TDF

ThatSpicyMeal

My old 2060 TDF was already 6 percent bonds. Not worth imo.

AviPaz

If your Roth IRA and taxable are already basically all S&P 500, keeping the 401k in a target date fund is actually a solid way to diversify without overthinking it. One year of outperformance means nothing though. The real questions are fees and what the fund actually holds. If the TDF is low cost and broadly diversified, it is doing its job. Going 100 percent S&P in the 401k would basically concentrate you even more into US large cap growth. Rebalancing Let the 401k do it automatically. Either turn on auto rebalancing quarterly or semi annually, or just rebalance once a year. The biggest win is consistency, not perfect timing.

djryan13

Just pick a fund that is years later… plan to retire in 2030 but I picked 2050 fund. I do have other funds too but most of my money is now in a cheaper TDF.

Machine8851

I wouldn't do a TDF because of the bonds.

OkChange9119

Agree. Part of the answer depends on the fee structure and/or share class of the TDF vs S&P500 index your employer offers in the 401k. And whether you invest outside of your 401k in an IRA or brokerage account. Also, different asset classes tend to have staggered years of under-performance and out-performance. Several years ago, it was mid and small cap US stock leading and, before that, it was real estate REITs. International stocks had lagged US markets in terms of returns for like a decade. https://www.visualcapitalist.com/how-major-asset-classes-have-performed-since-2020/

OkChange9119

Agree. Part of the answer depends on the fee structure and/or share class of the TDF vs S&P500 index your employer offers in the 401k. And whether you invest outside of your 401k in an IRA or brokerage account. Also, different asset classes tend to have staggered years of under-performance and out-performance. Several years ago, it was mid and small cap US stock leading and, before that, it was real estate REITs.

_galaga_

A lot of 401ks don’t have great options so a TDF is decent but you don’t need the bonds right now. Most would probably swap the bond chunk out for ex-US if that was an option. If you’re stuck with a TDF you could look to push the date out and see if that cuts the bond mix down further.

Adventurous_Elk_4039

There are various strategies but it all comes down to expense ratios and how much work you want to put into it. The TDF likely shows better because international outperformed last year. Personally, I like “owning the market” for instances just like that, so I would never recommend someone only hold the S&P 500. That said, depending on your 401k offerings, do you have any total market funds, total international funds, of if you have an S&P 500, do you also have mid cap and small cap index funds available? If not, it might just be easier to keep the TDF.

DaemonTargaryen2024

I was responding to your OP which called out the last 10 years. Either way, you are correct that a TDF can generally be expected to underperform an all-stock portfolio in the long run. It serves a different purpose and different audience

foradil

>You’re also (inadvertently) cherry-picking data. There have been 10 year periods where VTI has underperformed a TDF. Picking the last 20 years is not cherry-picking. Prior to that, there were few retail investors, ETFs were not mainstream, and 401k's were less utilized.

DaemonTargaryen2024

> I understand that target date fund should be providing a diversified, age-appropriate portfolio that gets more conservative over time. Yes. It’s a Honda civic. > I naively assumed they would not get particularly conservative until 10-20 years pre-target-date. Did you not read the prospectus? Or any of the publicly available data about the pre-planned lifecycle of the fund? > The 10-year returns for the 2060 fund is 201% versus 284% for VTI. You are comparing apples and oranges. TDFs never claim to compete with an all-stock fund in terms of performance. You’re also (inadvertently) cherry-picking data. There have been 10 year periods where VTI has underperformed a TDF. You can still generally expect VTI to outperform long term, but only looking at the last 10 years where there was a substantial US bull market is not a complete analysis. > Is the target date fund more stable or safer? Generally, yes. > How does this make sense? Answer this: who is the target audience for TDFs? And does you not being their target audience mean the TDFs are therefore useless?

StatisticalMan

Comparing VTI to a target date fund is apples to oranges. Compare a VTI+VXUS+bonds to a TDF.

dudreddit

The OP does not understand how TD funds work ... and 201% vice 284% for VTI should be considered quite good, for a TDF!

