TDF

zel_bob

Not financial advice. Probably could be ok. As I understand TDF are managed accounts and basically have bonds / stocks (international and S&P) so they are generally more stable than pure S&P. Again your gains won’t be as high but neither will your losses. When I’m in my 30s I wouldn’t want any bonds or little as possible until I’m about 38 or 39. I just switched my 401k from TDF 2070 to 70% S&P and 30% international. Looking at expense ratio and bond % already I was like “ehh it can’t hurt”. I’d put some in the TDF (30%) then the rest in S&P? Yes there’s overlap but the 30% is generally safer option and overall more expensive to own. If that makes sense

Soulofmine7

Thanks, how about putting everything in TDF 2065 which is slightly father from realistic one( I’ll be 70y.o. At that point)

zel_bob

I’d do something like 70% S&P500 and 30% international fund. OR 70% at the farthest TDF and 30% more realistic TDF. Farther TDF being more aggressive than the realistic one.

therealjerseytom

Why wouldn't it be "worth it"? What's wrong with that allocation? TDF's are designed to be no-brainers if you want to just be hands off. And you can always change this stuff at a later date. It's not like you're locked into one thing or another forever.

jboy9622

TDF. I use VTTSX (Vanguard Target Retirement 2060) so I don’t even have to think about it.

Guy_PCS

If you assume that over 35 years when TDF's started: * S&P 500 annualised return \~10–11% (nominal) * A target-date fund (starting far out from retirement) might earn something like 6–8% annualised Then over 35 years the difference compounds significantly. For example: * $10,000 invested at 10% for 35 years → \~$10,000 × (1.10)\^35 ≈ \~$28,100 * $10,000 invested at 7% for 35 years → \~$10,000 × (1.07)\^35 ≈ \~$10,000 × 10.7 ≈ \~$107,000 (I’ll recalc precisely below) Actually: (1.07)\^35 ≈ 10.677 → \~$106,770 And (1.10)\^35 ≈ 28.102 → \~$281,020 So the higher rate gives nearly **2.6×** the ending value of the lower rate. Thus, even a few percentage points difference in annual return matter *a lot* over 35 years.

GaylrdFocker

You can't deny it. You either accept it or pick your own funds. I would not want to be in a TDF at 0.26% and would skip the BlackRock small cap fund. The other 3 are fine or just do the Vanguard 500 and Intl.

Rich-Contribution-84

It depends whether the 401(k) dollars are Roth or pre tax - but yeah, I’ve always rolled over to a Roth or trad, depending. Your YTD return on QQQ and a 2050 TDF would be more like 20% than 2.5% btw. Something if off here.

MountainMistCalm

The majority of TDF's start off with little to no bonds. A valid complaint is that they grow too conservative (more bonds) too soon, that could be easily remedied by picking a target date much further than your actual retirement year. They are not perfect but they are a great option for many investors that do not know how to invest according to an asset allocation strategy or that want a 'set it and forget it' option. OP is a perfect example of someone that is emotional portfolio decisions, target date funds help protect some people from themselves.

be_like_bill

Your portfolio is super confusing, and seems terribly misaligned with the concerns you're bringing up. Half of your portfolio is FBGRX. Which indicates you made a bet on growth to be better for your long term investments. If so, you have to be able to handle the good, bad, and ugly of growth. It can give you good returns, but at the same time tends to draw down heavily during a downturn. The "AI bubble" is just the latest boom in the cycle, and this fund is over 50% allocated to companies that would lose value if the bubble bursts. If you can't stomach the ups and downs, it might be time to get off this rollercoaster. if not, at least significantly lower the allocation to it. Next, you have 2 SP500 funds. They provide no diversity. Just stick to one, or count all of them together in the allocation. Next you have 2 different target date funds, which makes no sense. TDFs are supposed to reduce the complexity of your portfolio not increase it. Plus they both have overlapping equities and even overlap with SP500 and FBGRX. Effectively, you have even larger exposure to FBGRX that is hidden under the TDFs. If I was in your place, I'd suggest just pick a TDF, and go all in on it, or if you want to go a-la-carte, add one bond fund and one International find and get fully out of TDFs. As for FBGRX, really evaluate if it's worth staying invested in this fund where you're panicking about a crash that hasn't even happened. How would you react if one actually happens? Would you just panic sell? If so, might as well reduce exposure while it's on the upwards trend?

