Newbie to the investment game (i401k and Vanguard)

[Roboturner]

Hello!

I recently finished the paperwork for my i401k through Vanguard - and am now looking to put as much of my earnings as possible into this account!

However, I am not totally aware of how I should split (or if I should split) the money into the different funds available.

Can anyone shed some light into what may be a solid initial investment?

Thank you!

[forummm]

One good option is the Target Retirement Fund for the year you turn 65. You can stick it all in there and then develop your own asset allocation plan for the rest of your life.

[Roboturner]

Thanks for the response, I am younger so my risk tolerance is higher than say a 50/50 split with stocks/bonds, I realize i could pick a further date to increase how "aggressive" the investment plan is, but has anyone had any experience with this fund? I realize its relatively new, so not much of a track record. Any thoughts on a plan to maximize potential ROI?

Thanks!

[I'm a red panda]

I'm early 30s and our work provided adviser recommends an 80/20 split or a 70/30 if you are more risk adverse.  If you are young 50/50 sounds needlessly conservative- where did you get that number from?

I think the idea of using a target retirement fund for age 65 (not necessarily the year you want to retire) is an excellent idea.

[GGNoob]

The Target Retirement Date Fund is a great option. Then once you learn more about investing, if you want to pick your own allocation, you can change it up then. Otherwise, the TRD Fund will do just fine.

[Wads]

If you are young 50/50 sounds needlessly conservative- where did you get that number from?

I think the idea of using a target retirement fund for age 65 (not necessarily the year you want to retire) is an excellent idea.

+1

[Roboturner]

I understand the target date retirement fund is a good option.  Lets say I'm looking to invest in some specific ETFs/funds.  MMM talks a bit about VTI vs VXUS, what are some other ones you like?  Like say my target allocation is 60% S&P 30%International 10% bonds.  What funds through Vanguard would you recommend to do this?  And given the advice on the target date fund, would investing in these individual funds really be any better? I wonder if having a specific target is "better" than just an automated system like TDR, or if these Vanguard algorithms are really the best bet.

and I wasn't suggesting 50/50 was a good split for me, simply implying that I can afford to go above the conservative splits, even above 80/20 etc. Looking (obviously) to retire <8 years, so this question can also go out to non-tax advantaged investment accounts as well.

Would love all advice and to learn from your experience.

Thanks

[Wads]

You may want to consider a Lifestrategy Fund. They have the same expense ratios as the target date funds, only difference is they will not change as you age.

https://investor.vanguard.com/mutual-funds/lifestrategy/#/

[WorkingToBeFIREd]

I'll be a bit contrarian and tell you to take a look at Fidelity's self-employed 401k with their Spartan index funds.

I'm as much of Vanguardian as the next guy and had even rolled over a previous employer's 401k into a rollover IRA at Vanguard with plans to use their i401k product.  Unfortunately, there were two downsides that had me choose Fidelity instead:

1 - You can't do "reverse rollovers" (moving a rollover IRA back into the 401k) with Vanguard.  I think they will let you do a 401k-to-401k transfer, but not from a rollover IRA.  I want to continue to be able to do Roth IRA contributions using the backdoor Roth, but can't do that (without insane math) as long as that rollover IRA exists.  Moving it back into my Fidelity 401k solves that issue.

2 - You aren't able to get Admiral shares in their i401k, just Investor shares.  Not a huge difference in ER, but every tenth of a point counts.  You can get Spartan Advantage shares from Fidelity, which are comparable to Vanguard Admiral in both performance, investment mix, and cost.

Fidelity will let me roll my Vanguard rollover IRA into the new self-employed 401k, and I just completed closing out my old "side hustle" 401k with Legend Ground and transferring it directly to Fidelity.  The fees associated with Legend and the funds available were pretty comical, so that was a necessary move.

You may have already done all the research and if the two points above aren't a big deal, Vanguard is a great option....but it's not the only one.  :)