Question! I currently have my Roth IRA and 401k in Target date funds (2055, 31). I’ve been learning more about personal finance over the last few months and am thinking of switching both to 100% VTI. Would you recommend? Or not? Anything besides VTI I should consider? Little hesitant just bc market seems so high...

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Can you buy etfs in your 401k? All VTI is fine but not as diversified.

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If you want more equity exposure and like the simplicity of target funds, change to 2065+. Crack open the prospectus to see the allocation. Diversification is still important. Past performance is not indicative of future results.

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I suspect the 2055 And 2065 are identical. It won’t add more bonds for a while still.

You didn't say which 2055 fund, but moving from a 2055 target date fund to 100% VTI would typically mean ditching international equities and bonds. Hence reducing diversification, as EY 1 said. Why would you want to do that, especially if you are concerned that "the market" (US equities?) is high? Although I'm open to changing my mind depending on your answer, right now I would certainly not recommend that switch. If your target date fund has an unusually high expense ratio, it may make sense to recreate a similar allocation with your own 3-fund or similar lazy portfolio, with VTSAX (VTI) as one of the funds. But if the expense ratio is reasonably low, the target date fund will do all the rebalancing for you plus the glide path. Right choice for most people.

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Bonds will bring down your return in a target fund. Per Ray Dalio, bonds are not wise investments..

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Ask Ray Dalio why his all weather portfolio is so bond heavy then. Is his famous portfolio that is great in an situations now all of a sudden terrible? Bonds are fine depending on why you are holding them. If you hold them for return, you probably don’t want them now. If you hold them for safety, they are as good now like always.

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I have my reservations about the target date fund. Depending on whether you are salaried person and where you are in your career, I would think monthly fixed income as “bond coupons” and therefore from a diversification standpoint, I would take on more risks by investing in equities (diversified equity portafolio if you want to limit some risk) This would be exactly opposite for someone whose income has large fluctuations such as a person in sales with a large variable bonus.

If you are young, the target portfolios are probably 90% equity. They will perform very similarly to a 100% equity portfolio.

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