TDF
Templeton Dragon Closed Fund
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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
Typically I think looking at things regularly is a good way to prime yourself for behavioral mistakes. For most people, the right answer is to invest in a TDF and check in maybe once a decade to see where they're at. The next step is setting your own asset allocation and doing a yearly rebalance. By the time we get to people needing to monitor frequently we're at a very small slice of the population. But if you're there, then you'd know the things you need to care about, right?
That wasn’t my only intention, I didn’t want bonds or cash at my age. For whatever reason vanguard’s TDF’s are not available to me.
*I wanted out of the TDF, exp ratio was .64% I’m around .06% now.* If your sole reason to avoid a TDF was expense ratio and you have access to Vanguard mutual funds, then you can access Vanguard's mutual fund TDFs for a expense ratio of 0.08%.
Way too much overlap and no reason to have a TDF unless you're 100% in it. With your amount stick to 1 fund, either VTI or VOO would be my pick. Also VOOV isn't an S&P 500 fund, it's a S&P 500 Value fund. At your age, look for growth, not value and dividends.
Ah, I see. Afaik, you should be fine rolling the Traditional 401k to a Traditional IRA. If the target date fund is not available at your IRA provider, you may want to see if there is another holding that is available otherwise there will be some selling of the TDF before it gets transferred that you will need to be aware of and what it will entail.
>I only say this because I had a target date fund from my first job and when I left I had about 10k of value in that account. Years and years later it was still at 10k and for some reason it didn't click for a while that the money in that account should be going up, not staying flat. I'm not sure what fund you had or when this was, but no TDF should've performed like this in recent memory. Whatever was happening here is not indicative of TDFs, and you should reconsider your anecdotal experience.
When I was 18-30 years old I tried to look at the fundamentals and understand if it was a company that I could trust to continually grow earnings over the next 40 years or not ~. But I walls traded way too much. I tried to have a weird balance between value and growth. By around age 30 I’d shifted to passive index investing. I buy a TDF in my 401(k) because it’s the best option 80/20 VTI/VXUS in every other account (and an equivalent in mutual funds in my HSA). I basically switched to a Bogle style over the course of a number of years because I realized that it’s quite unlikely that any individual person can beat the broader market. I’ll start adding bonds when I get to about 15 years out from retirement but I’ll keep buying VTI/VXUS every paycheck until I retire. I rebalance in Q1 every year but other than that I haven’t sold anything in years and will not sell anything for another 25 years ~.
Most of my savings are in a TDF for retirement and there is not an esg fund that is close enough for my comfort and thus I feel I have to go that route. as for my individual stock purchases I will not buy companies that I have strong antagonism toward. I know that emotional investing is not smart investing, however there are a lot of profitable companies out there and i dont have to be involved with all of them, i can try to avoid the ones that are most onerous to me. For example i will not invest in Tesla until Elon stops being the principal beneficiary of that investment (also fundamentals are wack). I also avoid oil companies for both macroeconomic and ethical/environmental reasons. Oil will be on the decline and while profitable for a while will have a decline and I dont want to be on that ride. I have been avoiding arms manufacturers but I am considering some investment in Rheinmetall/alternatives because I do believe in this case they will be facilitating the causes of freedom and that this will be a very lucrative endeavor for them. Even with their recent runup they are still undervalued, I think Europe is going to arm up over the next decade+ regardless of what happens. Also hedges against further currency risk for my portfolio (I think that right). UBH, ugh I will never invest in because I have worked with them professionally in the past and they are a trash company, profitable but trash. That blood money is weight my soul can do without.
VIGAX is a bet on the growth subset of companies (ones with higher expectations and higher prices to match). Those have done really well the past decade/two, [but historically underperformed value](https://www.dimensional.com/us-en/insights/when-its-value-versus-growth-history-is-on-values-side). I wouldn't describe investing in it as "more aggressive" in the way that you want; what you're trying to do is increase returns through increasing [compensated risk](https://www.reddit.com/r/Bogleheads/comments/1cnjdvz/what_do_you_all_mean_by_uncompensated_risk/). For your goal, I would simply start with VTSAX, VTIAX, and a bond fund in proportions similar to the TDF, then reduce the bond percentage as you are comfortable: * https://www.bogleheads.org/wiki/Asset_allocation * https://www.bogleheads.org/wiki/Risk_and_return:_an_introduction * https://www.bogleheads.org/wiki/Risk_tolerance * https://www.bogleheads.org/wiki/Assessing_risk_tolerance
I appreciate the insight as I’m new to this. I’ve always left the TDF alone but the fees over the next 10 years are about 40k more than my current allocations. I will be investing weekly regardless of what the market does as I don’t have a choice. I work in construction and our hourly rate is split about 60/40 so 40% of the hourly rate gets put into a 401k. (Prevailing wage work)
For many people it’s just a hobby. They don’t care if they underperform the market. Often times they have the mentality that their 401k is their retirement and that’s in a TDF or whatever. They’ll work till 70 and that 401k will be enough, and anything outside of it is fun money, whether that’s fun picking stocks or fun buying a sports car or etc.
