Just wanted to know what would be best for my situation. I pay really low rent and have no debt until I atleast buy a house or maybe my next car. I currently have a Roth IRA with a target fund on Swyhx 2045
Just wanted to know what would be best for my situation. I pay really low rent and have no debt until I atleast buy a house or maybe my next car. I currently have a Roth IRA with a target fund on Swyhx 2045
Target funds change their allocation over time. They tend to move into bonds a little too early for some people. ETFs that match their benchmarks, SP500 etc, ONLY hold that index. Index ETFs will carry a bit more risk, but more potential return.
Only you can decide what is best for your situation, how well you tolerate risk and reward.
Looks like they start to move into bonds in 2025 per the chart below, -20 year is 2025, 0 is 2045
[Life of fund allocation](https://www.schwabassetmanagement.com/products/swyhx)
A target date fund is a 3 fund portfolio made up of ETFs.
You can diy it but then you would have to actively decide when to make it more conservative.
It comes down to if you want to manage it or do a more set it and forget it approach.
Ask yourself this question: Am I on track to have a ton more than I need when I retire? SINK w/low expenses and good financial habits will get you into this cohort. If so, then you probably can afford higher risk investments than target date funds (aka: put it all on a S&P500 ETF and enjoy the ride). When you’re closer in to retirement, you may want to dial back the risk a tad by moving some into bonds.
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