Critical-Werewolf-53

Re allocate your 401k to match your risk tolerance and time horizons. TDF slowly go more conservative

Harriett_Jimenez

The TDF isn’t really outperforming; it’s just reported differently. You’re seeing time-weighted vs. your money-weighted return. Happens to everyone who DCA’s through the year.

SirGlass

So I did some math . what is your split the vangaurd TDF is rougly split 60/40% between foreign and domestic If you had the same split and invested in the two schwab funds $100 at begining of year you would have SWTSX 16,25% return = 60\*16,25%=10.88 SWISX 27.20% return = 40\*27.20% = $9.75 Total return 20.63% So its roughly equal . But this is assuming you had $100 invested on 01/01/2025 and it sounds like you did not so your returns will be less

ThatPlan

I’m pretty much just surprised that the YTD on the TDF is higher than the YTD of the Schwab funds. Given I had $X amount already invested on Jan 1, am I right to believe I would’ve just been better off staying in the TDF? If so, is there a reason I shouldn’t just switch back to the TDF?

SirGlass

You are comparing your time weighted return of your account to the YTD return of the TGF If you had invested 1k into the TDF on Jan 1 2025 your return would be approx 20% However if you invested $100 a month into the target date fund your return would not be 20% because you would with only $100 invested The $100 you invested last week into the fund wouldn't be worth $120 today. You are most likely comparing your time weighted return because you said you are buying periodically Were you fully invested in Jan 1 2025? Or did you add contributions after?

ThatPlan

Thanks! I guess I’m still just confused why when comparing both YTD the TDF is higher. If I’m contributing periodically wouldn’t the 20% YTD yield more than the 16% YTD?

No-Associate-6068

At 30, a 2065 TDF is the aggressive option (it's ~90% stocks). It's also more diversified than just the S&P 500. "Set it and forget it" is its best feature—it prevents you from tinkering, which is where people lose money. Go with the TDF.

hennylestacks

This already exists. There’s an entire TDF community—basically Reddit, but dedicated to dolls. I’ve even worked with a production company creating feature films that included a single intimate scene, and they sourced their dolls through www.sexdollcanada.com and www.sexdollamerica.com. These companies already produce licensed celebrity models, including Lexi Luna and Taji from VICE Media. What you’re imagining is already out there

hennylestacks

It already exists! There's a whole list of TDF (like reddit but for dolls). I worked with a production company that was making feature films with 1 intimate scene and they were having their dolls made by www.sexdollcanada.com and www.sexdollamerica.com - they already have celebrity dolls such as Lexi Luna and Taji from VICE Media. What you seek, does already exist.

Cracked_Tendies

Yup, you can look up TDF podcast from rational reminder on youtube. Very insightful Also, ya might wanna overweight int'l if you can stomach being a bit contrarian. Maybe you can do your own research to justify to yourself why this is a good idea, and do it before something bad happens... Iykyk

Cracked_Tendies

I would highly recommend you get off the TDF while you're young. First, bonds are pointless at your age and all TDF's have them to some degree. Second, research has shown that most TDF's actually underperform their benchmark. They just wanna charge you high fees for actively managing your funds. Just go with low cost global equity index funds instead. In 40 years, you'll have tripled your money by making this change

Venum555

I just went with an employer TDF for a couple of years until I started to self manage. I had no idea what was in the TDF. Could hide these in a TDF easily.

QuiteFrankly13

The average dude who just automatically contributes to a TDF in his 401k has been doing just fine. Only gambling regards are losing money in this market.

GaylrdFocker

>but then Iwas told I need to get bonds to balance things out How old are you? You don't need bonds till you're older. And you can easily manage 2-3 funds yourself, just use 1 fund if you're young, or just do the passive TDF. You don't need any active funds.

