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thin skin can't win |
I'm interested in the thoughts and opinions on this fund type, whether for an IRA or employer sponsored plan. I'm talking about the funds that have a managed blend that is targeted towards a set "date" of retirement, like the year 2035, 2040, etc. For example, the Vanguard 2035 Fund One advantage is obviously very low fees, though in the case of Vanguard it's a little misleading as the funds the 2035 Fund invests in also have fees, but true to Vanguard model all of those are low as well. So, outside of the low costs, how do you see these fitting into the portfolio for someone who doesn't necessarily want to engage a full-boat money manager and has basic investing knowledge but neither the time or desire to make evaluation, selection and monitoring their investments another full time job. I've got some of my retirement savings stashed in these funds currently. From my review of the mix and returns it looked like the blend and objectives of the funds by my actual year of potential retirement were a tad more conservative than I was looking for, so I just bumped it up to then next 5 or 10 year time. IOW, for example if I'm retiring in 2030, I selected the 2035 fund for a little more aggressive model. They seem like a little bit of an "Easy Button" approach, but I can't see where they are fundamentally not a good choice. You only have integrity once. - imprezaguy02 | ||
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If you dont mind doing a little reading you could go here https://www.bogleheads.org/forum/index.php I'm alright it's the rest of the world that's all screwed up! | |||
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Lost |
I just came out of a targeted fund. I did very well. This is from someone who is a former financial advisor and knows how to do it myself. It was just worth it to me to pay someone else to manage while I concentrated on engineering. | |||
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| I believe in the principle of Due Process  |
I’ve never seen the advantage of targeting, or “exposure” to various segments, or balancing. Let’s face it. These are variations of the “forecasting the future” dilema, and nobody does that surely. There are coincidences where whatever your scheme is works out better than some other scheme, but these are not causal, merely coincidental. Given the liquidity of public markets, why not just buy the lowest cost market index and liquidate as needed? Buffett and Munger have the opinion that investors who succeed do so in spite of their money mangement advisors, not because of them. https://www.fool.com/retiremen...tirement-advice.aspx Luckily, I have enough willpower to control the driving ambition that rages within me. When you had the votes, we did things your way. Now, we have the votes and you will be doing things our way. This lesson in political reality from Lyndon B. Johnson "Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." - Justice Janice Rogers Brown | |||
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Let’s face it. These are variations of the “forecasting the future” dilema, and nobody does that surely. There are coincidences where whatever your scheme is works out better than some other scheme, but these are not causal, merely coincidental. Given the liquidity of public markets, why not just buy the lowest cost market index and liquidate as needed[/QUOTE] This worked for me. Target funds just another sales gimmick. | |||
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Peripheral Visionary |
The vanguard date funds have worked well for me so far.   | |||
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| Shit don't mean shit |
Add me to JALLENS opinion. I'm 45, plan to retire around 60, or earlier if possible (very likely). I stay away from target funds and just have a nice mix of low cost small, mid and large cap index funds, plus some emerging markets stuff. I actually don't have any bonds, but do have a few dollars in money market funds, not much though. Some of my employer match 401k goes into those target funds. Once per year or so I have to move it. I can't change it, frustrating. | |||
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His Royal Hiney |
You need to look at the big picture. You have one thing down pat: finding the low cost fees for someone to manage your funds. The general principle of a targeted fund is that they will change the mixture to manage the reward/risk-volatility profile of the fund as it gets near the target date. The question is: is their philosophy of how much reward/risk-volatility should be for a given age compatible to your philosophy? The third most important aspect when you're holding mutual funds or any securities, is how much overlap do you have when you put all your holdings together? One fund will hold a mixture of securities and another fund you hold will hold their mixture of securities. But when you consider your whole portfolio, are you actually over-exposed with one type of securities or even one particular stock and under-exposed when it comes to other types of sectors/ stocks. So, the main take away is you need to manage your whole portfolio overall looking at it in terms of how much percentage of it is in one kind of funds versus other types of investments and whether the whole portfolio is going to give you the rewards/risk-volatility you are aiming for. "It did not really matter what we expected from life, but rather what life expected from us. We needed to stop asking about the meaning of life, and instead to think of ourselves as those who were being questioned by life – daily and hourly. Our answer must consist not in talk and meditation, but in right action and in right conduct. Life ultimately means taking the responsibility to find the right answer to its problems and to fulfill the tasks which it constantly sets for each individual." Viktor Frankl, Man's Search for Meaning, 1946. | |||
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| thin skin can't win |
Interestingly, this is something I've already recognized and expect to change to ever-further downstream funds. I plan to have the ability to still wait out some volatility very close to or after retirement and the funds get verrrrrry conservative it seems once you get to that point. For example, their 2015 fund is 47% bond funds right now. I don't see that ever being the right answer.
