in performance between an all-US-stock portfolio & many TDFs designed for young investors. Bonds have had little impact on the performance of these performance TDFs; it's mostly been the international stocks. Adding international stocks doesn't make a fund more conservative. Historically, US stocks & international stocks have taken turns outperforming each other. US stocks have dominated recently, but that tide could turn at any time. I'm most familiar with Vanguard's TDFs, so I'll use them as an example. I've never invested in one, but they're a great choice for a lot of investors who value convenience & are willing to pay a little bit for it. Vanguard TDFs start out with a 90/10 stock/bond allocation & stick with that for many years before starting to gradually shift more towards bonds twenty-five years before the target date. The difference in performance between a 90/10 portfolio & a 100/0 portfolio is usually pretty small, but the difference in risk is usually much larger. This makes it much easier for an investor to hold onto the TDF through a bear market instead of selling in a panic, a move that would cost much more than the performance difference. For a US-only portfolio, over the last 30+ years, the performance difference has been less than 0.4% CAGR. However, the risk (standard deviation) difference has been about 1.5%. (I expect longer time periods would show similar results.) 22 years into this comparison, the 90/10 portfolio was slightly ahead. Only the longest bull market in US history created much of a gap. Why then, you may ask, have funds like Vanguard Total Stock Market Fund (VTSAX & VTI) beaten Vanguard's TDFs by such a large margin recently? The answer is not bonds; it's international stocks. So, pick an all-US-stock portfolio (total market or S&P 500) over a TDF if you like. But please understand that the TDF is only slightly more conservative & has its own advantages. Of course, past performance is not an indicator of future results. https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=2&startYear=1972&firstMonth=1&endYear=2023&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&asset1=TotalStockMarket&allocation1_1=100&allocation1_2=90&allocation1_3=54&asset2=TotalBond&allocation2_2=10&allocation2_3=10&asset3=IntlStockMarket&allocation3_3=36&asset4=GlobalBond I didn't include international bonds in my analysis because their impact on the portfolio is small. Also, the comparison period would have been much shorter because some years of data are not available for international bonds.
Never take the penalty unless it's an emergency. Typically you can shuffle things around in your portfolio. Example lucky change i made, penalty free: February 2020, change from a target date fund to 100% s&p 500 in my 401k. (I'm younger) Penalty free, I just changed my holdings from Fidelitys TDF to fidelities version of the 500 index. Still the same, am I going to change it again? No, probably not. But I have slightly more diversification in hsa, Roth and brokerage. Not much, but some...
Yeah, less than 10% bonds and also 37% international. TDFs are pretty much the entire worldwide market, VTI is the DOMESTIC market. The US has greatly outperformed internationals in the last 5 years, so yes, it does explain why VTI has almost doubled the returns of the TDF.
Losing less is just as good as gaining more, but your aim shouldn't be to "beat the market" especially ov a short arbitrary time frame. Your goal should be to have the highest likelihood of ending up with enough and that's why you're not 100% invested in equities when you're a couple years from starting to drawdown. It's not useful to compare the return of your portfolio to the stock market, a better guide post would be like a 2030 TDF, or you can break out the return of just the equities portion of your portfolio and compare that to your favorite index as a stand in for "the market"
The 401(k) is a taxed advantaged account with a better continuous match. Do that first unless the fund options are horrendously expensive. No brainer. PS - I don’t think there is any 401(k) plan out there that doesn’t let you select the investments. It’s just that there are probably only 10-30 options. Often a TDF is the best and cheapest option. That’s what I do with my 401(k). They probably also have some options structured with a dividend focus or a growth focus or All bonds or S&P 500 or total market or small cap or mid cap or REITs or ex US, etc.
>What are the pros and cons of each? Hands off vs hands on is the only major consideration if this is a tax advantaged account. Internally, the TDF (target date fund) is just the 3/4 fund concept managed for you (I think closer to/in retirement they add a little bit of a 5th funds: TIPS). >I imagine I'd need to rebalance the 3 or 4 fund portfolio as I get nearer to retirement. Would that possibly trigger fees or taxes? In taxable accounts, yes, selling A to buy B is a taxable event. In tax advantaged, no. >Would the TRF rebalance by itself if it's a self-directed account? TDFs will rebalance as needed to stay at their target ratio for where they are in the glide path. I'd imagine they'd first rely on new money coming in to balance it, but at some points selling could be required, in which case there would be a capital gains distribution (a taxable event if the TDF is held in a taxable account).
Makes zero difference, they're nearly the same. BRK kinda feels like a TDF VOO.
I have mine in a Vanguard 2055 TDF. It's been fine, I do not feel like I need to worry about it. I can have more aggressive investments with either my IRA or individual brokerage account.
I would leave the Target date fund alone. Now, if you wanted to put new contributions to the Vanguard Total Stock Market Index fund, then that might be an idea, but I wouldn't sell any of your TDF to buy it.
You’re just getting started, TDF’s inside a retirement account are fine.
