Changing Roth IRA allocation: from VFIFX to VTSAX

[mrteacher]

Hi all,

When I opened up my Roth 8 years ago, I didn't know too much about investing, other than that Vanguard was the place to be, and that the Roth was a smart choice. I lumped - and have continued to - all my contributions into VFIFX. I liked the straightforward setup up the Target Retirement Accounts.

After learning quite a bit more about investing/personal finances and spending time on the MMM forums, I'm wondering if I would be better off reallocating and moving my $50,000+ Roth IRA from VFIFX to VTSAX. I will not need the money for 15 years+, maybe more. (FWIW, I also have a taxable Vanguard account opened with $20,000+ invested in VTSAX.)

What are important considerations here? What should I think through or be aware of?

Thanks! 

[dandarc]

What is your desired asset allocation?

If you do this, you won't have the following:
International stocks (you'll have Ford, but not Toyota - saw that in another thread and I think it is a good way to put this in perspective)
Bonds

If you're OK with that, or have these areas covered in other accounts, then go right ahead.  If you want exposure to International and Bonds, you could either stand pat with the Target Date fund, move to a life-strategy fund if you want an all-in-one that doesn't follow the curve, or move to a 3-fund portfolio and save a bit on fees.

Basically both choices you presented are defensible - you just have to decide what will work for you.

Regardless, you need to think about all of these things, and write down an investing policy statement, so in the future you can just execute the plan.

[Interest Compound]

FIFX is 90/10 stocks bonds, changes allocation to reduce risk automatically as you age, is much more diversified (holds international stocks) and is already 53.7% VTSAX



I'd choose that over 100% VTSAX.

[NoStacheOhio]

FIFX is 90/10 stocks bonds, changes allocation to reduce risk automatically as you age, is much more diversified (holds international stocks) and is already 53.7% VTSAX

I'd choose that over 100% VTSAX.

I don't think I would pay that much for a four-fund portfolio. I'd rather just buy the better share classes individually and manage it myself.

[Interest Compound]

FIFX is 90/10 stocks bonds, changes allocation to reduce risk automatically as you age, is much more diversified (holds international stocks) and is already 53.7% VTSAX

I'd choose that over 100% VTSAX.

I don't think I would pay that much for a four-fund portfolio. I'd rather just buy the better share classes individually and manage it myself.

Agreed, that's what I do. If the question were between TargetRetirement and a 3 fund portfolio, and they weren't specifically looking for a fully-automated solution, I'd have answered differently.

But between TargetRetirement and simply VTSAX, TargetRetirement is better in my opinion.

[Radagast]

But between TargetRetirement and simply VTSAX, TargetRetirement is better in my opinion.

I concur.