pnw_guy wrote: ↑Sun Feb 28, 2021 12:25 pm
Hi, this is my first post in the Bogleheads forums.
I'd like to implement the 3 fund portfolio in my work 401K. However, my employer only offers two of the three funds. They offer:
- Total US Stock Market Index
- Total US Bond Market Index
So what's missing is the Total International Stock Market Index. So while I can't do the 3 fund portfolio, I'd like to get advice on which of these three options I should pursue:
1. Should I just invest in one of the Vanguard Target Retirement Funds that my company offers?
Any thoughts on what I should do? I'm not quite sure which option to pursue or if it really even matters.
Thanks in advance.
I would (and actually do) just take option 1 and invest entirely in a Vanguard Target Retirement Fund based on age.
In my Roth IRA and my taxable brokerage account (both at Vanguard), I hold a Vanguard TDF.
My wife's Roth IRA and 403b are also in Vanguard TDFs.
My 401k doesn't have access to the Vanguard TDF, but it added cheap index funds a few years back, so I approximate the TDF using blackrock institutional index funds for:
Wilshire 1000
Wilshire 2000
International Stock
US Bond.
My IPS has me quarterly rebalancing to match the Vanguard TDF.
The only deviation we have is my wife is 100% VTWAX in her taxable account (we're relatively young, and she's not a big fan of bonds).
Whether you want to just use the TDF or roll your own target date portfolio has more to do with personal preference than with an end result in risk adjusted returns. You can do much worse than a TDF, and it's hard to do much better in the long run. For me, the simplicity and inability to fiddle is worth its weight in gold.
Pick a plan that makes sense and works for you and write it down. Then stick with it through thick and thin.
The most important thing in your control is your savings rate. After that, you can control for costs. Asset allocation, asset location, tax efficiency, and fund selection becomes much more of an arcane art than a science. I'm satisfied with the TDF's allocations and logic, and the rest is probably a wash in the end.
Good luck and stay the course!
TBI