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Do you contribute to retirement funds?

No
 Contribute <15% of take home pay
Contribute >15% of take home pay
Max out all retirement funds

Author Topic: Retirement Funds  (Read 64895 times)

Offline Shauly101

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Re: Retirement Funds
« Reply #160 on: April 27, 2021, 11:17:23 AM »
Hi,

Thanks, so from what I understand is to split the money into VOO and a vanguard Target Retirement Fund, correct?

Do you have the code for the/good vanguard Target Retirement Fund

RETIREMENT code is based on when you plan to retire?

Offline Yehuda57

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Re: Retirement Funds
« Reply #161 on: April 27, 2021, 11:49:42 AM »
Hi,

Thanks, so from what I understand is to split the money into VOO and a vanguard Target Retirement Fund, correct?

I'm by no means an expert or even a novice - I know as much about investing as John Kery knows about Middle East politics. The point of the targeted retirement funds is to diversify your investment into various funds, bonds, and whatnot. A significant portion of that will be in VOO-like funds, so investing in both would be redundant.


Do you have the code for the/good vanguard Target Retirement Fund

Select the one that matches closest to when you think you might want to retire. I doubt it would make much of a difference for the first 10-20 years, until you are much closer to retirement age in which case the fund will lower the risk level of the investments. So you don't really have to worry about the fact that you have no idea when you might retire, in 20 years you might have a better idea and can adjust it then.

Offline sruly101

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Re: Retirement Funds
« Reply #162 on: April 27, 2021, 11:59:40 AM »
I'm by no means an expert or even a novice - I know as much about investing as John Kery knows about Middle East politics. The point of the targeted retirement funds is to diversify your investment into various funds, bonds, and whatnot. A significant portion of that will be in VOO-like funds, so investing in both would be redundant.

Select the one that matches closest to when you think you might want to retire. I doubt it would make much of a difference for the first 10-20 years, until you are much closer to retirement age in which case the fund will lower the risk level of the investments. So you don't really have to worry about the fact that you have no idea when you might retire, in 20 years you might have a better idea and can adjust it then.

Thanks for explaining it, so what makes most sense is to put it only into the retirement fund that matches my age as of now and don't need to invest in VOO as well (as VOO is included in the retirement fund)

Offline Yehuda57

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Re: Retirement Funds
« Reply #163 on: April 27, 2021, 12:23:59 PM »
Thanks for explaining it, so what makes most sense is to put it only into the retirement fund that matches my age as of now and don't need to invest in VOO as well (as VOO is included in the retirement fund)

According to my extremely limited understanding, yes. If I'm wrong, I'm sure there is no shortage of members here to jump in and excoriate me.

Offline biobook

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Re: Retirement Funds
« Reply #164 on: April 27, 2021, 12:59:19 PM »
According to my extremely limited understanding, yes. If I'm wrong, I'm sure there is no shortage of members here to jump in and excoriate me.
You're right.  Vanguard's fund that targets 2055, which they recommend for someone born 1988-1992, has the following allocation:      
      
   Vanguard Total Stock Market Index Fund Investor Shares   54.20%
   Vanguard Total International Stock Index Fund Investor Shares   36.30%
   Vanguard Total Bond Market II Index Fund Investor Shares†   6.50%
   Vanguard Total International Bond Index Fund Investor Shares 1   2.90%
   Vanguard Total International Bond II Index Fund   0.10%
https://investor.vanguard.com/mutual-funds/profile/VFFVX

The total stock market is made up of >3000 companies, of which about 500 (surprise!) make up the S&P 500, which can be invested in with S&P 500 funds/ETFs such as SPY or VOO (or others).  These 500 are the large companies, and make up about 75% of the Total Stock Market Index.  So 75% of 54% means that about 40% of your investment would be in a VOO-equivalent, and there's no need to invest in VOO separately.
(As I understand it, also not an expert in this. Or anything, but that's another story.)

Offline Abey

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Offline sruly101

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Re: Retirement Funds
« Reply #166 on: April 27, 2021, 01:24:48 PM »
You're right.  Vanguard's fund that targets 2055, which they recommend for someone born 1988-1992, has the following allocation:      
      
   Vanguard Total Stock Market Index Fund Investor Shares   54.20%
   Vanguard Total International Stock Index Fund Investor Shares   36.30%
   Vanguard Total Bond Market II Index Fund Investor Shares†   6.50%
   Vanguard Total International Bond Index Fund Investor Shares 1   2.90%
   Vanguard Total International Bond II Index Fund   0.10%
https://investor.vanguard.com/mutual-funds/profile/VFFVX

The total stock market is made up of >3000 companies, of which about 500 (surprise!) make up the S&P 500, which can be invested in with S&P 500 funds/ETFs such as SPY or VOO (or others).  These 500 are the large companies, and make up about 75% of the Total Stock Market Index.  So 75% of 54% means that about 40% of your investment would be in a VOO-equivalent, and there's no need to invest in VOO separately.
(As I understand it, also not an expert in this. Or anything, but that's another story.)

Thanks so much for this info

Offline ShimshonK

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Re: Retirement Funds
« Reply #167 on: April 27, 2021, 06:53:17 PM »
Correct, it would be rather redundant to do both.

