Retirement Funds

[avromie7]

But not more aggressive than the overall market. No target fund is 100% equities.

Why would you want that over aggressive growth? At the very least I would want to match the overall market.

[skyguy918]

Why would you want that over aggressive growth? At the very least I would want to match the overall market.

You're entitled to your preferences, but that's not how target funds work. More importantly though, you called out Fidelity by comparing their find to the market. Comparing to other target funds works be more appropriate, unless your goal is the critique the whole concept of a target fund many years out from retirement.

[Shmulie]

You're entitled to your preferences, but that's not how target funds work. More importantly though, you called out Fidelity by comparing their find to the market. Comparing to other target funds works be more appropriate, unless your goal is the critique the whole concept of a target fund many years out from retirement.

Personally I think target funds are a big mistake when you are more than 15 years away from retirement, my opinion is go with index funds that track the overall markets up until you are pretty close to retirement (5-10 years)

[avromie7]

Personally I think target funds are a big mistake when you are more than 15 years away from retirement, my opinion is go with index funds that track the overall markets up until you are pretty close to retirement (5-10 years)

I would add aggressive growth to this when you're further away from retirement.

[Shmulie]

I would add aggressive growth to this when you're further away from retirement.

Any funds that you can recommend that has a strong/long track record of beating the overall market (I usually use the S&P 500 as the benchmark)?

[Yehuda57]

Personally I think target funds are a big mistake when you are more than 15 years away from retirement, my opinion is go with index funds that track the overall markets up until you are pretty close to retirement (5-10 years)

The target funds are basically a collection of index funds with a tiny percentage of bonds thrown in for good measure.

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

If you have a better group of index funds, by all means. But talk of targetted funds has been for people who don't want to/are unable to research what the best allocation is. The fund presents a simple set and forget option.

[avromie7]

Any funds that you can recommend that has a strong/long track record of beating the overall market (I usually use the S&P 500 as the benchmark)?

I was very limited in the funds I can choose in my 401k, I picked the best I can find which are OPGIX, RSEGX. I also picked FXAIX as a lower risk fund. Just looked at the 10 year/ lifetime record for funds that have been around for a few decades and compare to the S&P. I personally went with 2 or 3 that looked best at the time. I think ARKK can be an attractive growth fund.

[avromie7]

The target funds are basically a collection of index funds with a tiny percentage of bonds thrown in for good measure.

If you have a better group of index funds, by all means. But talk of targetted funds has been for people who don't want to/are unable to research what the best allocation is. The fund presents a simple set and forget option.

IMO, anyone who is far enough from retirement, should go for aggressive funds. I don't think the need to reconsider 20+ years down the road when retirement is on the distant horizon should be a barrier, it's not like you need to change things up every few months or years.

ETA: I think anyone far enough from retirement will probably come out ahead over 30+ years even if they lose 50% of their account due to a market crash immediately before retirement.

[biobook]

The Vanguard ones are allocated in index funds while the Fidelity ones are in actively managed funds.

Fidelity does have index funds.  FDEWX seems to be the index fund that targets 2055, and has an expense ratio of 0.12
https://fundresearch.fidelity.com/mutual-funds/summary/315793828

[ExGingi]

IMO, anyone who is far enough from retirement, should go for aggressive funds. I don't think the need to reconsider 20+ years down the road when retirement is on the distant horizon should be a barrier, it's not like you need to change things up every few months or years.

ETA: I think anyone far enough from retirement will probably come out ahead over 30+ years even if they lose 50% of their account due to a market crash immediately before retirement.

Let me share some historical charts with you. And try to put yourself into the mindset of a person at various ages that too your aggressive approach (including ARKK) at various points in time, as their children grow.

[biobook]

I would add aggressive growth to this when you're further away from retirement.