(34m) ditched tdf for 46.5%VTSAX 28.5%VTIAX 25%VIGAX did I make a mistake? TDF had an expense ratio of .64% that bothered me when crunching some number for over the next 10 years. I was between the funds listed above and GRMIX 75% VTIAX 25% the plan advisor steered me towards my current allocations. What do you guys think? I wanted something that mimicked the TDF without bonds, but more aggressive.
Most 401ks I am familiar with do not auto invest anything. The money sits there as cash (this is not an investment, except for brokerages like Fidelity that automatically hold it in their sweep money market). You have to determine what that cash is invested in, either a TDF as you say, or in whatever funds your 401k provider has available to you.
How about switching into the 2070 TDF 90% 10%?
That's like saying the S&P sucks, NVDA is up bla bla bla %. The reason TDF's suck is that it's very easy to look up what's in one, replicate it yourself manually, and save on fees. You just need to go in and adjust it every few years. But TDFs aren't for people in this sub. They're for the type of people who say "Oh yeah my work automatically takes some money out of each paycheque and puts it away for me.. I've never logged into the system though". I work with a lot of people like this and it's insane. Other Professional engineers losing thousands of dollars a year to fees. I've even offered to write down the steps for them to follow to go into the system and adjust it, and they just won't. Even when I explain to them they'll be getting the exact same funds as are within the TDF, just for 0.5% fees instead of 1.5% (Our work system has insane fees, but it's still not worth losing out on the matching to opt out, I've checked) Perhaps they're afraid they will intentionally stray from replicating the fund and start gambling if left in control. Like I don't know how they would really do that within my shitty work system, but maybe they imagine they would. These funds are also quite handy from the perspective of program administrators. Your work HR etc. They set it as a default to be automatically chosen based on the employee's age and when they'll be 65, and they can wash their hands of it and say they've done their due diligence. Very legally defensible. Imagine if the default was full stocks and some 64 year old had it crash right before retirement instead of having a buffer. It would be much easier for them to sue over that than high fees or low performance. Regardless, the company running the fund gets their tax on the lazy people of the world.
The fees on some TDF families can be extremely low.
>They tend to have something like a 60-40 stocks:bonds ratio. The stock to bond changes over time. It starts stock heavy (usually 90% or more) and eventually starts a glide path to be more bond heavy. I believe OP mentioned being in a 2050 Fidelity TDF, that should not have started the glide path yet (so it'll be within reasonable rounding distance of 10% bonds). It is the US to international stock part that is usually around a fixed 60/40 or 70/30.
Quick question about target date funds and 401Ks: this is what I have 100% of my 401K in currently is just a 2055 (I think? maybe 2050?) TDF. Are there other things that would be good to add to my 401K, or am I good to just keep it as 100% the TDF? Also, would it be good to throw a TDF into my Roth IRA as well? I currently just have VOO in my Roth, probably will add one or two more ETFs into it like QQQ or SCHD or SPYI or something like that?
I swapped my 401k out of the TDF a couple years ago and I’m glad I did
No, that’s not how TDF ERs work
You are welcome to your opinion, as am I. The Vanguard TDF glide path has 90% stock until age 40. I think a low cost TDF is fantastic for people who don't understand investing or don't want to take the time to learn and manage it themselves.
That all makes sense but the fidelity 2050 TDF got fucking destroyed in 2022. Peak to trough was over 30% drop.
Depends on the TDF. Vanguard and fidelity have TDFs under 10 basis points
1. TDFs are not 100% stocks 2. The stock portion is globally diversified: mostly S&P but also small and mid cap, plus international. 3. S&P has been on a tear the last 10 years. The S&P also had a 0% return from 2000-2010. 4. If you want more potential return than what a TDF can offer, it means more risk. If you can stomach that risk, then maybe you can be 100% stocks. But if you can’t handle that much risk (which is normal for 40) then you probably want to stick with the TDF.
