Author Topic: Performance of VTIVX (Vanguard Target Retirement 2045) - better options? Fees?  (Read 3993 times)

Lifeblood

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My wife moved her Roth IRA from Chase (high fees) to Vanguard, putting all funds in VTIVX, about 6 months ago. We felt good about this decision to get away from the high fees, but I have been disappointed in the funds growth in comparison to my own Roth IRA which I think is more aggressive. She doesn't need the money for about 25 years. We would like to move it to something more aggressive within Vanguard. Any suggestions? At the very least, I was thinking of splitting the funds between the three other Vanguard funds that make up the VTIVX, as this will lower fees a little, but I imagine performance will be similar.

Also, are there fees for moving between funds within Vanguard?

Thanks everyone! Your continued accompaniment through so many financial decisions has been amazing!

marty998

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6 months is not a long time and investments do go up and down. Past 6 months have seen large drops in commodity prices which have hit materials and mining stocks hard (especially here in Australia)

Have some patience. The falling oil price will benefit many sectors of the economy and provide a useful stimulus. You could very well see a rebound in the next year.

Markets will do what they do, your choice is to be as aggressive as you want taking into account the risk you are willing to take.

MDM

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See https://investor.vanguard.com/mutual-funds/fees regarding "are there fees for moving between funds within Vanguard?".

You can usually (with the benefit of hindsight) find something that "would have been better than" whatever you do.  Looking at https://personal.vanguard.com/us/funds/snapshot?FundId=0306&FundIntExt=INT, VTIVX has done reasonably well.  The choice is yours....

RyeWhiskey

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My wife moved her Roth IRA from Chase (high fees) to Vanguard, putting all funds in VTIVX, about 6 months ago. We felt good about this decision to get away from the high fees, but I have been disappointed in the funds growth in comparison to my own Roth IRA which I think is more aggressive. She doesn't need the money for about 25 years. We would like to move it to something more aggressive within Vanguard. Any suggestions? At the very least, I was thinking of splitting the funds between the three other Vanguard funds that make up the VTIVX, as this will lower fees a little, but I imagine performance will be similar.

1.
I'm not sure you understand the purpose of a Target Retirement fund. TR Funds are 'funds of funds;' the whole point is to offer maximum diversification at minimal cost and maximum simplicity. Obviously you can break the fund up into its constituents and allocate them accordingly, but this is a) more complicated and b) subject to your personal idea of appropriate allocation. The TR funds are allocated according to Vanguard's idea of appropriate allocation. They are perfect for a 'hands off' investor, which is to say, most investors.

2.
Judging a fund by its performance for anything less than five years in relatively silly. Furthermore, judging an TR fund at this time frame is even less meaningful as its not actively managed and hence you're really only judging the allocation (stocks vs. bonds) which has nothing to do with "performance" and everything to do with your plan and level of risk. Do you have an IPS? If so, what does it say?

3.
Really it sounds like you're saying you want a more aggressive allocation. Is this your call to make? And finally, what would that look like? VTIVX is currently 90% equities and 10% bonds (!), so you want a 100% equity allocation?

4.
Judging by the above, I would not move the money out of the TR fund and would focus more on saving and keeping costs low.

Also, are there fees for moving between funds within Vanguard?

There are not. However there are short term trading penalties which you should be aware of.

Lifeblood

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Can you point me toward any resources for making an IPS? I think that is my next step.

MDM

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One could do much worse than http://www.bogleheads.org/wiki/Investment_policy_statement and the links therein.  Good luck!