403B changes

[umterp1999]

Hi,

My employer is changing the funds offered in our 403B.  We are moving from many different companies to just a few low cost funds.  Our 403B funds are currently with Fidelity and spread over two different target date funds (one for me and one for my wife) as well as Fidelity Contrafund and Blue Chip Growth.  I also have a Roth with Vanguard which is a target date fund.

My choices for my wife's and my 403B are now:

1. Vanguard Target Date funds
2. Vanguard institutional index shares
3. Vanguard Extended Market Fund Inst Shares
4. Vanguard total stock market index fund
5. Vanguard total international stock index fund

Obvioulsy I like the simplicity of target date funds, and the costs are low.  I am concerned about basically being all in target date funds.  Anyone have any thoughts?

[Physicsteacher]

Why are you concerned about being all in target date funds? The expense ratios on Vanguard's are quite reasonable, and you can pick a year that provides an asset allocation you like. You might be able to get expenses a little lower by investing in the other index fund choices and rebalancing when needed, but I see nothing wrong with using the target date funds in your 403(b) plan if that's what you prefer.

[seattlecyclone]

There's no reason to be concerned about owning Vanguard's Target Retirement funds. If you would have bought some of the Total Stock Market and some of the Total Bond Market and some of the Total International and some international bonds, that's exactly what you're doing with the Target Retirement funds.

Do be aware that your expense ratio will probably be slightly higher with these than if you purchase the underlying funds individually. However I don't see any bond options in that list so if you want to invest your 403(b) partially in bonds you may have little choice but to put some of your money in the Target Retirement. This is not a terrible thing! Just because 0.15% is higher than 0.04% doesn't mean that 0.15% is a ridiculously high fee to pay.