When you're far from retirement, using a 2055 target fund like FDEWX, you'll have 90% of your investment in stocks, which is pretty aggressive.  Morningstar's analysis of FDEWX shows that 25% of that stock is large cap growth.
https://www.morningstar.com/funds/xnas/fdewx/portfolio

So you are exposed to aggressive growth within a target date fund.

ETA: to see that 25%, click on WEIGHT in the Stock Style box.

[biobook]

IMO, anyone who is far enough from retirement, should go for aggressive funds. I don't think the need to reconsider 20+ years down the road when retirement is on the distant horizon should be a barrier, it's not like you need to change things up every few months or years.

ETA: I think anyone far enough from retirement will probably come out ahead over 30+ years even if they lose 50% of their account due to a market crash immediately before retirement.

I've bolded the parts I don't understand.  Are you saying that you came up with these ideas yourself?  Or is this based on the knowledge or experience of others?

[avromie7]

Let me share some historical charts with you. And try to put yourself into the mindset of a person at various ages that too your aggressive approach (including ARKK) at various points in time, as their children grow.

With DCA, that risk is significantly reduced. Someone who invested in the Nasdaq 30 years ago would still have a growth rate of around 12.5%.

When you're far from retirement, using a 2055 target fund like FDEWX, you'll have 90% of your investment in stocks, which is pretty aggressive.  Morningstar's analysis of FDEWX shows that 25% of that stock is large cap growth.
https://www.morningstar.com/funds/xnas/fdewx/portfolio

So you are exposed to aggressive growth within a target date fund.

ETA: to see that 25%, click on WEIGHT in the Stock Style box.

That's still not anywhere near the growth rate of the funds I listed, and I don't think they're the best you can find.

[avromie7]

I've bolded the parts I don't understand.  Are you saying that you came up with these ideas yourself?  Or is this based on the knowledge or experience of others?

My investment strategy is based in my opinions that were at least partially formed by reading from and listening to professionals. My opinion on the second point you highlighted is based on my belief that "set it and forget it" doesn't have to mean never look at it for 50 years, looking at it again decades down the road should be close enough to set it and forget it to make the increased potential worthwhile.

Keep in mind, I'm still young (under 30) so my outlook has little to no foresight for short to mid term effects, and it's entirely based on the long term.

[Abey]

I was very limited in the funds I can choose in my 401k, I picked the best I can find which are OPGIX, RSEGX. I also picked FXAIX as a lower risk fund. Just looked at the 10 year/ lifetime record for funds that have been around for a few decades and compare to the S&P. I personally went with 2 or 3 that looked best at the time. I think ARKK can be an attractive growth fund.

Cathie woods is a YOLO style investor, looking at the past year or 2 will not protect you in a sudden market downturn. Not saying it’s a good strategy or not Just beware.

[avromie7]

Cathie woods is a YOLO style investor, looking at the past year or 2 will not protect you in a sudden market downturn. Not saying it’s a good strategy or not Just beware.

I just realized, I didn't really explain my opinion on ARK. The strategy I would use with ARK is to have a relatively small percentage of an account in ARK, something like 15%

[ShimshonK]

Personally I think target funds are a big mistake when you are more than 15 years away from retirement, my opinion is go with index funds that track the overall markets up until you are pretty close to retirement (5-10 years)

Can you really classify a small bond allocation as a "big mistake"?

[Shmulie]

Can you really classify a small bond allocation as a "big mistake"?

Might be a little too harsh but yes I think it's a mistake to put anything into bonds so far away from retirement
(I consider 10% pretty significant and not so small)

Take a look at the chart below comparing VOO to a Target 2055 and a Target 2050 fund
Missing out on a huge amount of upside

[sruly101]

Hi,

So for retirement funds:

FDEWX Or VFFVX

Any difference??

[Shmulie]

Hi,

So for retirement funds:

FDEWX Or VFFVX

Any difference??

I remember reading that Vanguard has some kind of tax advantage for their mutual funds througha patent but that could be just for their S&p 500 fund I'm not sure

anyone else know anything about it?