Author Topic: Target date retirement funds  (Read 1894 times)


  • 5 O'Clock Shadow
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  • Posts: 1
Target date retirement funds
« on: May 03, 2016, 06:11:40 AM »
Hi all,

I'm pretty new to the mustachian way of thinking (and investing) and am trying to figure out if my current investment strategy is the best way to go. For reference, I am 30 years old, and after spending a few years working on my PhD, I've been working at a "real" job now for two years.

I currently have a 401k through my employer but I felt so confused about investing when I first signed up for it that I just put all money towards the TIAA Target Date Retirement 2050 fund (TLFRX). I put in 5%, they match 5% and give me an extra 4% for having worked at the company for more than a year.

I also have a Vanguard account. I first signed up for a Roth IRA (because I figured my taxes would be more when I retire). Then I realized that early retirement would probably put me in a lower income bracket, so I also signed up for a traditional IRA. I also have a brokerage account. Since I felt overwhelmed again ;-) all of the money in these accounts is invested in the Vanguard Target Date Retirement 2050 fund (VFIFX).

The expense ratio at TIAA is 0.69%, which is higher than Vanguard, so I'm focusing on putting extra money into Vanguard. I'm maxing out my IRA contribution there (currently into the traditional IRA) and I put any other savings into my savings account for a downpayment (I should get there in a year).

Anyways, in this article, the suggestion is to just invest in the S&P 500:

My questions are:

1) Currently, the TDRF's seems to contain average to risky investment mixes. Should I put some of my money (all of it?) into the S&P500, as recommended in the article?
2) Will I start losing money because I'm investing in the TDRFs (which will become more conservative over time).
3) Does the concept of "Target Date Retirement Fund" even hold if I'm planning to retire early (i.e. before 2050)?

Thanks for any suggestions you might have!


  • Bristles
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  • Posts: 270
Re: Target date retirement funds
« Reply #1 on: May 03, 2016, 08:51:08 AM »
I wouldn't look at it as losing money if you're allocation shifts to less risky as you get older. Your returns may be lower in good years but you also aren't losing as much in bad years. Typically you want less volatility as you near retirement because a big drop at that point could really hurt you in retirement as you start drawing down. If you're retiring at 40 instead of 65 you may not want to go super conservative at retirement though.