VTIVX vs. VTSAX...switch or stay?

[MidwestGal]

A few days ago I inquired what to do with my retirement accounts while in school, I will be taking our fellow Mustachians' advice to leave them in their respective places.  Currently I have less than $10k in my Roth with Vanguard in VTIVX, or their Target Retirement 2045 fund.  I am generally the type of person who will set auto investments and forget about it, especially with the schedule I've been keeping lately.  This target fund currently has an allocation of 90% stocks and 10% bonds.  Having read all of MMM's blog posts, I'm intrigued about the idea of VTSAX only, but as stated earlier am still in school, and will be there for several more years.  The thought of even lower fees associated with the index fund makes it very attractive, but I worry about volatility while in school in case (knock on wood) anything happens.  The stress of my work/school/family schedule had finally started to take a toll on me and my fear is that I would be too tempted to watch it ride up and down.

• I have an emergency fund of roughly $3k
• I will be leaving/reducing work hours this fall (will be unable to have benefits after this)
• My spouse is currently working and we are deflating the lifestyle to live on that income alone while paying off debt and saving all of my current income
• I will be operating with military education benefits for the next couple of years and will receive a stipend

My question is, what is the best route to take with my Vanguard account, stay in this Target range, change to a different range or go full speed ahead with the index fund?  If I am leaving out any pertinent information please let me know.

[MDM]

For your situation, "set it and forget it" seems appropriate.  I.e., your 2045 Target fund looks fine.

The only way you will know the best route is to look out the rear window and see what happened after it happens.  Don't worry about "best" - you have something "good" so let it go and concentrate on the the work/school/family items you mentioned.

Good luck!

[Frankies Girl]

I personally would go 100% into VTSAX if you're still in school and have (potentially) 10+ years of work ahead of you once you get out.

This would only be for your investments, not your emergency fund. The volatility is only an issue if you need the funds within a 5 year or less timeframe. If you're investing for decades, then a few sharp drops won't matter since it will have years to recover and grow.

http://jlcollinsnh.com/stock-series/
^obligatory "have you read this?" since it's pretty much the best primer for learning about how the whole thing works...

http://jlcollinsnh.com/2011/06/08/how-i-failed-my-daughter-and-a-simple-path-to-wealth/
and Jim Collins' advice to his own daughter (who is in her 20s now) but applies to anyone starting out and with decades of investing ahead of them.

But you honestly won't be wrong to go with the target date funds. They are good and are really no-brainers (in Vanguard's case) but you could do even better than "good."   ;)

[MidwestGal]

My goals run more to be a SWAMI than FIRE.  So assuming I'm able to work for at 20-30+ years after graduation, I wanted to weigh both sides.

It sounds like this may be a choice between good vs. best in the long run, and the potential fear factor that 'best' can require.

[boarder42]

whats a SWAMI

[MidwestGal]

A SWAMI is someone who can retire early, but chooses not to because they love their career.  I first saw it here:

http://www.mrmoneymustache.com/2011/04/30/weekend-edition-retire-in-your-mind-even-if-you-love-your-job/

and thought it was a great concept.  Evidently it stands for Satisfied Working Advanced Mustachian Individual.  Outside of Mustacheland evidently it represents someone who is inducted into certain teachings, or is a respected person/teacher/master of their own destiny.  Really, both fit in this forum!

[matchewed]

whats a SWAMI

http://www.mrmoneymustache.com/2011/04/30/weekend-edition-retire-in-your-mind-even-if-you-love-your-job/

[plantingourpennies]

We have VTIVX (in our Roth) and VTSAX (in our taxable Vanguard brokerage).  The reality is, no matter which you choose, you're going to "feel" the swings of the market if you look at the balance too often.  When the S&P500 dropped some 30%, and VTIVX was down "only" 27%, I was not splitting hairs and feeling "good" about making the "right" choice for my Roth.  Instead I just focused on the long term plan for that account and maxed out the Roth contributions again, sticking to the investment plan for that account. 

So worry less about which fund you choose and more about choosing and investment plan.  Once you have an investment plan, then focus on getting into the mindset that you're not going to be touching that money for 10+ years (more realistically 30 if you're aiming SWAMI), so what do you care what it does in the meantime? 

[MidwestGal]

That's a good point.  I've asked myself why it's so hard to consider letting go of this target account to seek lower expenses and potentially higher gains.

[RapmasterD]

VTSAX and then forget about it. All in one pot. Focus on saving. Focus on revenue. Focusing on growing that pot.