My Current Retirement Fund of Choice

Posted by Mr. B

March 31, 2007

Vanguard Target Retirement 2045 Fund (VTIVX)

As I mentioned previously, I recently moved my Roth IRA from American Funds to Vanguard. When I transfered, I placed all my money in the Vanguard STAR Fund (VGSTX) initially, which only requires a $1,000 minimum. Recently I contributed enough money to break the $5,000 mark, and this was my signal to exchange the money into a different fund.

I chose the Target Retirement 2045, which is an all-in-one portfolio. It’s currently comprised of almost 90% stocks, making it very aggressive.

The three largest holdings in this fund are:

Vanguard Total Stock Market Index Fund
Vanguard European Stock Index Fund
Vanguard Total Bond Market Index Fund

That’s a decent breakdown. When I eventually have about $50,000 in the fund, perhaps I’ll split it into a few different funds of my choice, but I like the current holdings.

What I like about the Vanguard Target Retirement Funds is that they start aggressively, but as the years pass they gradually become more and more conservative, thereby helping you keep keep more of your earnings. Best of all, the adjustments are done automatically, allowing the investor to “add money and forget about it.” Since I’m in my 20s, I have lots of time to let the money compound away.

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