FrigginMasshole

2060 TDF. They are the safest investment with decent returns

pizzasandcats

I would like to buy a luxury watch. I can afford it. However, I will likely have to wait 6 months to a year to actually purchase the watch. Maybe longer. I’d like to just park the funds in a separate brokerage account while I wait. However, I don’t mind taking some risk since it can wait. Rolling a couple of options in my head. I considered a lower-beta index ETF, something like SCHD. Another alternative is to just mimic a TDF allocation for say, 2027. Would consider a bond fund or even using the money (about $8k) to run some wheel strategies. I really don’t want to just have the cash sitting there in a MMF or HYSA since I’d rather not miss the opportunity cost of being totally out of the market than not miss the watch. All my serious savings/retirement is in global index ETFs. I’m an experienced investor just looking for some opinions!

GoldChallenge6287

I’m almost positive there is a pre-determined structure that accounts for when/how the mix is rebalanced which is based on years left to target date - shifting more towards bonds as time approaches the TD of the TDF. As you mentioned these are probably meticulously poured over at inception but what you’re describing is introduction of a new asset class based on prevailing (and speculative) market conditions, that usually are transitory. If that were the case, the argument could be made that they fucked their clients over by not buying bitcoin, as it far outperformed any asset class since inception. But that’s not how these are designed, packaged, and sold to their clients. What you’re describing is an actively managed fund - which require higher fees, higher asset turnover, and introduce unpredictability and added risk to their clients. Do TDFs underperform in melt up bull markets? Absolutely. But they sacrifice returns for consistency because that’s what they’re selling: a product that, regardless of market conditions, their clients will have a fair, risk-adjusted return by the TD. If they didn’t achieve this… well there would be no vanguard Ret 2060 funds TLDR - TDFs emphasizes low costs, pre-hedged, pre-defined roadmap based primarily on a persons age til retirement, rather than reacting to cyclical market conditions

GoldChallenge6287

I’m almost positive there is a pre-determined structure that accounts for when/how the mix is rebalanced which is based on years left to target date - shifting more towards bonds as time approaches the TD of the TDF. As you mentioned these are probably meticulously poured over at inception but what you’re describing is introduction of a new asset class based on prevailing (and speculative) market conditions, that usually are transitory. If that were the case, the argument could be made that they fucked their clients over by not buying bitcoin, as it far outperformed any asset class since inception. But that’s not how these are designed, packaged, and sold to their clients. What you’re describing is an actively managed fund - which require higher fees, higher asset turnover, and introduce unpredictability and added risk to their clients. Do TDFs underperform in melt up bull markets? Absolutely. But they sacrifice returns for consistency because that’s what they’re selling: a product that, regardless of market conditions, their clients will have a fair, risk-adjusted return by the TD. If they didn’t achieve this… well there would be no vanguard Ret 2060 funds

Leather-Scallion-119

Thank you for the response. Yes, this is money that he doesn’t need, and he does not spend a lot in retirement as it is. A TDF is a good idea. I guess the family has just helped him decide that stocks/ETFs is where his risk tolerance lies for this money, to allow more potential gains on it. So if we’re only talking stocks, it’s good to hear a second vote for VT. But I could float the TDF as an idea since it would also make sense, and I’m not sure if something like that has been seriously considered.

Rich-Contribution-84

This is not weak at all. If you max out the 401(k), your company is giving you $5,875. It’s not the greatest in the world but it’s solid. You should expect about 10% growth on average, per year in an S&P 500 fund. The 401(k) match is far better than that. Now the question is - what investment options are in your 401(k) plan. Even if the options have high ER’s, the match negates it by a lot. You’ve presumably got something akin to an S&P 500 fund in your 401(k). If not, there’s probably a TDF or total market fund or combination of funds that could be put together to meet your goals. Please do the 401(k) first!