Pale_Drink4455

I have been saying this for years and the Bogleheads cultists hate what I had to say. I’ve been in purely the S&P for many years and my return has been close to 16% for the past 10 years alone in my retirement accounts. My brother in law who was stubborn to just stick with TDF and had a starting similar balance of mine since 2016 produced just under 11% over ten years. The ending balances between him and me are substantial with similar contributions!! Plus his expense ratios have been higher than mine to boot!

phil-l

Try it yourself! You can look up the performance for the 4 funds that make up this Vanguard TDF. Looking quickly 5 years back (mostly because that was easy to find): No surprise, the Vanguard Total Stock Market fund is way up, and the International Stock fund is up - but not as much. The Total Bond fund looks to be close to the inflation rate, but the International Bond fund has been down over the past 5 years. Yeah, you can't really compare this collection of funds to a pure US stock fund, particularly over the past two decades. They're trying to do different things.

er824

Honestly, if the expense ratio is reasonable there is nothing wrong with a TDF. I had that exclusively in my 401k for about 12 years. Only switched it because my employer refused to add the index fund flavors and I got tired of paying the expense ratio of the ones they did offer.

Odd-Flower2744

The idea that there are institutional investors scheming together with retail investors in mind has always been pretty absurd to me. All of retail together doesn’t move the market huge amounts and a big chunk of that group isn’t trading so there’s nothing to fool them with, their money comes out of paycheck into their TDF or whatever regardless. In summary you have retail making up a decent but smaller portion of the market then a huge portion of that being passive investors and what you’re left with is a pool of money so small it’s a no factor and even further this small fraction isn’t all betting in the same direction.

RangerNo5619

So you would opt for a full send into SPY over an asset allocation into a traditional TDF (target date retirement fund)? Btw, your return on investment over the past 14 years is beyond impressive. I’m tempted to do the same thing, but if we experience a depression in the next 15 years, I’m screwed.

Shiz_in_my_pants

Do you have an sp500/total US market/TDF fund? Congrats, you already have NVDA in your portfolio then.

Ill_Register9857

What about 37 and just started investing? Is TDF 2055 in 401k good? And what would you put in a Roth I just opened one too Thank you

Ill_Register9857

It’s with hsa bank there are many may etf and mutual funds and individual stocks to choose. I already have TDF 2055 in my 401k and Voo/schd in my Roth IRA. I shouldn’t need this money as I’ll have a fsa next year

c0LdFir3

What turd of a TDF do you have? Schwab, Fidelity, and Vanguard all managed over 20% on their TDFs. I’d be dropping that thing and doing something else if I were you.

luke_530

Dude get out. This robinhood? Go to fidelity or vanguard and open a roth and get a TDF. Stop the gambling mindset. Slow and steady on this game. Only allocate a small percentage to Yolo shit

luke_530

You sir need a TDF in that roth

buckles66

I think TDF's are good for someone who who doesn't ever want to rebalance and is not as tolerant to risk. I personally don't have any bonds right now as I'm young (28yo) and have 30 ish years until I want to retire. I'd rather focus on growing it as much as possible now, even with more risk. Its all up to your personal risk tolerance. Another thing to keep in mind is TDF usually have slightly higher expense ratios so I would do some comparing and research on how they function before deciding if that is the direction you'd like to go. No matter what funds you pick though, consistency and time in the market is the most important thing.

Wah_Day

I'm 32 and just started a new job, that offers a pension, and a 457b account, and looking for some advice on how to best approach all of this, and also kind of a sanity check. I currently don't plan to retire early, so planning on whatever the new age goal is. I have an old "Retirement Account" and an ESOP from my previous employer, which equals about $250k combined. I also have a Roth IRA with $25k in it. The "Retirement Account" has both pre-tax and after-tax funds, not effected by Roth contributions limits. My current plan is as follows: * Currently putting 5.5% pre-tax into Pension, company is also contributing 5.5% * Currently putting 5% after tax into 457b account, 100% into a 2065 TDF. Auto increase 1% every year. * Build up 1-year emergency fund, currently 3-months. * Max out Roth IRA, and diversify a bit more. Currently 70% VTI/30% VXUS, thinking of moving into 40% VTI, 32% VXUS, 20% BND, and 8% VNQ * Roll over ESOP account into a tax deferred account, IRA * Withdraw the full after-tax portion from the "Retirement Account" and roll that portion into the Roth IRA, the gains would roll over into the tax deferred account mentioned above. * Leave pre-tax alone, and let it grow. Diversified into Large, Mid, Small cap * Build a small vacation fund, $2,500 * Start building an investment account, no idea on what to invest in just yet. With all that said, does all this make sense and look like a good path to retirement? Are things I should reevaluate? Never though about having a pension so it is kind of making me rethink how to handle/approach retirement.