The 10-year return isn't lower than the S&P because the TDF is too conservative with equities, but because it's diversified internationally. VT is "only" up 130%. Also, S&P is up 210%, not 250%. For any date more than 10-15 years out, a TDF is basically just VT plus a tiny bit of bonds. So this really just comes down to the international allocation debate that gets rehashed every day on here. International has under-performed US badly the past 10 years, but there have been long periods of the opposite over the past 50 years and it could happen again at any time.
That’s just not true. Fidelity’s 2050 index TDF is less than 10% bonds right now.
Target date funds are funds of funds. The overall performance is just the weighted average of the component funds. S&P 500 is not a fair comparison for a TDF, as TDFs typically use US total market style for the US coverage (recent history has favored large caps, but that isn't always the case). TDFs also typically have 30-40% of stock as international. International should be thought of as just as aggressive as the US, it just didn't do quite as well as the US in recent years (though a longer view of history shows many periods where it would have been the US dragging behind). Then, there's likely 10% bonds in that 2050 fund (far from the 40% someone else mentioned), bonds have lower expected returns than stocks but typically provide more stability than a pure stock portfolio.
>For context, a target retirement fund might be doable in a standard IRA or Roth? Or just Roth. Any tax-advantaged account: 401k (Roth or traditional), IRA (Roth or traditional), HSA, 403b, etc. >For my taxable brokerage, what would be the comparable to a target fund as a point of reference. The boglehead portfolio? You can just build the TDF yourself: https://www.bogleheads.org/wiki/Approximating_Vanguard_target_date_funds If you want to get fancy, you do this across all your accounts and put certain funds in certain places: https://www.bogleheads.org/wiki/Tax-efficient_fund_placement
>Target retirement funds such as 20XX. What happens post date? Vanguard's TDFs have a "glide through" path to where it keeps shifting into bonds past the date of the fund. Example: [Vanguard 2050](https://investor.vanguard.com/investment-products/mutual-funds/profile/vttvx) has 50% stocks still. And it will eventually merge into [Vanguard Target Retirement Income](https://investor.vanguard.com/investment-products/mutual-funds/profile/vtinx) fund, which is 30/70. >1 - But if i retire on 2027 and decide to buy a 2025 target. Since its post target date it would be in bonds. No. I'm not aware of any TDF that goes 100% into bonds. >Would I get the dividend yield indefinitely? Or would the target fund have some liquid date in the far future? What happens then? The fund is just a fund. It never liquidates, and it doesn't guarantee you've saved enough to last the rest of your life. >2 - with the current administration changing the framework and actively influencing the fed and tweaking numbers, inflation is sure to come. But how will the bonds handle in the long term if investors lose confidence in the us market. That's a little harder to answer. >3 - Do retirement funds post target date diversify in international or pure us bonds? VTINX still has 15% ex-US bonds and won't go lower than that. 4 - Any negatives if I early retire in 2 years (then age 53 in 2027) and go with a 2025 / 2030 retirement fund? No. The fund year is just a benchmark; it has no actual impact on your account. A 20 year old can invest into the 2025 TDF for all anyone cares (they shouldn't, but they can). 5 - any recommend target retirement funds?I know vanguard is popular. For either taxable or Roth. Am not trying to min max for absolute best results but reasonable good enough/ above average to set and forget. Vanguard is the gold standard of TDFs. [Do not invest TDFs in a taxable account though](https://www.bogleheads.org/forum/viewtopic.php?t=447240).
Depends upon the fund, but there is no reason to assume that a TDF will be 100% bonds in the target date year. Most (maybe all?) state that they will continue to invest, but the glide path continues until the fund resembles a retirement income fund. FFFDX is Fidelity's 2020 TDF and has the following allocations: US Stocks: 25.51% Non US Stocks: 22.56% Bonds: 54.04% (including about 5% in international) Shore-Term and other assets: -2.11% This fund will continue to glide to its ultimate asset allocation in 2040 which will then be 24% equities and 76% fixed income.
Do not pay any voluntary fees for management. A 0.2% expense ratio for a TDF isn't horrible. "Excellent" would be like 0.08%. Horrible is something like 0.7%.
What don't you like about the TDF that's motivating you to change away from it?
Look up AOA and AOR. 80/20 and 60/40. Same as a TDF, but constant target allocation rather than time adaptive
I hate these posts. TDF are designed to underperform. Its goal is to make sure you have a safe nest egg to retire with. As you age and approach retirement age it sells stock and buys bonds. Typically its percentage of bonds equals your age. So if you start at 20, it’ll be 20% bonds, 80% stocks. When you’re ready to retire at 65 it’ll be 65% bonds 35% stocks. So assuming you’re 40, your 2050 fund should be 40% bonds and 60% stocks. If your 401k lets you only select from TDF funds and you want to be more aggressive, choose a 2060 or 2065 fund.
