Not trade/Financial savvy at all. I’d like to know if it would be a safe/smart plan to just buy index funds (vanguard/fidelity) and hold on to them for 30+ years and be hands off on them. I don’t have the interest or time to read expense reports and make frequent trades. Is this a good plan or are there other options to look into?
- Next With the recent Vanguard target date fund tax bill lawsuit, should I be worried about my Fidelity target date mutual fund that I have in my taxable account?
- Previous Changing Jobs, what to do with 401k
You essentially are describing the retirement plan of most people
I am financially savvy, and have the time to read expense reports and make frequent trades. But I don’t. Because I think buying VTI and VXUS and holding them for the long term is a better strategy. So, IMO, not only is it a good idea, it is the BEST idea for how to approach your retirement strategy. Pour money into index funds (and eventually bonds as you get older), every paycheck, regardless of “market chatter”, and never touch it. It really is that simple.
As others have said, you should start with a Target Index Retirement Fund. Vanguard has a number of those. You pick the year you think you will retire. The fund is somewhat aggressive in the earlier years, but as it gets closer to the target retirement date it becomes more conservative.
Also, there are a number of good “couch potato” index funds (funds you invest, then forget about and let them grow). VBIAX is one I use. Somewhat middle-of-the-road risk, has it’s ups and downs, but overall grows nicely over time.
Yes, in fact that’s one of the core pillars of this subreddit
You might be a good candidate for a Target Date Fund. I’m a bit like you that I want to be fairly hands-off, so I have all my retirement dollars in a TDF.
Yes. In fact for many people, that’s all they buy. I buy total US and total international funds for my retirement.
That’s the recommended way to build a portfolio. If you’re not into doing the research to build your own, then you should probably just pick a Target Date Fund and allocate 100% of your retirement money into it.
Index Funds are almost always the best bet with great returns and low fees. Starting at 30 years old with an initial $1000 and making payments of $250/month (which is $125/paycheck for most people… a pretty reasonable amount) and putting it into a Vanguard S&P500 Index Fund should result (based on past performance over decades) in $953,300 at 65. Pretty incredible returns for such reasonable contributions.
Don’t try to time the market. No day trader is going to outmaneuver the insider information of Wall St pros. Because you aren’t pulling it out until retirement, you don’t need to stress about short term fluctuations. Pay for some good tax advice on the front end and you’ll likely not need to change anything ever.
My current employers 401k offers “Vanguard 500 Index Fund – Admiral Shares” and I max out my annual contribution into it. My employer matches 25% as well. Then in my regular brokerage account I put 20% of every paycheck into VTI. Been doing this for about 4 years now and my only regret was not starting this 15 years ago, but better late than never. Good luck with your future financial plans!
This is the only way you should be treating these accounts! Anything less is gambling
I wouldn’t fill my retirement accounts with anything other than those tbh.
Yes. It’s a great plan. I’ve been investing in the S&P500 index fund for about 25 years and averaged 10-15 percent every year. I don’t have time to read on investments. It makes up nearly all of my 401K. It does go down in some years but in the long run it’s been fantastic for me and I’m a very risk adverse person. It’s like investing in the US economy as a whole.
Yes. Buy Index funds for retirement. I would use a Roth IRA and a 401K to purchase them. You can open a Roth IRA through vanguard and Fidelity. The annual limit to contribute to an IRA is $6k. If you want to contribute more then I would use your company’s 401k.
You can put money in a regular brokerage account but then you are missing out on the tax savings.
Yes, that is the Boglehead way (followers of John Bogle the founder of Vanguard).
You have been handed a golden opportunity right this moment if thats your plan for 30+ years down the line.
Investing it in Index funds basically means if something goes really wrong with your retirement we all have much bigger problems to deal with than if somebody gets to retire or not.
Yes but make sure you rebalance it periodically (at least every year or so). Most retirement accounts have something called target date funds which do this for you automatically.
yes, you cant time the market, because you can’t beat time **in** the market.
Yes. Some would say it’s the BEST way to fund a retirement plan.
Look into the “three fund portfolio.” Very highly recommended by those that are financially savvy and don’t want to a) pay a financial advisor, and b) think about their retirement portfolio.
Uh.. yeah.. specially during times like NOW.
Not only is it a good idea, I would argue that for 95% of people anything else would be a *bad* idea
Yes. Very solid thinking. It took me 30 years to learn that concept.