Ok-Repeat-2334

One big "catch" is that the finance industry makes far less money off passive index funds, especially in the past decade or so, since management fees on things like VOO have collapsed down to below 0.1% (So if you have 1 million invested, the company running your fund gets <$1000 dollars per year to run it, which isn't even pure profit because they need to use that money to do things like keeping the fund balanced to the index). This is why Wall Street pays for a lot of articles fearmongering against passive investing, arguments from which you will see repeated here despite the fact that they don't make sense. One common one is that there must be a "passive bubble" forming due to the % of assets that are held in passive index funds. There is a kernel of truth here, in that yes it makes sense that passive demand based on "being on the index" creates price distortion, but the "there is therefore a bubble that hasn't been corrected for" part is the lie. It relies on removing the following facts from the discussion: 1) Price discovery (ie, the process by which market actions establish a consensus price that we consider accurate) is accomplished by the act of trading, not the act of holding. You'll often see scare quotes like "90% of stocks are now held in passive funds", but this doesn't actually matter if the remaining 10% are traded with sufficient frequency to achieve price discovery. And we have more trading volume than ever. 2) If these distortions in the market ever grew large enough that active investing managers became reliably able to exploit them enough to beat the market on average, the problem would immediately self-correct. We would reach a sort of inflection point where it was totally balanced whether the "next" person with money to invest took an average of 8% per year passively and paid 1% fees (so 7.9% returns), or invested in an active fund which makes 9% returns but charges a 1.1% fee. If you choose the active fund, the increased demand would justify them now charging 1.10000001%, and suddenly the next marginal dollar is better spent passively. Obviously it's impossible to ever really know this kind of thing with this level of instant granularity, and the mechanisms by which the market self-corrects are a bit more complicated, but the larger pattern holds, and we can say with absolute certainty that active investors do not currently beat the market on average, even before you consider their higher fees. Remember, "active investing" isn't just guys going "buy! sell!", it also includes algorithmic trading, and the most simple algorithms cost pennies to run. It's trivially easy to create a script that says "Buy the S&P500, unless the P/E ratio of #1-500 exceeds the P/E ratio of #501-1000 by x%, in which case, sell the S&P500 and buy those instead", which would self-correct for the above. There's all sorts of algorithms like this, and infinitely more complex, currently at work in the system. So, given all this, the more interesting question is why so many people are just leaving money on the table. Like at my work we have a sort of "captive" pension system where you can choose which funds your investments go into, all of which have higher fees than on the open market, but never to such a degree that it's worth rejecting the system and losing out on our pension-matching. There is an S&P500 fund at 0.4%, and a Target Date Fund at 1%, which is just composed of a mix of the lower-fee funds available to you. You can see at any time what the % of those funds are, and if you are in the TDF, at any time you can break it up and buy the components of it directly. When you're a new hire, you actually lose more in fees than it invests in bonds for you, because the allocation is so low. And obviously, the TDF is the default they assign all your investments to unless you log in and tell it to do otherwise. For the life of me, I cannot get my fellow colleagues, even highly paid engineers who should be able to understand this stuff, to accept that they should log into the system, spend half an hour a year replicating the makeup of the TDF fund with its compnents, and save thousands of dollars a year. They still "feel safer not touching it". This kind of behaviour from humans is the real distortion in the market you should be wary of, which is how active investors continue to stay in business despite worse performance year after year. Even the illusion of someone else "taking care of your money" for you is enough for retail investors to set their money on fire. And so, those of us who choose to shrug off that false comfort, get better returns.