JackfruitCrazy51

I'm 5 years away from retirement. \~70% of my funds are in 401k's/IRA's. Over the last year, I've shifted away from 80% S&P 500 and moved towards a TDF of 2035, which is currently at about 70% equities. If the trends keep going up, I may move more towards the TDF 2030, which is about 60% equities. I want to make these moves while the markets are going up, not a reaction after its fallen. So far this year, I'm up about 11%.

taplar

That's a very subjective question. What I consider conservative may not match what you do. I don't know exactly what 2060 TDF you are invested in, but I looked up VTTSX since you said Vanguard. Taking it as an example, it currently holds about 8,18% bonds. So with a total of around $40k, you'd hold around 4.7% bonds there. For the 2065 TDF, VLXVX also holds around 8.18% bonds. So over all from those two TDFs you're probably holding around 9.7% bonds. *My personal opinion*, that's not very conservative.

taplar

During bull markets, TDF would be expected to under perform pure equities due to them having an allocation of bonds. During bear markets, a TDF may decline less due to the same reason. 

MarioMan3210

Yeah, I probably wouldn't go 100%. I will have to see what is best to diversify and allocate. But, I think TDF just isn't doing as well as I thought it would.

StatisticalMan

Because S&P 500 is more risk. Most people aren't willing to retire on a 100% S&P 500 fund. If you can accept the risk and volatility which comes from 100% equities then it is likely over the next 20 years that will outperform any TDF. TDF are just designed for simplicity and with automatic decreasing risk.

CCM278

TDFs are designed to create a glide path that reduces sequence of return risk through the few years either side of retirement. This is because retirement has asymmetric risk, being 10% below your income needs is much worse than being 10% above. That SoRR period doesn't move, so you can be more aggressive now, but you need a steeper glide path to a more conservative portfolio later, the later TDF dates won't do that. If you don't want the SoRR / glide path then don't use TDFs at all. Making them 'more aggressive' by changing the date completely defeats the purpose because they still have a glide path but to a different destination. Like going to Florida when you need to go to New York because you like the weather better there.

Enough_Fact1857

Well. What I learned from reddit is that 10% bond is really not necessary for people in 20s or 30s. Most TDF has at least 10% bonds. But everyone's risk tolerance is different

xiongchiamiov

>If you want to be hands-on, you could build a simple mix of broad index funds (like U.S. total market, international, and maybe a small slice of bonds). You could, but that's already what a 2065 tdf is going to have done, so it's extra work for no real gain. We don't know which fund specifically GP has, but looking at [the TDF index](https://www.callan.com/target-date-index/) 2065 funds range from 81% stock at the 10th percentile to 94% at the 90th.

xiongchiamiov

>Otherwise the conservative composition of TDF would be perfect for people in your age. The entire point of TDFs is that their composition is perfect for _any_ age. That's what they do.

LizzieBuzzy

Look into the details of the TDF and the other investing options and their past performance. Stock advisors are continually saying that older investors are missing out on gains when moving into more conservative portfolios.

DeeDee_Z

My feeling about TDFs is that they get "too conservative too soon". The worst possible thing that can happen to a TD fund manager is to have a couple of "bad years" as soon as some one retires. To hedge this, most managers and even some target date indexes start to shift to bonds "too early". (You can get around this by going with a TDF whose date is 10 years farther out than you think you want.)

sol_beach

Switch to TDF is you desire to reduce your Return On Investment.

bank_truth

Target date funds handle rebalancing for you, which matters a lot as you get closer to retirement. Doing it yourself with separate funds gives you more control, but it also means keeping up with rebalancing and deciding what to sell when you need cash. If you’d rather not deal with that, then a TDF works.

Enough_Fact1857

The problem with TDF is that when you withdraw you cannot choose to withdraw only bonds or equities. Otherwise the conservative composition of TDF would be perfect for people in your age.

