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Agreed, just one. More specifically the target retirement fund portfolios rebalance every so often to adjust for risk, so as the retirement date gets closer, the portfolio will automatically rebalance more to bonds vs equities. You’ll see that the 2070 retirement fund is almost 100% equities while the 2020 retirement fund will be almost all bonds at that point
Actually the 2020 fund still holds 55% stocks
You should put your money in the one that’s closest to the year you expect to retire. The target date funds will automatically rebalance your portfolio from a bigger % of equities to a bigger % of bonds as you get closer to that date.
The advice I got was to just invest in the index. Only a small number of accountants ever are able to beat the index, and they take a chunk of of your earnings for managing you portfolio
I found that target date funds don’t use admiral shares for underlying investments. I looked up the investments (available on Vanguard) and compiled my own identical portfolio with admiral shares for lower fees. Not sure if that’s changed, but worth a look.
Target date funds do invest in the index, they just mix in some bonds as well.
I like them because they’re actually a bit more aggressive than most traditional investment advice — eg the 2050 target date fund is 90% stocks, historically you would have told someone in their early 30s to only hold 70% stocks.
Don't invest in Target date funds. You'll never get there. You're better off putting your money in index funds and diversify.
I think what SC1 is saying is that the fund is built around the assumption that you’ll hold your funds there until the target date. That’s no guarantee. Additional point: comparatively speaking, target date funds are $$$. I second a previous comment around index funds. Super low costs. ~Market returns. Stash some additional cash in more risky bets / investing interests of your own.
The only reason you would use multiple target retirement funds would be if your risk tolerance fell between two of the options and you used it to “blend” them.
Personally I go much more aggressive on the risk tolerance scale and even do some market timing (the horror!) so I just use the underlying indexes and do my own diversification. But I have done more self-education on investing than most people would consider sane or healthy for someone who is not an investment professional, so for someone who wants the balancing done for them and has a more typical risk tolerance, target retirement funds can be a good choice.
I guess if you really wanted to retire in 2049 instead of 2050, you could put 80% into the 2050 fund and 20% into the 2045 fund.