The idea of the target date funds is that you can put in the money and never touch it. It will automatically shift to more conservative holdings as you get closer to retirement.

A diversified fund like VOO is also great, but some would consider it aggressive to continue holding 100% in equities as you get closer to retirement.

If you have a Vanguard account, I'd definitely recommend using their funds (link that was posted here). If you have an account somewhere else, it's very possible that they have their own target date funds, which would likely be nearly identical.

Offline sruly101

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Re: Retirement Funds
« Reply #168 on: April 28, 2021, 10:17:12 AM »
Correct, it would be rather redundant to do both.

The idea of the target date funds is that you can put in the money and never touch it. It will automatically shift to more conservative holdings as you get closer to retirement.

A diversified fund like VOO is also great, but some would consider it aggressive to continue holding 100% in equities as you get closer to retirement.

If you have a Vanguard account, I'd definitely recommend using their funds (link that was posted here). If you have an account somewhere else, it's very possible that they have their own target date funds, which would likely be nearly identical.
Thanks much.
I have a fidelity account, will check if they have target data funds as well.

Offline Yehuda57

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Re: Retirement Funds
« Reply #169 on: April 28, 2021, 10:21:14 AM »
Thanks much.
I have a fidelity account, will check if they have target data funds as well.

They call them Freedom Funds:

https://www.fidelity.com/mutual-funds/fidelity-fund-portfolios/freedom-funds

Offline ShimshonK

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Re: Retirement Funds
« Reply #170 on: April 28, 2021, 07:35:26 PM »
They call them Freedom Funds:

https://www.fidelity.com/mutual-funds/fidelity-fund-portfolios/freedom-funds
It looks like the Fidelity ones charge a much higher expense ratio. 0.75% vs Vanguard's 0.15%.
That's significant, so it's actually probably best to stay away from those.

Offline biobook

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Re: Retirement Funds
« Reply #171 on: April 28, 2021, 07:47:26 PM »
It looks like the Fidelity ones charge a much higher expense ratio. 0.75% vs Vanguard's 0.15%.
That's significant, so it's actually probably best to stay away from those.
Fidelity lists several Target Date 2055 funds (for example), with some having expense ratios of .08 or .12.  I don't know the difference between all these.
https://fundresearch.fidelity.com/fund-screener/results/table/overview/netXpnsRatio/asc/1?assetClass=BAL&category=TL&indexFundOnly=All&ntf=Y&order=fundType%2Cntf%2CindexFundOnly

On second thought.... The one with an expense ratio of .08 requires a minimum investment of $5,000,000.  I guess one has to look at all the details.
« Last Edit: April 28, 2021, 07:52:28 PM by biobook »

Online aygart

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Re: Retirement Funds
« Reply #172 on: April 29, 2021, 08:35:19 AM »
They call them Freedom Funds:

Do they give UR points? Auto cycling to 5x categories?
Feelings don't care about your facts

Online aygart

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Re: Retirement Funds
« Reply #173 on: April 29, 2021, 08:39:49 AM »
It looks like the Fidelity ones charge a much higher expense ratio. 0.75% vs Vanguard's 0.15%.
That's significant, so it's actually probably best to stay away from those.

The Vanguard ones are allocated in index funds while the Fidelity ones are in actively managed funds.
Feelings don't care about your facts

Offline ShimshonK

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Re: Retirement Funds
« Reply #174 on: April 29, 2021, 10:41:56 AM »
The Vanguard ones are allocated in index funds while the Fidelity ones are in actively managed funds.
Well, that explains it. Seems surprising though that Fidelity doesn't have equivalent funds.

Offline ushdadude

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Re: Retirement Funds
« Reply #175 on: April 29, 2021, 10:42:40 AM »
Well, that explains it. Seems surprising though that Fidelity doesn't have equivalent funds.
you an actually buy certain vanguard funds within a fidelity account. just check the fees first

Offline avromie7

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Re: Retirement Funds
« Reply #176 on: April 29, 2021, 10:49:17 AM »
Well, that explains it. Seems surprising though that Fidelity doesn't have equivalent funds.
This probably also explains why I found the Fidelity funds to be quite lackluster. They trail the market significantly even when retirement is many decades out.
I wonder what people who type "u" instead of "you" do with all their free time.

Offline skyguy918

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Re: Retirement Funds
« Reply #177 on: April 29, 2021, 10:51:58 AM »
This probably also explains why I found the Fidelity funds to be quite lackluster. They trail the market significantly even when retirement is many decades out.
Wouldn't all target funds trail a bull market?

Offline avromie7

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Re: Retirement Funds
« Reply #178 on: April 29, 2021, 10:53:02 AM »
Wouldn't all target funds trail a bull market?
I don't think so, I would expect it to be very aggressive when it's so far from retirement.
I wonder what people who type "u" instead of "you" do with all their free time.

Offline skyguy918

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Re: Retirement Funds
« Reply #179 on: April 29, 2021, 10:55:37 AM »
I don't think so, I would expect it to be very aggressive when it's so far from retirement.
But not more aggressive than the overall market. No target fund is 100% equities.