Enough_Fact1857

A 2035 TDF will still holds considerable equities at 2035, because it's designed for regular withdrawal starting on 2035 for \~30 years. It's not designed for one time withdrawal of 100%. Also usually TDF will still have 10% bonds early. I would lump sum all your initial investment if you have any, and then DCA with your paycheck (if you have any) into VTI/VT/VOO during next 7 years. Then DCA out of the equity in 7 years to HYSA/MMF/SGOV. So in 10 year you would have at least 80% bonds and at most 20% equities.

immanewb

TDF are fine for anyone who couldn't be arsed or the time to spend to learn how investing works. It's exactly for people in OP's shoes: "noone at my workplace knows anything about how any of this works."

siamonsez

That's a crazy allocation. Holding mostly or all large cap growth funds is just a bad idea, but being 80% equities 20% cash is also a bad idea and having that kind of allocation so close to retirement is also sketchy unless you don't need this money to cover expenses in retirement. Put it all in a 2030 TDF. I hope the majority of the money is in tax advantaged accounts.

Dankomycin

I would move out of the bonds and cash and move it to sp500. I would keep the international. and then in 10 years i would shift it back towards the bonds. I think your current TDF is a little too conservative. But like others said, no one really knows.

bienpaolo

Nah, you’re not wrong to want more control, but jumping out of a TDF too close to reirement without a plan for how you’ll manage rebalancing, sequencing risk, or tax efficiency could backfre fast. The TDF might be limiting, yeah, but are you ready to DIY the glidepth and handle market swings without a built-in throttle? What’s your plan for keeping your emotons outta the driver’s seat when the market tanks and you’re holding the wheel solo?

PHL1365

Because one plausible scenario is that the stock market drops 20-30% rather quickly, but rebounds in a reasonable length of time. In that situation, it's best to withdraw money from bonds (which presumably are not as badly affected) rather than realizing the paper losses in the equities. If your money is in a TDF, you cannot withdraw anything different from the allocation of that TDF, so you wind up selling equities and locking in your losses. A TDF is fine when you're still in the accumulation phase. When you're in the decumulation phase, it seems best to have more granular control of which assets you sell.

vegienomnomking

Why not both and tilt towards what you like? For example VOO + TDF and tilt towards the sp500.

SnS2500

You are not wrong. Target date funds are generic. They do not know you and your circumstances. You do. If you want more bonds than the TDF gives, you, then get more. If you want less, then get less. Generic things can have their place, but one size does not fit all.

PHL1365

Well my intent is to implement the bucket strategy, but I realized that a TDF would not work well for that.

DoinIt4DaShorteez

Your reasoning is OK as long as you have a reasonable expectation that you're going to actually need the flexibilty, vs. just having an feeling you should be *doing something.* TDF is designed to mantain an "appropriate" ratio, even past the target date. If you've been satisfied with the performance, look up the portfolio and approximate it with individual holdings. You can always go back to the TDF again or keep tabs on its portfolio and rebalance yourself if you don't end up doing what you think you might do.

Rich-Contribution-84

Because I’m only interested in total market exposure. VTI+VXUS with a spattering of physical real estate and a TDF in my 401(k) for me. I’m about to start layering in bonds too as a get a little closer to retirement. Simple and cheap and diverse.

siamonsez

Your post indicates some fundamental misunderstandings. An etf is just the name of a container, it can contain literally any kind of investment or mix of them. The only way it makes sense to say 70% etfs is if the rest is individual assets or mutual funds and then it's a meaningless goal that says nothing about the types of investments. Targeting dividends is pointless when you're not in the draw down phase. Dividends are equivalent to a forced sale causing unnecessary taxable events which drag on your returns. Best case, if it's in a tax advantaged account that negates the negative impact of dividends, its an arbitrary chunk of the market to target. There's an argument to be made that they're slightly less volatile, but they're still equities. Growth doesn't mean anything to do with increased returns. In this context growth is the opposite of value, those terms refer to the current price relative to what the company is currently worth. Basically, growth means you're paying more than the company is worth right now. Historically growth has returned less than value. Your proposed allocation is some combination of meaningless and contradictory. You should use an all in one solution like a TDF or target allocation fund until you have a better understanding of investing and can make rational decisions about how to allocate your money. Sorry if this came off as harsh, it sounds like your exposure to investing comes from social media finance influencers that have no idea what they're talking about. You have to be careful when taking financial advice you see, it doesn't generalize well as it's all dependent on the context of the scenario being discussed. If you don't understand why a suggestion makes sense in a certain context you can't make a rational decision about whether it's a good idea for you. Mixing and matching random advice that was given convincingly is how you arrive at a conclusion like the nonsense allocation you suggested. You shouldn't listen to anyone that talks about investing in etfs like it's a specific thing, it's like saying that food that comes on a plate is the best kind of food.

