I’m currently in my early 20s. My goal is to retire around my 40s. Here’s the situation (I use vanguard):
I have a Roth IRA with the target retirement fund 2065. I also will open a Roth 401k with the same fund once I start my first job. I plan on maxing out my IRA every year (since that isn’t much) and putting enough in my Roth 401k to get all my employer’s match. These are set for 2065 since I won’t be withdrawing from them until 2060 anyway.
Since I’m not planning to max out the 401k, I’ll have more money to put into another mutual fund account, which hopefully will have enough by the time I’m 40 for me to retire with it and live off the passive income. My question is, what funds or ETFs should I use for this? I don’t think I should use the target retirement fund 2040 since that goes conservative too quickly nor the 2065 since thats not meant for this, but is there another fund that auto adjusts between the vanguard US total market index fund, vanguard international total market index fund, and other good index funds? Or are there other better funds and ETFs? Which funds and ETFs do you guys recommend?
At your age, go growth and mix in dividend stocks as well and definitely DRIP everything. I personally like ETFs LIKE SPY, QQQ or VTI. Awesome that you’re maxing out your Roth IRAs. But you should always invest in your company’s 401K especially if it has a matching contribution. That’s free money you can’t pass up.
Read up on FI/RE on r/financialindependence
Also can Google “financial independence retire early” (FI/RE)
At your age I’d go for qqq or something tracking the s&p500. You’ll have more exposure to risk but your returns will be greater. My Roth IRA is a mix of FXAIX and qqq and has returned ~720% over the last 3 years
You might want to break down your numbers a bit more. You aren’t going to become rich in 20 years putting money into low cost ETFs, unless you are pulling in six figures already with significant upside in your income.
The people who retire in 20 years are the people who own their own businesses, make a shit ton of money from their jobs (like 400k+), purchase assets that will provide them passive income (like real estate), or get lucky as shit 10xing their money doing stupid shit like making 2 million from some stupid NFT they create.
Put together a realistic budget, break down how much you can actually save/invest and calculate what your possible career projection can be in that time frame accounting for salary increases and inflation.
> I don’t think I should use the target retirement fund 2040 since that
goes conservative too quickly nor the 2065 since thats not meant for
this, but is there another fund that auto adjusts between the vanguard
US total market index fund, vanguard international total market index
fund, and other good index funds?
You realize there are plenty of target dates between 2040 and 2065, right?
VTI for total US domestic market. If you want international exposure then VXUS, if you want to weight for tech VGT…the pattern is just toss the loot into Vanguard ETFs. Can’t go wrong.
Same boat but a bit older, my strategy has been to invest in 100% stocks (US and International). Thought being I might get lucky and be able to retire earlier. Worst case I reach 40 and have to work a while longer. At some point I’ll start paying down my mortgage to free up some cash and eliminate some of the risk
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