[Krupa]

I opened up an IRA in my early 20s  and had it set the target retirement fund through Vanguard and have been maxing it every year. It’s been about 7 years since then and I decided to learn more about investing so I can maximize the return. Should I change the contribution to the VTSAX or keep it in the target retirement fund?

Another question I have is, for my brokerage account are there certain stocks I should be investing into? Currently I just have handful of shares in just random companies and some in crypto. There’s really not much in there but I’d like to start contributing more and have set stocks/funds in mind to put the money into as a weekly automatic recurring investment.

Thank you for any insight you can provide! I love this group and it’s very inspiring to read all your posts and stories!

[Ross]

Vanguard’s target date funds are great. Don’t get seduced by and succumb to greed. Just keep saving as much as possible and trust the process. The best ways to growth wealth faster are: Save more, earn more, spend less.

[Jiajie]

I used to be in target date funds but I found them to be too conservative for me. As the funds get closer to the target year, it will push more of your money to cash and bonds. It’s safer for retirement but returns are way lower that way. I switched to VTSAX and a couple other funds because I’m a bit more aggressive.

For your brokerage, I’d suggest low cost index funds instead of individual stock. Those are safer. If one company has problems the other companies keep the index fund price up. Whereas if you pick individual stocks it’s riskier.

[Jacob]

Yup, you’ve obviously seen that Target Date returns are subpar at your age and have researched enough to find the best total market fund out there. I think you know what to do.

And playing with individual stocks, crypto, or other risky assets is meant for no more than 10% of your portfolio. The other 90% just DCA into $VTI and ignore the noise.

p.s. I have individual stocks, crypto, Bitcoin, small angel investments, etc. But keep it under 10% for your sanity and future security.

You can check also: I know both are practically the same fund, but: VTI or VTSAX in a Roth IRA & why?

[Judy]

You can move the target date out further for more aggressive fund or split off and change your contributions to new funds and keep target fund for more conservative part.

[Don]

Hard to answer with no info. If your target fund is making 11% and VTSAX is only making 7% then you shouldn’t switch. If its making 5% and VTSAX is making 7% then you should.

[Jon]

Target date funds are perfect for new investors. I personally like them a lot because they handle everything an investor needs from start to finish. Just make sure it’s indexed, so you don’t overpay fees. I also am of the opinion that you should be investing in the market weight of the entire world’s stock market, not just US.

Also, the glide path from aggressive to conservative should be unbiased and gradual as you enter retirement.

Target date funds tend to do that glide path over 20 years, which is fine, but a lot of investors don’t like how conservative that approach is. Once you find your own personal preference of everything mentioned above, you can break away from target date funds. But until you can start making your own informed decisions, I would highly recommend you only invest your money in Indexed Target Date Retirement Funds.

Would you also like to explore: 401k – Do I keep it in target retirement or go split it up into 25% in VTSAX, VFIAX, VTIAX, VTWAX?

[Joanne]

Target funds are a bit conservative. Would keep what’s already invested in target fund but invest new money in VTSAX (Total US stock market) or VFIAX (SP500).

Unless you’ve done a lot of research on the financials of that company, I wouldn’t invest in individual stocks. High risk compared to an index fund. The difference between a fund and an individual stock is that an individual stock can go to zero whereas the fund is generally self-cleansing as stocks will enter and leave the fund periodically based on the definition of what the fund invested in.

I would suggest broad based index funds like the ones mentioned above. For growth, something like QQQ/QQQM (Nasdaq 100). For dividends, something like SCHD or VYM. These are all ETFs or exchange traded funds.

Regarding crypto, don’t invest anything that you aren’t prepared to lose completely. I have about 5% of my portfolio in bitcoin.

[Author]

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