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Posted by on June 27, 2007, 1:49 pm
> rstrazz@gmail.com writes:
>
> > I have a Roth IRA with Vanguard that is the LifeStrategy Growth Fund.
> > ... I am comparing it to the Vanguard
> > Target Retirement Fund for 2045 (Hoping to retire at 60, a separate
> > debate for another day)
> >
> > I am basically wondering:
> >
> > 1. Which one is better for fees?
>
> Morningstar lists VASGX at 0.27%, and VTIVX at 0.21%. These are both
> very low-cost funds.
I'd call it a wash.
> > 2. When it's the year 2035 (10 yrs before I retire) is the
> > LifeStrategy Growth Fund going to be too risky? I like the fact that
> > the retirement fund constantly re-allocates itself.
Currently, both have 85-90% in equities, about 10% in bonds,
and on the order of 15% (all equities, presumably) in non-US.
ie. they are *very* similar at the moment, though VASGX has
an asset-allocation fund which can move those proportions around
a little bit. Vanguard's 2035 fund is almost identical to the
2045 and even their 2025 is still almost 80% stocks and only
increases bonds to 20%.
In other words, it'll hardly make a difference for at least 10 years.
> > 3. I have no extra time, I am a very overworked software developer
> > with multiple projects. I don't want to mess with allocations, etc.
> > at all if I can help it.
>
> Well, a day or so to go over your finances once a year isn't such a
Or at least plan on reviewing sometime in the next few years -
plus, of course, before/around any major event - marriage, job
loss, house-buying, etc.
> big deal, is it? ;-) Eventually you'll also want to add reviewing your
> insurance and estate planning to your annual financial checklist; that's
> especially important if you get married and/or have children.
He should be reviewing some of that now anyway - perhaps not
life insurance (especially if he has no dependents now) but
certainly disability and, if he doesn't have it, health insurance.
Moreover, the IRA is only part of a bigger picture - a review
of debt, spending, etc on a regular basis is a good idea.
> > 4. There is no reason I cannot put 4k in every year until I retire
> > (not too much vs. a developer salary) Just keep in mind that I plan
> > to do this (don't know if that changes your answer at all)
>
> If your employer offers a 401(k) plan, you should also sock away at least
> enough there to get the full company match. Otherwise you're throwing
> away free money! Diversifying your retirement assets between pre-tax
> (401(k)) and post-tax (Roth IRA) investments is a good thing, too.
All good advice and worth repeating!
--
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