I have a TDF(American funds) I am funding through my employer. I have it set for 2060. That account is at $80k. What target funds should we consider?
Depending on the % of bonds, a TDF has underperformed having most if not all one’s money in the stock market. Especially from the late ‘00s as bond yields really dropped. Stocks are risky but they’ve provided great gains in the long run. A TDF can still be useful with less correlated assets but think one word of advice (Merriman) is keep the TDF % = 1.5 x age with the rest in a stock fund. Could be altered as 1.5 x (age-10) or whatever you feel comfortable with. As a TDF gets more conservative it can actually get more useful with age if stocks have a blowout.
no shit....of course a TDF is under performing, what you think it was gonna do with bonds and international?
Part of that is it has bonds. Depending on your goals and risk tolerance forgoing bonds could be reasonable for the next 10-15 years. Part of it is that it has international, and international has underperformed. It doesn't always underperform though, sometimes it outperforms for long periods, and you just can't know which the future will hold. Moving out of the target date fund into 100% VT is fine as long as you add your own bonds (or just move back into the TDF) at some point as you near retirement. Doing anything other than 100% VT is a mistake though. QQQ did really well the last 5 years, but that doesn't suggest anything about how it will do over the next 5 years.
If you want to be more aggressive than TDF, just do VT or VTI + VXUS. Same thing as TDF but without bonds.
As you get older your TDF is composed of more and more bonds and money market funds. This is primarily to PROTECT your money for retirement, but the trade of for reduced risk is that your returns are significantly lower. If you wanted to swap out an equivalent would be a variation of the 2/3/4 fund portfolio that you can find in r/Bogleheads , but TLDR that is some ratio of VTI+VXUS+BND+BNDX or VT+BNDW. Less protection for your money, but more money can be made if you just buy and hold.
He’s right. This freak’n “my TDF ain’t outperforming the most tech heavily concentrated SP500 ever” shit needs to end.
Maybe if you have low risk tolerance. I actually dumped my entire TDF today. Too conservative for me at this point.
You can learn a lot about investing and still arrive at the conclusion that a TDF is the best place to put put money.
Ah yea sorry I fixed it. TDF glide paths add more bonds than 30-40 year olds need, and most 20-30 yo don’t need any.
>But understand that they get too aggressive too quickly I think you meant the opposite? That they get too conservative, too quickly? At least, that's the main (and possibly, only) concern/complaint I hear about TDF from most folks.
The TDF in my 401k has an expense ratio 24x higher than the expense ratio for the S&P500 fund. No thank you
One suggested portfolio part in a TDF with its % 1.5 multiplied by age, and the rest in a 100% stock portfolio, the latter % decreasing with age (Small Cap Value but could be a broad index). This from Paul Merriman iirc, who usually suggests 8 or 10 fund “factor” buy and hold portfolios. So the idea is when young, a TDF may be a bit too tame but steadying if the economy goes bad vs growing older a TDF may provide enough diversification to weather an economic storm.
This is the problem with TDF. TDF = target date fund. —>Problem: (once the target date has been reached) or (as the target date gets closer and closer) — investors “that are invested in the TDF fund,” are going to sell their shares. —>Once investors start selling their shares, the market price is going to drop. Locking in their CAPITAL GAINS. Those investors, who did not sell their shares + are still holding the bag — these investors are going to experience “a decrease in their stock portfolio balance.” Perhaps these investors, who were left HOLDING THE BAG ONCE THE TARGET DATE HAS BEEN REACHED — perhaps, these investors wanted to retire via CONVERTING MAXIMUM CAPITAL APPRECIATION, for maximum capital gains. —>If you do pick a TDF fund — pick one that has a target date, that “extends past your actual retirement age.” Ex: You are 40 years old. You hypothetically retire at 65 years old. That is an extra 25 years. —>2025 + 25 years = 2050 TDF fund. This (will become less aggressive) and (people will start selling massive amounts of shares), when the year becomes 2050. TDF shares being sold = lowers the market price of TDF. —>If you retire at (65 years old/year 2050), you want to invest in a TDF fund that is (greater than 2050 number). So that, you can still have maximum capital appreciation, even when you are 65 years old.
