Author Topic: Target Retirement Fund or Build your own?  (Read 3665 times)

Chris04626

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Target Retirement Fund or Build your own?
« on: March 02, 2014, 04:19:54 PM »
i am a 32 year old man just starting with investing in a Roth Ira through Ameritrade. I do not have alot of money, but will be adding more to my Roth each month. My goal is to have enough to afford to retire on someday lol   Right now i own 3 shares of VTI

Question is should i purchase a target retirement date fund. Or Build my own by going with VTI and adding in BND, VNQ, VWO and maybe VT

Thoughts?


foobar

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Re: Target Retirement Fund or Build your own?
« Reply #1 on: March 02, 2014, 08:13:05 PM »
I would buy a life strategy fund (blend of 4 index funds) and revaluate in 6 years. Your in an IRA, rebalancing can be done at any time. If you can buy the admiral funds, doing it yourself is much cheaper but need more money for that.

i am a 32 year old man just starting with investing in a Roth Ira through Ameritrade. I do not have alot of money, but will be adding more to my Roth each month. My goal is to have enough to afford to retire on someday lol   Right now i own 3 shares of VTI

Question is should i purchase a target retirement date fund. Or Build my own by going with VTI and adding in BND, VNQ, VWO and maybe VT

Thoughts?

wtjbatman

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Re: Target Retirement Fund or Build your own?
« Reply #2 on: March 02, 2014, 08:14:40 PM »
We've had some good discussions here about target retirement fund vs build your own. I believe building your own is easy and saves you money, so I'll throw in my 2 cents.

I have a TD Ameritrade account myself, and as you probably realize, all of those funds you mentioned trade commission free. That's a pretty big deal, whether you're investing a little at a time or a lot. Which in your case it's definitely a big deal. If you purchase a Vanguard target retirement fund on TD Ameritrade it's going to cost you a $10 commission.

The expense ratio on a Vanguard Target Retirement fund is .18%. The expense ratio on every fund you mentioned ranges from .05% (VTI) to .19% (VT). Assuming you skip VT, you are going to save money on fund fees by going with individual funds instead of the target retirement fund. Even if you include VT, your overall portfolio expense ratio will be lower.

The benefits of a Target Retirement Fund are in their simplicity, but since you seem to have a good handle on how to build a properly diversified portfolio, you're already beyond the need to invest in such a fund. Save yourself the commission and the higher expense ratio and go with those commission free ETFs.

soccerluvof4

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Re: Target Retirement Fund or Build your own?
« Reply #3 on: March 03, 2014, 05:09:05 AM »
 I do both and also have a trading account with TD Ameritrade. All comes down to how active you want to be and how much time you have to put into learning /reading to further educate yourself about investing. The 4 index fund is a good way to start while learning ways to branch out to further your gains. ETF's are a great tool.

kyleaaa

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Re: Target Retirement Fund or Build your own?
« Reply #4 on: March 03, 2014, 08:50:54 AM »
Doesn't matter. Do whichever you prefer or just flip a coin.

Left

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Re: Target Retirement Fund or Build your own?
« Reply #5 on: March 03, 2014, 09:33:39 AM »
I'm in life strategy in roth ira, vanguard target fund in 401k (company offer it and I don't want to pick another one) and for taxable account I pick between vti, vxus and bnd. I pick vti/vxus/bnd so I can rebalance without selling (avoiding income tax on it) by buying more or the other on the next round. Though my bnd and vxus percent is low, maybe 5% of portfolio right now? I just haven't had the cash to buy more of it and I was unsure if I wanted more of them before so I didn't buy much last time.
« Last Edit: March 03, 2014, 09:36:27 AM by eyem »

Chris04626

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Re: Target Retirement Fund or Build your own?
« Reply #6 on: March 09, 2014, 05:48:56 PM »
Being 32 what etfs would i buy to replicate a  Vanguard targert retirement fund?  I go through Ameritrade and some etfs are commision free

Chris04626

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Re: Target Retirement Fund or Build your own?
« Reply #7 on: March 09, 2014, 06:02:30 PM »
Ive been told i should try and replicate a target retirement fund and go with something like this

65% VTI, 25% VXUS, 8% BND and 2% BNDX. 

OF course a couple of those are not commision free

tj

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Re: Target Retirement Fund or Build your own?
« Reply #8 on: March 09, 2014, 06:49:56 PM »
I think bogleheads is the better place to ask this question, which you did. :-D