r/personalfinance • u/ozzy102009 • 8h ago
Retirement Retirement fund recommendations
Good morning. I am looking into retirement fund investments and I am automatically a hundred percent invested in an SSGA retire 2050 fund. I have the option to invest I. Different things like bonds, the S and P 500, etc. I have no idea what to do. Advice ?
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u/longshanksasaurs 8h ago
The wiki has an article about 401k fund selection.
Target date funds are self-contained, globally diversified portfolios of stocks and bonds, where the bond allocation increases as you age. If that target date fund is a reasonably low expense ratio, that could be your only fund in your 401k.
If you don't want to use the TDF, then you should be identifying the funds needed to manage your own three-fund portfolio of total US + total International + Bonds (not just any three funds, those three asset classes in particular), and you should still consider looking at a target date fund glide path as a starting point for an asset allocation.
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u/Smithy2232 8h ago
Yes, the default is generally a target date fund. Depending on your age, I would look at the S&P 500 and some growth funds. Growth funds are down around 20% so far this year so it might be a good time to start investing in them.
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u/ozzy102009 8h ago
Do most people split within a few funds ?
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u/TeslaSaganTysonNye 8h ago
If you have a TDF there's not really a need to carry any other fund. It will be well rebalanced as the fund ages and goes from aggressive to conservative over the years. It's the simplest way to invest. Outside of just going 100% into a world total stock index fund, a TDF is very simple.
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u/Smithy2232 8h ago
Yes, I think most people have a few different funds within their retirement account.
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u/BaaBaaTurtle 6h ago
You shouldn't do what "most" people do. You should do what works for you.
A target date fund is perfectly fine, especially if it's in a traditional account. A target date fund will be a mix of stock and bond funds that will slowly reallocate over time. If you don't know anything about investing and don't want to expend calories to learn they are an ideal vehicle.
If you do want to make your own fund we recommend a three fund portfolio made up of the total US stock market, the total international stock market, and a broad bond fund. It will be up to you to periodically rebalance into safer investments as you get closer to retirement.
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u/BaaBaaTurtle 6h ago
Generally we recommend broad market low cost index funds like VTSAX and VTIAX (total US and international stock markets) along with a bond fund like VTBLX in a traditional account.
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