[Michael]

Hello I’m 51… I’m currently invested in the Vanguard Target Retirement 2040 Fund, which offers a diversified mix of stocks and bonds. However, I’ve been considering switching to a more focused investment like VTSAX, VTI, or VOO for potentially better growth and lower fees.

Am I correct??

Each of these funds has unique benefits:

VTSAX provides exposure to the total U.S. stock market.
VTI is the ETF equivalent of VTSAX with similar market coverage.

VOO tracks the S&P 500, focusing on large-cap U.S. companies.

I’m seeking advice from others with experience or insights into these options.

Is it worth making the switch for long-term growth, or does the simplicity and automatic rebalancing of a target-date fund outweigh the potential cost savings and flexibility of these alternatives?

What factors should I consider before making a final decision?

I appreciate any thoughts or personal experiences you can share!

[Frank]

Probably, but we can’t answer your question, because it depends mostly on how close you are to your FI goal in dollars and what your plans are.

This 2040 TDF has been a really mediocre place for a long-term investor for a very long time.

It is closer to a retirement portfolio than a growth portfolio right now, and I have to tell you it really galls me when I hear “experts” who ought to know better recommending these things to people who are decades away from retirement.

All these do is add an extra decade to the accumulation phase. And contrary to popular propaganda, their purpose is NOT to be the best thing for any particular person, but as a CYA for 401k providers who just want to do the bare minimum to comply with ERISA regulations.

But the issue with jumping to 100% stock index funds now is that you are going to have a much more volatile portfolio.

So, if you are already close to having enough money, getting more aggressive now probably wouldn’t be worth it. But if you have a long way to go, I would certainly make the shift.

[Christopher]

Vtsax and vti are the exact same, and voo is like 98% the same as those. You’ll usually just want to pick one from that set.

Then you may want to add some bonds, some international, some small cap value, depending on various factors.

[Author]

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