Right on, man. I originally had TDF 2055 and switched to TDF 2065 a few years ago for my 401k. I may swap to 2075 if bonds move quickly in 5-10 years.
Currently have VLXVX in my 401k, and it’s held up well for what it is. I’m not expecting above average returns (It’s a TDF after all; though it’d help), As long as I keep contributing and compounding does its thing, all that matters to me.
I'm not a big fan personally. Just took a look at the vanguard TDF 2055 and it has nearly 9% in bonds. That seems about 9% higher than I'd like 30 years out. If you don't want to put any effort whatsoever into investing then they could be the move low key
That depends on the fees for the specific TDF in question. My 401k is 100% TDF and I pay a 0.08% expense ratio, which is a negligible cost.
It’s good to have a modest amount of bonds actually. Not having them could majorly fuck up your plans if a recession were to happen right before you plan to retire. People with a TDF are better insulated against those eventualities, while still mostly following your index fund set and forget strategy. You’re way isn’t the worst idea ever, just carries real risks that everyone lately especially on Reddit seems to want to pretend don’t actually exist.
It’s not a horrible idea to start buying bonds at 28. I do think it’s a bad idea to change your plan based on current or expected market conditions. I am 41 and hold no bonds other than a small % of my 401(k) bc it’s a TDF. I plan to start layering in bonds then I get within 15 years of retirement and shift toward wealth preservation mode. Presumably youre still 30-40 years from retirement and not yet in wealth preservation mode.
They are perfectly reasonable TDFs. Most people will use their broker's homegrown index TDF that's a mutual fund. But if for whatever reason you can't or don't want to do that, the ishares TDF etfs are a good alternative.
If this was your interpretation of events, you should set up auto-investing into a TDF for retirement. Then live your life in bliss, never checking investing news or subreddits again.
The volume will probably go up the closer to that year we get. Not many people are buying a TDF ETF but you should also not be selling it for 35 years. Discounts and premiums can happen with an ETF when you sell, but also when you buy. If you're that concerned, just move it to a mutual fund.
That's a lot of money for a 27 year old. Nice. \- Holding SGOV is a perfectly reasonable emergency fund. That's also a lot of money for a house- if you can get a favorable interest rate without putting $200k down (which you should), you'll probably be better off investing some of that money. It's fine to wait until after you move to get firmer handle on housing costs and expenses, though. \- There's no reason to \*not\* max your Roth IRA with such a large brokerage account, IMO. Move money (long term capital gains) from your taxable to the IRA at the end of the year if you haven't hit the max via your normal, budgeted contributions. \- As a smaller thing, why split VOO/VXUS (no US small- or mid-cap) in the taxable but VT (no international) in the HSA? Why a Target Date fund in the 401k (higher fees + 6% bonds on a tiny portion of your overall portfolio)? These are all good investments, so you aren't doing anything "wrong" per se, they just don't necessarily line up. For the 401k, for example, using VITPX + VIIIX (basically the mutual fund versions of VT and VXUS since you apparently have access to Vanguard mutual funds), would cut your 401k expenses down to a quarter of what they are with the TDF and be more consistent with your other accounts.
TDF funds are pretty conservative, they’re not going to exactly make you rich. Theyre designed to reduce volatility over time by reducing equity exposure and increasing bond exposure closer to retirement date.
What’s a TDF? But thank you!
You’re doing awesome!! Find a trustworthy pro you like. You must make great money. You should be optimized. Maybe you don’t need them to actually manage the money. But the financial planning aspect would benefit you. Awesome job though!! Change your 401k to sp500 or NASDAQ if available. At 27 you have zero idea when you will start drawing. You’ll give up a lot of growth with that TDF so early. And they normally have higher internals. Just check to see. Great job man!
Dividends aren’t magical free money, they reduce the value of a company when paid out. And depending on what makes up your TDF, you’re probably already getting dividends, the fund’s just automatically reinvesting them. Without knowing what makes up the TDF I don’t know if you should switch, but if you should it’s not because of dividends.
I just follow vanguards TDF glide path in terms of my bond allocation, which everyone should have. But I diversify it beyond the standard BND and have an international bond index and a little bit of GLD as well. When a recession comes, which it will, I’ll recover much faster that people who are all in on equities.
A TDF isn't bad advice, you're kinda both missing the point. Retirement isn't an age it's when you have enough to stop working and cover your expenses. The appropriate allocation will depend on how long from now that happens which will depend on their savings rate and expenses during retirement. You don't just say you want to retire in 10 years and put it in a 2035 TDF, but going 100% equities isn't going to let you retire in 10 years either unless you are saving like 80k/year or whatever. If you can hit the amount you need to retire in 10 years then a 2035 TDF that has a significant fixed income allocation would be appropriate and 100% equities would not. You can't adjust risk to meet an unattainable goal, you have to adjust your savings rate and/or time line.
