Jump to content
debo

Vanguard 403B choices

Recommended Posts

I'm planning to being 403B contributions through my employer.  There are so many Vanguard choices.  What criteria should I use to choose one?  I'm within 5 years of retirement and am mostly in Vanguards stock funds.  I know this is a bonehead question but I have no idea where to start.

Share this post


Link to post
Share on other sites

There are no "bonehead" questions here--we look forward to any questions. Whatever question you ask, there are probably other folks with the same question, lurking, just waiting for you to ask a question!

We think it's best to look at all your retirement investments as a whole. That means in addition to your 403b account, you should also consider your other retirement accounts such as IRAs, your taxable account, your spouse's retirement accounts, etc.

Do you have a preferred asset allocation, the ratio of stock funds to bond funds? If you are 5 years from retirement, you might consider an asset allocation of about 60% stocks and 40% bonds. However this is a very personal decision and you might reasonably choose one that's anywhere between 40% and 80% stocks. Do you invest in international as well as US stock funds? 

Do you have a pension? If so, consider that you may not need to take withdrawals from your 403b or IRAs until well into retirement? So you will be investing for a longer period than just 5 years. Will you be 59.5 when you expect to retire?

Your easiest choice of a good low-cost Vanguard fund for your 403b is one of their Target Retirement funds. I suggest you decide on an asset allocation, for example 60/40, and pick the TR fund with that asset allocation. TR funds gradually become more conservative over time, so if it's 60/40 now, in 5 years time your fund might be 50/60. Here's the TR 2025 fund which is now 65/35. https://investor.vanguard.com/mutual-funds/profile/VTTVX 

Another very easy choice would be one of Vanguard's Life Strategy funds. These funds don't change their asset allocation over time. The LS Moderate Growth fund stays at 60/40. https://investor.vanguard.com/mutual-funds/lifestrategy/#/

If you only want a US stock market fund, we prefer Vanguard's Total Stock Market fund. You can't get a fund that is more diversified, based on companies' value in the  US stock market.  

Share this post


Link to post
Share on other sites

I'm about the same distance from retirement as you and I have the TR 2025 in my 403B.  Vanguard recently reduced the expense ratios on these funds in their 403Bs.  I think it's .09% instead of the .13% they have listed, but don't quote me on that number exactly.

 

Share this post


Link to post
Share on other sites

You’ve gotten some good advice so far.

You can build a three fund portfolio (VTSAX, VTIAX, and VBTLX), buy a target date fund which gets progressively more bond heavy, or a LifeStrategy fund which maintains its stock/bond split. All are great options, which means your biggest decision is what your stock/bond split should be.

You may want to read my Investing 101 page as well as the page I wrote about Vanguard’s 403b.

I’m making the assumption you have a Vanguard 403b, which may not be the case since you can buy Vanguard funds through several vendors.

If you provide more information about your circumstances (risk tolerance, other accounts/investments, pensions, available vendors and their fees, willingness to manage a simple portfolio, etc) then you may get more insightful feedback.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

×
×
  • Create New...