I'm using one of the online tools where you can load all your account data and get regular updates on the overall mix and balance. It shows me way too heavy in tech, but that's because I was very early adopter of AMZN and APPL and haven't sold any of that over the years. Hell, now the unrecognized gains gives me heartburn just thinking about it! Pulling those two out of the mix shows a much more normal blend across the universe of accounts. Even with the 2035-2045 funds the bond mix is more than I'd normally lean toward, but realize it's the wise thing to have as a part of the mix as I move into my mid-50s. You only have integrity once. - imprezaguy02 | |||
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I am not so sure. Take a look at what bonds are paying now. Granted it could change in the future. Nothing beats a low cost Index Fund. If you also like to pick some stocks do so. I prefer to be in control of my holdings. | |||
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| I believe in the principle of Due Process |
I’ve never understood the allure of bonds. I remember when Penn Central went bankrupt. All those people who put their money in railroad bonds had a nasty shock. It could have been avoided by keeping track of Penn Central financials, but who wants to do that? Professional trustees had no excuse, of course. More recently, look how Chrysler and GM bond holders were treated. No respect! Bonds have been a beggars crossroads over and over. Now when yields have been essentially nothing, they are the worst of all possible investment, IMNotalwayssoHO. There is little protection against a financial downturn, certainly no guarantees. Luckily, I have enough willpower to control the driving ambition that rages within me. When you had the votes, we did things your way. Now, we have the votes and you will be doing things our way. This lesson in political reality from Lyndon B. Johnson "Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." - Justice Janice Rogers Brown | |||
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They are a very solid option for a lot of people. Kind of like a Glock 19. You could do a lot worse IMO. And not just because of the 'mix' but Vanguard's are extremely low cost. Big fan of Vanguard. --------------------------------------------- Proverbs 27:17 - As iron sharpens iron, so one man sharpens another. | |||
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Member |
It's fine, especially if you don' want to spend the time doing it yourself. Target retirement funds are marketed for investors who want simplicity of managing their investments. And, adjusting the target date to match your risk tolerance is the right thing to do. The target fund will rebalance automatically as the markets move up and down, and will help keep you from making behavioral mistakes like selling when you shouldn't etc. | |||
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| Paddle your own canoe  |
My concern is that the Target Date Funds get too conservative toward the retirement date. I have Fidelity managing about 60% of my assets with the rest in vested in dividend paying stocks that I choose and manage. I am able to live comfortably off the dividend stocks while drawing some of the 60% to pay taxes and gift to my children. It drives Fidelity nuts that I have those concentrated securities to live off of even though they admit it is working. | |||
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Drill Here, Drill Now |
I've seen several articles suggesting to compensate by buying one that is 5 or 10 years beyond your actual retirement date. For example, if one were to plan to retire in 2028 they could buy: Ego is the anesthesia that deadens the pain of stupidity DISCLAIMER: These are the author's own personal views and do not represent the views of the author's employer. | |||
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| Lost |
^^^That's exactly what I did, with very pleasing results. | |||
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Better Than I Deserve! |
This is exactly what I do...I plan to retire around 2030 but have my money in T. Rowe Price TRRDX which is a 2040 Target Retirement Fund. I want it a bit more aggressive as I get closer to retirement. I also have an ETF portfolio to play with and manage myself. I'll have some income when I retire from my military pension and wifes pension so I hope not to need the investments to live. ____________________________ NRA Benefactor Life Member GOA Life Member Arizona Citizens Defense League Life Member | |||
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Member |
With the Vaguard ‘Target Date’ funds the makeup is mostly lost cost Vanguard index funds of various flavors and percentages. Of course the mix depends on the ‘date’ labeled on the fund. I don’t have any myself, the the Son does. With his part-time income he could ease into Vanguard with a $1000 initial investment, from the common $3k. I’m more neutral to favorable with them, it can depend on the individual, with who, including fees involved. They are a lot better than procrastinating and wondering what to do. | |||
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| Good enough is neither good, nor enough |
If you are many years from retirement consider an index fund. Warren Buffet is a big proponent. Vanguard has some great low cost index funds that I use. They are all equity, so less diversification than a targeted fund, but in the long run, I expect markets to go up, so I like equity funds for max growth. Buffet won a million dollar bet with this one that I own as well. https://investor.vanguard.com/...-funds/profile/VFIAX Here is an article on the bet and rationale behind index funds. https://investorplace.com/2018...ett-vanguard-advice/ There are 3 kinds of people, those that understand numbers and those that don't. | |||
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| I believe in the principle of Due Process |
Those who continue to contemplate these matters would be well served to read Warren Buffett’s Chairman’s Letter of 2017, starting at page 11, where he discusses the bet he had pitting the passive index of S&P 500 vs. a collection of 5 fund of funds proposed by a fund manager. http://www.berkshirehathaway.com/letters/2017ltr.pdf. Here is his statement of what was involved:
For outcome and conclusions, see the report. Actually, those who are contemplating these matters would be well served to read ALL of Buffett's Chairman’s Letters, starting all the way back in 1977. It is the cheapest thing to getting an MBA I can imagine. Luckily, I have enough willpower to control the driving ambition that rages within me. When you had the votes, we did things your way. Now, we have the votes and you will be doing things our way. This lesson in political reality from Lyndon B. Johnson "Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." - Justice Janice Rogers Brown | |||
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