That does seem high for a TDF. Now, there should be an option for a lower cost s&p 500 index fund, and most likely a Agg Bond fund if you choose to diversify. Most will tell you to put it all in s&p 500, but it’s also important (to most) to have some downside protection. A 2055 TDFs equity allocation will likely be high, I am assuming 90% US Equity, and 10% bonds/diversifiers. TDFs can serve as a set and forget type of fund, as they have a glide path they stick to as you move closer to retirement and slowly de-risk the portfolio. Problem here is that fee seems very high for even an active TDF and might just be best to mimic it.
My 2055 TDF is 0.08 You're getting robbed.
A TDF isnt a bad idea, but you can pick one further back than the actual timeframe. For example my wife has a 2065 date one for ease of investing in her Roth, with an actual target of 2040
At the place they are in, I don't think having some fixed income in there is a bad idea regardless of how little they have saved/invesed. TDF wouldn't be ideal but it was the simplest thing I had the patience to write out lol. Something like a Vanguard Lifestrategy Fund, FFNOX at Fidelity (fixed 85% equities/15% fixed income) or AOA (80/20) would probably be better than the fixed income ramp of a TDF. But going all in on equities with as little as they have...... a couple bad years at the worst possible time would leave them with next to nothing.
I suggested a TDF because they are going to be so far behind, they've got basically no room for volatility tolerance. Otherwise yeah, I'm right there with you. Considering they don't own a home, have barely any savings, really they sound like they just live in the now and make bad financial choices like buying bare land, expensive trucks and RVs.... They just don't have much space for risk
About 35% to max 457b, my IRA, and a mandatory investment from work. job also includes 6% gross inclusion. so 41% total. Mix of index funds and a TDF Just bought a house so rebuilding emergency savings
This might be absurd what what if a TDF slowly rebalanced to Jepi and jepq instead of bonds?
You're comparing against the worst case. Again: > [Most TDFs are reasonably priced now](https://www.callan.com/target-date-index/), and the best ones are fantastically low. We need to actually ask what their funds are before making assumptions about them. If you asked and they said their TDF is .62% ER, then yes, I would be against it. But right now you're making assumptions.
The common complaint about TDFs is that they get "too conservative too soon". The biggest problem a fund manager can have, is suddenly there's a drop in the market for a year or two, and everyone who thought they were going to be protected by having 5% or 10% or 15% bonds in their portfolio, now takes a hit on the growth side and wishes they had had EVEN MORE bonds for "protection". SO, your typical fund manager starts to ramp down the stock holdings around age 45 or 50, to reduce volatility in advance of need. When you get closer to 65 -- it IS another 40 years from now, after all -- see what you think about your portfolio allocation and your health and your whole attitude; if you think you need that portfolio to last another 25 years FROM THEN, then you might move to a 7075 or 2080 TDF at that point. Note that the Fidelity Target Date **Index** Funds only invest in the same three funds; the difference between them is ONLY when they shift their fund mix.
Working out is a skill though. If you want to start lifting you need to know which ones to do and have someone to check and correct your form. Once you've been doing it for a while you no longer need a trainer. You don't need to pay someone thousands of dollars to manage auto contributions to a TDF.
They’re seeding them currently yes. I work in the industry, I’ve already done due diligence with state street and Apollo on their new TDF series that gives Apollo a 10% allocation. Blackrock and Goldman doing them too.
As I have repeatedly stated, it is speculative until new rules and guidance are published. Also - you may be misunderstanding the differences between a PE manager and a PE fund. It's going to be more important to have rules on fund leverage. I am guessing that it will be similar to how a public CEF which uses leverage work today. Leverage is already present in publicly traded funds. What I would be watching for is that the vast majority of private market funds today are not '40 Act funds. I actually don't even know if I've ever seen a '40 Act PE fund. So that itself will be interesting to see how regulators figure that out. I also took a quick look through the post. I have mentioned liquidity as a risk. The other risk which I assumed people understood but no one has mentioned is price discovery of equity assets. I think that debt assets will be simpler to price simply based on credit quality and duration. But I do think that price discovery will be a challenge for any fund that plans to hold private equity. A TDF normally has multiple sub-advisers managing different sleeves - I would expect that if a TDF holds any private market assets whether it's debt or equity - it will simply be some smaller allocation relative to the other sleeves which is managed by a PE manager. It's unlikely that a TDF would fail simply due to a significant draw-down of a single sleeve.
