Hello! Currently my 401k is invested in a 2060 target date fund, ~60% of it is in Russell 1000, most of rest in international. My HSA is all cash right now and I want to invest that as well. My question is should I keep both the accounts in target date funds or make them s and p 500 and later rebalance? I am currently 28. TC- 135
If you want a hands off, set-it-and-forget-it approach to rebalancing to reduce risk as you get older towards retirement, use target date funds. If you have the knowledge and interest to handle portfolio risk on your own, then you can do anything you want. Invest in total market index, s&p, individual stocks, etc. Just depends on the type of person you are.
Thank you! I am already managing my Roth with VOO and QQQ, not sure if Iād wanna manage two more accounts. Having said that, do you know if VOO significantly outperforms target date funds? If difference in returns is too big then I might as well do S&P500
Target date funds(TDFs) are not designed to beat the market and over the longer term, they won't, theoretically. What TDFs do is reduce your exposure to stocks and increase exposure to bonds as you grow older. This makes sense because you don't want a full stock portfolio risk right when you're about to retire. TDFs do this automatically for you. With s&p, you manage your own risk. The farther out the TDF date, the more aggressive it will be(more stocks). For example, TDF 2060 will be more aggressive than say TDF 2045.
Stocks and bonds
Target date funds suck. Dey r not aggressive enough in initial yrs. N have hi fees. Low expense sp500 r way to go. Or if u have long way to go, contribute in a growth ETF.
I had the same concern w target funds with the heavy international exposure and the higher fees. I switched to a manual set up of 80/20 U.S vs international and an 85/15 set up between stocks and bonds. VOO is 56% of my total portfolio
100% VTI Or 80 VTI 20 VXUS
Following. I have the same question. Most say just put it in an index fund like s&p