greytoc

I may have misunderstood your goal. You mentioned "let them do the allocation shift" so I took that to mean that you wanted the allocation to be moved slowly over time. And yes - the TDF would have a higher allocation of fixed income. Re - the manual process that I've used is primarily to move into fixed income slowly over time - but I have liked using target maturity fixed income funds so that I can control the average duration and credit quality. That probably works for me because I trade actively. Re: SWAGX - yeah - I think that's fine depending on your duration needs. It's intermediate duration.

el_smurfo

I assume the TDF will have a high allocation of fixed income which is my goal. What would your manual proposal be just shift the majority of the total market to Schwab's bond fund, SWAGX?

greytoc

That's fine. But you would need to check the tdf allocation as of now - a TDF with a 1-2 year target may already have a high allocation of fixed income. It's really also about your own personal risk tolerance - I personally would use a more manual process. Mostly because I like to be in control. But it depends on how much effort you want to expend into doing the re-allocation.

luke_530

Vti, vgt, vea & vwo. Also, open a roth. Do VT in roth, or a TDF 10 years past the year you'd want to retire. Then you don't need to worry about retirement as long as you max that thing out every year, tax free growth. Then open a brokerage with some combo of vti and vea+vwo. Throw in vgt if you want some growth.

Medical_Addition_781

My preferred ratio is more like 50 TDF, 25 SP500, 12.5 midcap blend, 12.5 small cap value.

ejeffrey

Yeah.  A TDF is designed to be an all-in-one, lifetime portfolio.  It's so you can set and forget your 401k and not worry about it for a few decades.  if you are managing multiple allocations it's not doing what it's designed for and there isn't much point, you should just pick the allocation you want and buy it  I also think most target date funds are inappropriately conservative for young investors, and generally a sub optimal choice. The main thing they do is have a fraction of their assets in bonds and stable assets and that fraction grows with time.  Having bonds helps protect you in the case of a stock market crash. That matters if you need to use the money now.  In a retirement account you aren't going to withdraw from for at least 10 years there is no reason for any bonds not even 10%.  And with their lower average returns they aren't the best use of tax advantaged savings if you get to the point of maxing out your contributions. If you want bonds, buy a bond fund. Keep it  in a taxable account as part of your rainy day fund. That's especially true if they include tax advantaged government bonds. That brings up another point that you didn't mention.  You want to maximize your tax advantages but you should still have a rainy day fund.  What you don't want is for a short term emergency to force you to withdraw money from a retirement account and pay penalties.  

harrison_wintergreen

a TDF for someone his age is probably close to 50% S&P 500 or equivalent, Russell 1000 or whatever. so his plan is about 90% S&P 500.

RandolphE6

Remember you're asking this on reddit which mostly consists of young adults that have no concept of risk tolerance. So of course you're going to get balls to the wall asset allocation recommendations. There's absolutely nothing wrong with a TDF. TDFs encapsulate the standard 3 fund portfolio which is the benchmark for success.

knight-owl19

Really great explanation here thank you. That’s a good point. I might just go all in for S&P 500 then at least for a little while. From all of the comments I’ve gotten it seems the 20% in TDF isn’t very useful lol

brewly

It depends on the glide path of when the TDF switches to bonds at what age. For example if you have access to ITDH 2060 TDF which starts at 0% bonds and adds much slower it could be a smart idea to do something like 40-50% TDF and 50% SP500. It essentially gives you a 80% us/20% ex us split along with a built in bond pathway for probably around 0.12% expense ratio. Then when it becomes full bond percentage it ends up being around 25% bonds due to the split percentages. I like the idea. If you have a less optimal TDF option that starts bonds at 10% now or much higher expense ratio then doesn't look as good.

VictorChristian

at 25? 100% into SP500. Move into Target Date fund maybe mid thirties or 40's ... that said, even the Target Date Fund would be mostly SP500 - depending on the fund. Do you know what the ticker is for the SP500 index and the TDF?

yad76

A target date fund that far out is likely to be something like 90% stocks/10% bonds. The majority of the stocks are going to be US and then the S&P 500 is 80% of the US total market. Without knowing your specific TDF and just ball parking, let's say half of your TDF is already in the S&P 500. That means your overall portfolio is going to be something like 90% S&P 500 with the remainder being a small amount of international stocks along with trivial chunks of US mid/small caps and bonds. I am personally fond of mixing investments like you are doing to better control your desired exposure and to make it easier if you can't decide on one or the other, but I think the specific allocation you have here doesn't accomplish much as you are so heavily tilted toward S&P 500. Imagine a US market crash of 50%. You've basically are still down almost 50%. Imagine international/small caps out perform S&P 500 over the next 10 years by double, but that outperformance was less than 10% of your portfolio. What I would advise is deciding why you want to split between these two funds and then use that as guidance to adjust your allocation more appropriately. I'd suggest at least doing 50% S&P 500/50% TDF if you want the TDF exposure to mean anything. If you decide you don't want to go more than the 20% you have now, then consider why not just going 100% S&P 500.

