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Learning, Sharing, and Teaching => Investor Alley => Topic started by: huapala07 on May 09, 2015, 07:08:25 AM

Title: VTSAX or Vanguard Target Retirement Fund 2045
Post by: huapala07 on May 09, 2015, 07:08:25 AM
My employer used to offer only Fidelity and TIAA-CREF, so I went and started my own Roth IRA with Vanguard Total Stock Market Index (VTSAX).  However, my employer switched companies and now I can get the Vanguard 2045 fund.  My question is, which one should I put my money in?  At this point, I can't max out my 403b, but I can put in about 7K to 8k a year.  Here are the differences:

VTSAX:
Expense ratio: 0.05
10 year yield: 8.55
Since inception (11/13/00): 5.81

VTIVX:
Expense ratio: 0.18
10 year yield: 7.64
Since inception (10/27/03): 8.10

The YTD is higher for VTIVX and that has a higher return since inception.  Also, VTIVX has 62.2% of the Total Stock Market Index Fund (but not the admiral share, which starts at $10k minimum).  However, the VTSAX has a lower expense ratio. 

I'm a novice at investing, so I'd love to hear your advice.  Thank you.
Title: Re: VTSAX or Vanguard Target Retirement Fund 2045
Post by: forummm on May 09, 2015, 07:34:35 AM
Both are good choices. It depends on your preferences. You can learn more here:
http://www.bogleheads.org/wiki/Bogleheads%C2%AE_investing_start-up_kit
http://www.bogleheads.org/wiki/Investment_policy_statement
Title: Re: VTSAX or Vanguard Target Retirement Fund 2045
Post by: Trifele on May 09, 2015, 07:45:27 AM
Don't forget to factor in the fees that the new company will be charging for the Target fund, on top of the Vanguard fees.  My employer recently switched to a new company too, and I can now get VTSAX in my 401(k) -- at 0.45%.  0.05 is the Vanguard fee, and 0.40 is the fee charged by the new administrator
Title: Re: VTSAX or Vanguard Target Retirement Fund 2045
Post by: huapala07 on May 09, 2015, 07:49:24 AM
Thank you to both.  I asked if there are any fees, and they told me there aren't any other fees.  Basically, my employer, a private university, hired a local financial planning company, and now we can get the Vanguard target fund through TIAA CREF (at least that's how I remembered it).  I believe my employer is paying for the services of the financial planning company and we are not charged for using their services.
Title: Re: VTSAX or Vanguard Target Retirement Fund 2045
Post by: PDXstash on May 09, 2015, 09:25:27 AM
The target date fund has an expense ratio that is a weighted average of the underlying constituent funds.  As far as I know, you can't get target date funds as lower-cost Admiral shares.  My take on this has always been that while I appreciate the simplicity of the target date fund, I would rather buy similar funds individually so that I can get Admiral shares.
Title: Re: VTSAX or Vanguard Target Retirement Fund 2045
Post by: huapala07 on May 09, 2015, 11:47:39 AM
That is a great idea!  I'll contribute toward the target fund and when I have enough in the account to split them into admiral shares, I will do so.
Title: Re: VTSAX or Vanguard Target Retirement Fund 2045
Post by: BEN_BANNED on May 13, 2015, 08:50:33 AM
I believe my employer is paying for the services of the financial planning company and we are not charged for using their services.

You're paying directly by higher expense ratios and the financial planners taking a percentage of the total assets in the company plan.