First of all, the two funds you're looking at are not comparable: one is an S&P 500 index and is strictly stock in large domestic companies, while the other is a fund-of-funds that contains domestic stock large and small, foreign stock, domestic bonds, and foreign bonds.
The two have very different uses. One is used as part of one's domestic stock allocation in a balanced portfolio, while the other is used as its own balanced portfolio.
My initial concern with the Vanguard fund is whether we'll be able to withdraw money before retirement age. That's our goal, and it doesn't say anywhere there are restrictions, but I'm worried that's assumed with a fund named "Retirement 2035 Fund."
If you're investing in taxable, you can withdraw at any point. The Vanguard target retirement fund is meant as an "all in one" for
within a tax-advantaged account to be investments appropriate for someone planning to retire in 2035.
By the way, if you're buying in a taxable (non-IRA, etc) account, the TR fund is very tax inefficient. It'd be better to buy the underlying funds directly possibly substituting municipal bonds for the total bond market, depending on your tax bracket.
I'm also wondering if people have had a better experience with one company over the other.
I have no experience with Schwab, but have great things to say about Vanguard (100% of my investments are with them, for what that's worth).
Finally, the fees seem about the same on both of these accounts, but does anyone with experience know about hidden fees we should account for?
Vanguard has a $20/year account maintenance fee; this is waived if you sign up for e-delivery (that is, you don't ask for physical mailings of everything).
We are also wondering if it makes sense to hold our emergency fund in this Index fund, instead of the low interest savings account. We've got about $6,000 in savings as our emergency. Considering moving some over to a higher yield fund.
If you're just getting started in investing, your passive income is presumably quite low. As such, holding an emergency fund in a highly volatile asset (stocks are the entirety of the Schwab fund and a majority of the Vanguard target fund) is a
terrible idea. When you get to the point that your passive income is higher and reliable, then you can afford to put your emergency fund into a higher-yielding asset class than cash. In the meantime, you need to have it available for, well, an emergency.
We're starting with $1,000 and plan to add at least $100 a month. Any advice is appreciated, as we're new to this. Thanks!
Is this in addition to tax-advantage retirement investments? That's an important detail before I can help with that.