Today I heard keeping your 401k in a Vanguard target retirement date index fund is NOT a good idea. Where should we be putting our 401ks?

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I bury my cash in a coffee can. Stock market scares me.

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Yesterday I heard it is a good idea so I think we're OK

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I have most of my money in one of those accounts, and my return has been phenomenal

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I have had phenomenal returns on my Vanguard target retirement fund too. And low cost

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^yes, target funds have high fees and on average don’t outperform the market. You should just invest in the market or do a combination of market and bonds.

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Vanguard Institutional target funds have extremely low fees, on par with an index fund. If there’s an argument against target date funds it’s that they are a touch conservative, but really they’re fine.

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What was the reasoning op?

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Ours is really good - returns and expenses wise. Typically, target retirement funds have high fees, which might be why you heard what you heard - but would be curious to hear what you did.

If you have a better fund in mind, go for it - but I don’t think there’s a downside to keeping funds there

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if you’re <40 you may be better of just going 100% into a total market equity index because the fees will be marginally lower...the target retirement funds just reweight bond/equity balances as you age to reduce your equity risk as you near retirement

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SP500 index fund

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They aren’t supposed to outperform the market. They have a component of bonds that will lower risk and return

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Target date funds, with low fees, are an excellent investment vehicle — they balance your portfolio across equities / fixed income based on your assumed risk tolerance (younger = higher risk / reward profile = higher allocation to equities). As others have said, high fees can kill returns, but our target date fund is a great, safe “market return” type investment.

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Agree with M1

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