OldBrewser

Nominally, the point of a TDF is to get you into an asset allocation that is appropriate for your time left to retirement. You defeat point of that by only having a small allocation to the TDF. I’d dump it.

Ill_Register9857

If you have a TDF in your work 401k, a dividend employee stock program (ConEdison), What would make sense to have in your IRA?

Odd-Flower2744

Only reason I’d do a TDF at that age is if it has a cheap expense ratio and expense ratio on international options is high. Basically its sole purpose is to get the international portion cheap but usually a 401k that’s offering a low expense ratio TDF also has a cheap international option. My 401k has 1%+ fee on TDF and international so I go 100% S&P500 with a .05% ratio and just get international in IRA.

ThereforeIV

>Is it a good idea to put 80% into S&P 500 and 20% into target fund? Why? A huge part of understanding finance, or anything for that matter, is figuring out the "why". >Long story short I moved it from the general 100% 2060 target fund to 80% into S&P 500 and 20% into target. Was this a good idea? Why leave 20% in a Target Date Fund? The "why" if the index funds is easy, you want to get the market. But why a TDF? >I’m 25 and I’ve had my 401K since I was 19. I have about $8,300 or so in there rn (ik it’s not a lot alright). Great start, your are ahead of the curve. >Also I have like a third of that into a Roth, a third into pretax and a third into the employer match thing my job offered. Make sure all that money is actually invested. The Roth IRA (there's also Roth 401k) is just a tax advantaged box; you still have to invest the money in the box. You wouldn't believe how many stories get payed if "it been 5 years I've got returns in my Roth", only to find out the person never invested the money. >I also left the job recently but I plan on getting another one soon that matches as well to merge 401Ks. Rolling over 401Ks is good, wish I had done that earlier; instead I've got half a dozen of them scattered. >Figured I’d come on here and ask people more experienced than I am. Lmk if I can fix anything. Thanks. A Target Date Fund is paying someone what to invest your money based in theory on when you want to retire. Usually they are doing some large index vs bond split. They basically always underperform with extra hidden fees. Brokerages push TDF because they make better money off of those than off of simple index funds. Better to keep things simple: - Max out tax advantaged retirement accounts - Invest in low fee broad market index funds

luke_530

I see Index funds in your future. Maybe even a TDF. Over the long term, you're always going to lose out on this yolo shxt.

PashasMom

Default pick for many plans is the TDF for the year closest to your 65th birthday.

Ill_Register9857

Is sp500 only, for someone 37 years old and just started a Roth? At what age would you focus on dividends ? In my 401k it’s TDF 2055 Just wondering because in my employee stock program ( ConEdison ) it’s a dividend stock and I’ve been investing in it

Emotional-Power-7242

If want to autopay and forget about it for 40 years buy a TDF. If you want to autopsy and forget about it for 20 years and then in 20 years have to figure out what bonds are, buy VT.

Sad-Wallaby5104

One last question for selling the TDF! Is it ok to just choose the Average Cost basis in this scenario?

therealjerseytom

> I made the mistake of investing in a TDF VLXVX in my BROKERAGE account Why do you think this is fundamentally a mistake? > Can someone help me understand how to estimate my taxes for the below if I sell now? If the positions are long term holds - more than a year and a day - gains will be at your long-term capital gains rate, which will be 15%. Short holds (under a year) are taxed as ordinary income.

AICHEngineer

Are your TLH sales STCG or LTCG? Cause 1900 in TDF gains will be taxed mostly at LTCG, so 15% for you.

