What would be a good funds to invest in?

[bint3]

Im 28, just starting understanding & saving for retirement. I don't want to do a target date fund because I want to actively try to maximize my retirement plan. What would be a good plan with these options available?

Tier 1: Passive Target Date Funds

BlackRock LifePath Index 2065 Fund

BlackRock LifePath Index 2060 Fund

BlackRock LifePath Index 2055 Fund

BlackRock LifePath Index 2050 Fund

BlackRock LifePath Index 2045 Fund

BlackRock LifePath Index 2040 Fund

BlackRock LifePath Index 2035 Fund

BlackRock LifePath Index 2030 Fund


BlackRock LifePath Index 2025 Fund


BlackRock LifePath Index Retirement Fund

Tier 2: Passive Stock Funds

Vanguard U.S. Large Cap Index Fund

Vanguard U.S. Small/Mid Cap Index Fund

BlackRock International All Cap Equity Index Fund

State Street Global All Cap Equity Index Fund

Tier 2: Passive Bond Fund

BlackRock Bond Index Fund

Tier 2: Passive Real Asset Fund

State Street Real Asset Index Fund

Tier 2: Active Stable Value Fund

Interest Income Fund

Tier 3: Active Stock Funds

Fidelity Growth Company Fund

Neuberger Berman Genesis Fund


T. Rowe Price International Small Cap Equity Fund

Ford Stock Fund (F)

 

[mosfet]

@bint3 Does anyone swear by those target date funds? every time i've ever looked at them in my plan offerings, the performance was worse and fees higher than the general index funds

 

[lucash]

@mosfet They are a good simple option because they start allocating bonds. Depends what you truly want to do. I am young so don’t do the target date as I don’t want bonds currently. For advice on the post would probably need TICKER symbols

 

[godisatulpa]

@lucash

as I don’t want bonds currently.

why not?

bonds beat stocks about 20% of 5-year periods.

in fact, bonds beat the S&P 500 from 2000-2020. https://www.nytimes.com/2020/05/01/business/bonds-beat-stocks-over-20-years.html

bonds are getting hammered right now, and anything that's beaten down is also usually a good time to buy that same thing.

 

[ltcajh]

@godisatulpa Presumably because they are not worried about stability in their portfolio in their 20’s. They don’t care about massive swings 40 years before they retire.

As you age you get into bonds (maybe) but there’s no reason when you’re young.

 

[neoinarien]

@godisatulpa Likely due to recency bias. Since Obama rates on bonds have been historically low.

 

[godisatulpa]

@mosfet are you doing an apples to apples comparison?

reddit seems to often compare everything to the S&P 500 (US large cap), over the last 5 years or other short periods.

if Investment X doesn't beat the S&P 500 on those google charts (which don't include re-invested dividends), they consider it a crappy investment.

TDFs will have US large cap, US large cap, international stocks and bonds, any of which might under-perform the others at a given time.

 

[mosfet]

@godisatulpa I think so?

For example, my plan offers VINIX as the lowest fee infed fund and the appropriate target date fund given my age would be FFIZX. 10 year total return for the former is 11.9% vs 7.5% for the latter. I don't consider 10 years a short period!

 

[neven]

@bint3 Vanguard is always good for long term investing. They have low fees and a solid background

 

[mp71]

@bint3 The target date find is going to include more diversification beyond the suggestions you usually see listed on reddit, where many folks will exclude international investing entirely.

There is no guarantee that US markets will outpace international markets. There is also no guarantee that large cap will outpace small/mid cap. (Historically small/mud actually beats large cap. Look up the ibbotsen chart.)

It would be wise to remember that the most important component of a large 401k are your contributions. If you want to maximize your plan then maximizing your contributions is the most important step, especially at a young age.

If you want to be aggressive but also include some diversification then consider using 50% of the 2065 target date fund and 50% Vanguard Large cap equity.

 

[ltcajh]

@bint3 Pick a percentage between 60% and 80% into the Vanguard Large Cap Index fund.

Put the rest into Blackrock International All Cap fund.

 

[onsecondthought]

@bint3 You’re 28 so 2065 would be the better option as it is more aggressive