It looks aggressive to me I recommend Age - 20 as a percent allocation to bonds for most of us, so that would be 10% for you, but the JH TDF is only 5% bonds Jack Bogle warned that TDFs may over allocate to bonds, advising that investors should treat social security and pension income as a bond allocation (I divide by 4%; for example. $20k in annual income is like $500k in bonds)
Well it depends on a few things, but a TDF is pretty aggressive at your age. It’s 2065 so it’s gonna be heavy equities right now and slowly become heavier in bonds as you near retirement. At 41, my 401(k) is 100% 2055 TDF. $300K ~ My emergency fund is 10.5 months’ expenses in HYSA My HSA is 100% S&P 500 but that’s just because my options in my HSA were limited and it was the best low cost option that I had. $88K ~ My IRA is roughly 80/20 total US market/total ex US. $95K ~ My Roth is roughly 80/20 Total US/Total Ex US $17K ~ My taxable brokerage is roughly 80/20 Total US/Total ex US. Roughly $720K ~ I own a single rental property valued at $460K ~ with 60% ~ equity at a COVID refi rate of 2.2%. I’ve also got a total world fund for my kids’ 529s. They’re 6 and 4. I don’t think the above allocation is GENERALLY (for most people) ideal in terms of what types of accounts I have my money in. But specific details matter and there are reasons that I have so much in the taxable account relative to the others. I also have way more in physical real estate as a percentage of my retirement portfolio than I’d recommend. I accidentally have that property - it’s my starter home and I was able to refi it during COVID at such a low rate that I felt like I needed to keep it as a retirement asset. What’s my point? Any advice anyone on Reddit gives is gonna be generic. If you agree with the principles, you’ll need to apply them to the specifics of your situation. Generally, though, for the 401(k), go with the most diversified and cheapest option available. A lot of funds in 401(k)s have high fees. Avoid that, where possible. TDFs are often the cheapest option available. That low expense ratio is why I bought the TDF instead of trying to replicate what I have in all of my other accounts, which is 80/20 VTI+VXUS. Once I near retirement I’m gonna eventually be adding treasuries/bonds/cash aggressively so that when I retire I’m less than 50% equities. But until I get within 10-15 years of retirement I’m pretty much all equities outside of the TDF and the rental property. Which, again, why do I have the rental property? It was so cheap at 2.2% and I already had a bunch of equity because I’d lived in it for multiple years. I wouldn’t even consider just buying a rental property today at 6 or 7% or whatever when I can but index funds at a cost of a tiny fraction of one percent.
I was hoping you’d say that! 10 year AAR as of 3/31/25: - [vanguard federal money market fund](https://investor.vanguard.com/investment-products/mutual-funds/profile/vmfxx): 1.83% - [vanguard target retirement income](https://investor.vanguard.com/investment-products/mutual-funds/profile/vtinx) (their most conservative TDF at 30/70): 4.15% - [vanguard target retirement 2065](https://investor.vanguard.com/investment-products/mutual-funds/profile/vttsx): 8.38%
Your TDF is ~90% equities so that's by no means conservative. Honestly you really don't need to touch it.
What’s your target date fund’s expense ratio? If you don’t understand investing, it’s best to stick with the TDF unless the exp ratio is high.
Not 0%, but a low allocation. The Vanguard 2065 TDF has about 10% in bonds.
> those tend to be awful, like you could almost do better with a money market fund vs most target date ones (not all). Sorry what? That’s not remotely accurate > And I'd wager his has 25% in bonds. A 2065 TDF would have 10% tops in bonds. > I've looked at many of them and most all are really terrible. I have seen one or two that looked good, but the others were dreadful. Blanket statements like this really don’t add any value
A target date fund is like a basket of different types of eggs and as you get older/closer to retirement, they will swap out some of the more fragile eggs (equities) towards already developed chicks (bonds) so that you're less likely to have significant gains or losses. Just keep funneling as much money into your TDF and try to automate that practice so that'll be one less thing for you to waste your brain power on.
Totally get that! As I learned more I transitioned out too, but when I had a big windfall of money and didn't know what to do with it, I felt TDF's were super helpful in getting going.
Right. That’s a portfolio for a 45 year old. Vanguard’s 2070 TDF is 10% bonds. And that’s still only 45 years out from now. So someone is 65 years out, what does the pattern suggest? This portfolio is for a 6 month old child. They don’t have to worry about sequence of returns risk or glide paths *just* yet
Why on earth are you suggesting 20% bonds for a 6 month old. 75% VTI, 25% VXUS - bonds are not necessary. By definition this money can’t even be withdrawn for another 20.5 years. If you’re using it for college, you could either buy a TDF or recreate one. If this is just for their own money in the future, then no bonds at all right now
You might as well preach abstinence. A TDF won’t motivate them to plan budget and streamline. A TDF doesn’t stop them from panic selling. I get it. Don’t pay anyone, and you will get what you pay for.
You certainly can learn emotions, but really all this person needs to know is "stick it in a TDF and you're done".
http://efficientfrontier.com/ef/0adhoc/ifyoucan.pdf is good reading for everybody. (You don't have to buy into his specific portfolio, and I think a TDF would be a more reasonable default option these days.) It's one of those things like the game of Go. The rules can be explained in a few minutes, but the practice to become an expert takes a lifetime.
If no one knows then why not keep it simple? Your money and who knows you could be right. For retirement funds I think 99% of people are better off throwing in a TDF then ignore it. By tinkering with all these funds you’re more likely to underperform the market.
> the target funds are really heavy International and bonds ( 35%/10%) respectively even if i choose a slightly more aggressive target date. The allocation always has more international the more aggressive you go. If you want less international, pick a closer date or don’t use the TDF > What are you guys my age selecting? 401k fund selection guide https://www.reddit.com/r/personalfinance/wiki/401k_funds/ You generally always want some international even at your age. And you definitely want some bonds at your age