GaylrdFocker

It's perfectly fine. A TDF will almost always have fractional shares since it's a mutual fund. An ETF will buy whole shares for that amount and the remaining fractional share will be a separate holding but it's fine too.

therealjerseytom

Your 2060 TDF is already something like 90% equities. You could pick your own mix but you're already pretty much at max growth, and honestly the amount you can contribute will make more difference than anything for probably the next ~10 years or so.

WasteProfession8948

I’m in the same timeframe, 2-4 years from retirement. Over the past year I shifted most funds from regular index funds to TDF funds. Still left some in index funds. Importantly, all new money is into bond funds (SWAGX & SWRX) to provide an even safer cushion in case things are wonky in retirement year.

BestJersey_WorstName

Kids are 12 and 10. I have mid five figures (after tax) that I want to preserve principle on for school and living expenses. I want control of the money and don't want to be forced to use it for anything. Before I call a financial advisor, is there anything wrong with buying a TDF 2035 fund and calling it good?

Rich-Contribution-84

Index funds are absolutely the way to go for 99% of people. Simple. Cheap. Tax efficient options. There are some exceptions in my portfolio - I own 10 individual stocks in my taxable account because I started buying them 20 years ago before I moved to buying 100% index funds. But over the past decade or so, I’ve just been buying 80/20 VTI and VXUS. My current 401(k) match options are fantastic but the fund options are not - so my 401(k) is all in a TDF. But that’s not wildly dissimilar from the 80/20 US/international total market split that I have across my HSA/IRA/Roth/taxable.

xiongchiamiov

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?

magneto-reluctance

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.

lufisraccoon

*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%.

GaylrdFocker

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.

taplar

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. 

xiongchiamiov

>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.

Rich-Contribution-84

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 ~.

etaoin314

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.

xiongchiamiov

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

magneto-reluctance

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)

yogibear47

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.

magneto-reluctance

(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.

PadishahSenator

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.

Inner-Chemistry2576

How about switching into the 2070 TDF 90% 10%?

Automatic-Milk-1744

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.

Cruian

The fees on some TDF families can be extremely low.

Cruian

>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.

brokencreedman

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?

supdog13

I swapped my 401k out of the TDF a couple years ago and I’m glad I did

DaemonTargaryen2024

No, that’s not how TDF ERs work

CapeMOGuy

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.

Knerd5

That all makes sense but the fidelity 2050 TDF got fucking destroyed in 2022. Peak to trough was over 30% drop.

DaemonTargaryen2024

Depends on the TDF. Vanguard and fidelity have TDFs under 10 basis points

DaemonTargaryen2024

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.

christsizeshoes

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.

rainbow_explorer

That’s just not true. Fidelity’s 2050 index TDF is less than 10% bonds right now.

Cruian

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.

xiongchiamiov

>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

DaemonTargaryen2024

>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).

YoupanicIdont

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.

thetreece

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%.

xiongchiamiov

What don't you like about the TDF that's motivating you to change away from it?

AICHEngineer

Look up AOA and AOR. 80/20 and 60/40. Same as a TDF, but constant target allocation rather than time adaptive

bigbrooklynlou

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.

uderitzk

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?

IronyElSupremo

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.

chopsui101

no shit....of course a TDF is under performing, what you think it was gonna do with bonds and international?

Based_Commgnunism

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.

thewarrior71

If you want to be more aggressive than TDF, just do VT or VTI + VXUS. Same thing as TDF but without bonds.