Are you saying that you say a TDF that has a PE allocation? Please share a link.
Do you know what kind of protections there are if a PE firm (or others) over-leverage - what kind of risks are there for them accessing this kind of capital? Vanguard hasn't said much about it, except that they will publish soon on how they might derisk issues (spread to many accounts to keep TDF and others from potential failure)
Move out of the expensive TDF? Yes, [those fees will eat your returns](https://www.bogleheads.org/wiki/How_much_do_you_lose_to_annual_fees_after_many_years%3F). Move into only an S&P 500 fund? No, there are [a multitude of reasons to invest more broadly](https://www.reddit.com/r/Bogleheads/comments/1bgzg6w/vooavuv_and_chill_any_need_for_international/?share_id=Nr71aoI-36YmEBo64ZgvY&utm_name=androidcss). What should you do? [Mix together cheaper funds to approximate what the TDF would be doing](https://www.bogleheads.org/wiki/Approximating_Vanguard_target_date_funds).
TDF is almost fool proof. Can't really mess it up. Trade off is less growth for someone early.
Move your money out of TDF. Especially with your window of time. The fees are baked in, you won't even notice them. I was in TDF early in my career, then switched to growth funds. Best move I ever made.
>It has lower returns and higher fees Be sure to compare against a comparable portfolio's return before saying it under performed, don't look only at that be S&P 500. However, given the expense ratio, even with a proper comparison it likely did fall short. >It also has the options for several indexes including the s&p500 and international which both have expense ratios around .06%. You may be missing the US extended market, but that's less than 20% of the weight of the US total market right now. A DIY approach would let you choose your stock to bond ratio, which could help boost expected returns. However, no matter what the age or timeline, not everyone can actually stomach a 100% stock based portfolio. The various investing subreddits see it all the time during even moderate drops of people that took on too much risk and want to bail on their strategy. The lucky ones post and get talked out of it before they go through with it. A single behavioral mistake like that could cost you more than the opportunity cost of bonds would. As long as you properly diversify and avoid behavioral mistakes, a DIY would likely be better than the TDF due to the costs involved.
Yes - agreed. And I suspect that this development is related to the lobbying efforts of various private market firms. The unknown is about how 401k plans and fund managers will choose to implement something like this. I think that liquidity will be an issue for equity. Pensions, endowments, etc. can scale in a way that a typical plan cannot - so I think that this type of access would need to be through a feeder fund as part of fund of funds like a TDF. But for private debt fixed income - it may be different and may be less of a challenge.
It's a common misconception that private markets equate to more risk. It does not mean venture capital, risky startups, or small businesses alone. Private markets can also mean equity and debt of well-established businesses. The risk is generally about liquidity. But if a fund like a TDF or a fixed income fund had some allocation to PE markets in the form private corporate debt, etc. it's not necessarily any more risky than corporate debt of public companies with similar credit ratings. There are assets like private equity dividends which could be appropriate. Realistically - it's way too early to tell how 401k plans will offer such access. I would also add that a lot of 401k plans offer stable funds - on the surface such funds seem like safe alternatives to money market funds which are not typically offered in 401k plans. But if you dig into how stable funds work - it can have far greater risks than the average 401k investor realizes.
Just a reminder that this is an investing subreddit and unrelated political comments will be removed. Also - until the EO is published - the articles cited by OP are speculative. Most people are likely unaware that currently IRA's structured in the form of a SDIRA can hold PE assets. And PE firms like KKR, Apollo, etc. have been attempting for many years to gain access to funds which are offered in 401k plans because of the amount of capital which can be accessed. One idea which have been floated in the past is to allow a TDF (target dated fund) to hold private equity feeder funds. Note - that other types of retirement plans such as pensions and SDIRA's already can access private equity and private debt assets. Today - for a 401k plan to gain access to the private markets - the investor must use a linked brokerage account and invest in publicly accessible private equity funds and companies (ie. BCD's, companies like KKR, etc.).