Pin_ups

I have held SPYG, SPYD, and vanguard TDF 2060 in the past 6 years, never had to worry about the market, that money is now doubled for me with 5k ytd gains in 2025.

Admirable-Sea-8100

If you're retiring in 2050 then don't worry about it. If AI investment is a bubble and it pops then it doesn't matter for you since the market won't take 25 years to recover (as long as you have a diversified portfolio and you aren't just picking a few stocks, which it sounds like you aren't). And whatever you do, *do not* withdraw your funds or stop contributing before or during a crash. You're much more likely to lock in losses and miss out on the rebound than you are to successfully time the market. If you aren't 25 years out from retirement then the way to deal with this is by having a high enough bond allocation to weather a crash. If you're using a target date fund then the TDF will do this automatically, so you don't need to worry about it. At most, just try to put off using your retirement savings for a year or two after the crash (which is only a worry if you're retiring right when it happens) to give the market some time to recover.

Pin_ups

Man, stop selling us products, you are in the wrong room to sell some junks. I am simple man, I go SPYG, and vanguard TDF 2060.

siamonsez

>10% in individual picks and a rational behind why you think each is undervalued and an exit strategy for each. A fixed income allocation based on your planned withdrawals over the next 10 years. >10% total for alternatives like commodities and reits and crypto. The rest in global, market weight equities and if you diverge from market weight you should have a logical reason backed up by data. It's going to largely resemble a TDF or target allocation fund.

paymerich

Or just stop contributing to the bond allocation and leave alone to progressively get smaller just by time. It’s a portfolio perception issue because your entire portfolio adds up to 100%. It’s why bonds smooth out the market drawdowns. You basically are describing a Target Date Fund. Maybe you should consider rebalancing into a TDF that is 5-10 years later than your planned retirement age so it will be a bit more aggressive.

LibraryLongjumping63

Core - Far away TDF. Risk/Hedge/Fun/Ok if I lose etf's from there.

Historical_Low4458

You don't need both a S&P 500 index fund and a large growth fund. Just pick one. Also, I would probably flip the investments. Everything except the TDF in the traditional.

therealjerseytom

> I'm thinking I can be more conservative with my Regular 401k with a TDF and more aggressive or take on more risk with my Roth 401k with S&P 500 (FXAIX) and maybe a small-cap. But again, why? Why do you think a traditional 401k should be more conservative than a Roth?

Ok_Assignment4100

I guess both can be used for aggressive investing -- depending on your retirement goals and tolerance for risk. Again, I'm 40 and can take on some volatility. My company's investment options aren't the greatest (Who's isn't?), but I'm thinking I can be more conservative with my Regular 401k with a TDF and more aggressive or take on more risk with my Roth 401k with S&P 500 (FXAIX) and maybe a small-cap.

JackfruitCrazy51

My focus right now is bridging the health care gap from 60-65. I've been doing a lot of Roth the last few years so that I can keep my income below that 400% level for ACA. I've also been trying a bucket strategy for those 5 years, where I'm doing some CD/TIPS ladders. It will be a tricky time, because those years would be great times to do Roth conversions, but that would interfere with the ACA discounts, which could be huge. As far as investment choices, over the last few years the majority of my retirement savings has been in 2040 TDF's. From age 35-50, I was 90% S&P500. From 25-35, I thought I was some kind of genius and had about 15 different things selected in my 401k.

ventipls

Okay thanks! I just did 40-40-20 on two other Large Caps just to see how it does, if i notice steady declines or anything off I’m going to go 50-50 right then compare and if all else fails back to 100% S&P. Was considering TDF but after doing research that does not sound like something I’d want to do.

siamonsez

At a minimum contribute enough to get any employer match. As a rule of thumb you want to contribute 15% of income to retirement if you can't swing that now don't stress, but keep in mind you'll eventually have to contribute more to make up the difference. After contributing you have to decide how to invest it. A TDF is a perfectly reasonable option until/if you learn enough about investing to have a strong opinion. At your age probably a 2055 TDF.

PashasMom

American Funds 2040 TDF would be my pick for her. That way she doesn't have to worry about how much international vs. domestic equity, small caps vs. large caps, equity vs. bonds -- the professionals at American Funds are doing the managing for her. They have an excellent track record.

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