Over the last 3 years, yes. What are you in, a TDF? Lol
Let me see if I can explain a few things and make some suggestions. Primerica's sales organization is set up as a multil-level marketing entity. They sell term life insurance and offer investment accounts as part of their Buy Term and Invest the Difference philosophy. Part of the way sales representatives grow their part of the multi-level organization is by trying to recruit customers to become insurance sales reps. If you want to get into insurance/investment sales they offer training and if you are part of a good hierarchy you will get good support. You must become licensed by your state by studying, taking the appropriate tests (there is usually a fee that pays for the test), and passing them. Some people are not good sales people and quit/fail while others become very successful. I would suspect the number that are successful is a small percentage of the total that try. If you want to get into sales great, give it a try. I couldn't sell ice water in hell so I'd pass the 'opportunity'. If you **need** life insurance, search online for the best price from a company that is highly rated by an organization like AM Best. Term is a commodity product, you just want a good company that will be around when you need the policy to pay out. As for investing my suggestion would be open an account with Fidelity (free and their excellent support folks will walk you through the process) then move money into the account and cause shares of broad market mutual or ETF funds to be bought. Alternatively shares in an appropriate Target Date Fund (think 2065 as you are young) can be bought where the admins of the TDF will handle allocating and re-balancing for free. Start improving your financial literacy by understanding that NO ONE will watch or care more for your money that you will. Read the Wiki here especially the getting started [https://www.reddit.com/r/investing/wiki/index/gettingstarted/](https://www.reddit.com/r/investing/wiki/index/gettingstarted/) and the r/personalfinance Wiki. The biggest mistake of my life was not getting started as early as possible. If I've said anything that you don't understand, ask.
He basically has VTSAX in his Roth TDF and in the Vanguard Life Strategy Growth. Not sure about his 401k, I know it's only 3% match and just started about 2 years ago. Not sure what he contributes.
I need advice managing my newly widowed mom’s retirement funds to make her money go as far as possible. Details: Age: 63 Planned year of retirement: 2030 Current Annual Income: $197,000 Assets: Paid off House, Value: ~$350,000. 401k: ~$540K in a mix of 2030 TDF and some S&P500. Taxable Brokerage: ~$70K in company stock I’m trying to convince her to sell and invest differently. HYSA: $200K. Checking: $30K. Non-HYSA Savings: $30K. Dads Inherited IRA: $35K in Silver. First off - I know it’s way too much in HYSA and regular savings. We grew up poor so she’s been someone that’s always been afraid of not having money. Getting her to open a HYSA was an adventure but she trusts me more now to help her manage this. I’d like to cut this down to something like $60K for 6 months of savings and move the rest of it to her Fidelity Account. I want to sell her individual stock and the silver in dad’s account to invest differently. The taxable account is down in one stock so it should offset the gains from the other and that’s alongside the fact that she’s held much longer than one year. The inherited IRA hasn’t moved so I don’t think she’s actually taking a hit there. Strategy: I need help and advice with how to invest the money in her taxable account, and what id move in from the HYSA, to make sure it lasts. It seems like the move is bonds but I’m not sure if just sticking that entire balance in $BND is the move or if there are specific timed bonds is the better option to make more money / make it last longer. The TDF should go more bond heavy closer to 2030 but not sure if I should manually rebalance the pieces she has outside of that into the TDF, leave them as is, or something else. Appreciate any input and advice yall can provide.
The TDF has basically everything. But in the parts that you're managing the ratio yourself, you're very overweight into US, yeah? Is that intentional or just what happened?
I'm not familiar with that particular one, but an asset allocation tool should ask you a bunch of questions about how much you're saving, when you'll need it and how much you'll need. It'll spit out what's essentially a slightly customized TDF. They pushed it because if they helped you they'd just be using the tool for you. They don't want broad questions like "how should I invest?" they can give you specific guidance if you havd a specific question.
The S&P500 fund or a TDF years out with very little bonds. The TDF is better diversified for better compensated risk.
I'm a constant defender of TDFs, but agree they aren't appropriate here: their choice is a 0% chance of retiring with a TDF or a non-zero chance of retiring if they go all-stock (let's say VT). It doesn't matter if the second option has low chances of success. Larry Swedroe [has talked](https://www.bogleheads.org/wiki/Assessing_risk_tolerance) about your "ability, willingness, and need" for risk, which I think is a useful approach. And OP has an intense need for risk.
Expense ratio of 0.03% (FXAIX) and 0.08% (Vanguard TDF 2065). For the latter, guess depends if you're hands-off and want broad diversification and auto-rebalancing. Justifies the fees.
For my respective retirement investment accounts currently: 401k has Vanguard TDF 2065 and Roth IRA has FSKAX, FTIHX and FXNAX. My 401k plan doesn't have great options aside from Fidelity's S&P 500 (FXAIX), so just opted for TDF for it's diversification. Thoughts?
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.