Target Retirement Fund vs. existing LifeStrategy Growth Fund

Morningstar lists VASGX at 0.27%, and VTIVX at 0.21%. These are both very low-cost funds.

I wouldn't worry too much about trying to predict the future, that far ahead. Investment regulatory climate and tax regulations might be significantly different 30 years from now, for instance, and there's no telling whether these funds will even still be in existence by that time. Save your money regularly and about once a year consider whether your asset allocation is appropriate for your current goals and risk tolerance, and whether your current funds are still good choices in their categories.

Well, a day or so to go over your finances once a year isn't such a big deal, is it? ;-) Eventually you'll also want to add reviewing your insurance and estate planning to your annual financial checklist; that's especially important if you get married and/or have children.

If your employer offers a 401(k) plan, you should also sock away at least enough there to get the full company match. Otherwise you're throwing away free money! Diversifying your retirement assets between pre-tax (401(k)) and post-tax (Roth IRA) investments is a good thing, too.

-Sandra the cynic

I'd call it a wash.

Currently, both have 85-90% in equities, about 10% in bonds, and on the order of 15% (all equities, presumably) in non-US. ie. they are *very* similar at the moment, though VASGX has an asset-allocation fund which can move those proportions around a little bit. Vanguard's 2035 fund is almost identical to the

In other words, it'll hardly make a difference for at least 10 years.

Or at least plan on reviewing sometime in the next few years - plus, of course, before/around any major event - marriage, job loss, house-buying, etc.

He should be reviewing some of that now anyway - perhaps not life insurance (especially if he has no dependents now) but certainly disability and, if he doesn't have it, health insurance.

Moreover, the IRA is only part of a bigger picture - a review of debt, spending, etc on a regular basis is a good idea.

All good advice and worth repeating!

I'd suggest reading about the investment mix in the 2045 fund, and comparing it to the LifeStrategy growth fund, and see if you agree with their investment strategy over the entire lifetime that you'd hold the fund. My criticism of life-cycle funds generally is that by nature they assume you have no other investments, and they assume everyone retiring in 2045 has the same view of risk and the same plan for withdrawals. I believe they'll err on the side of "less risky" for this reason. Maybe you have a 401k at work and you'd tap into those assets early in retirement. And maybe the plan has only one decent mutual fund offered and so you need to "balance it out" with this Roth IRA.

The other thing is, you're very far away from retirement, and choosing a mutual fund based on its investment mix in 2035 seems really premature. I mean really, you say you're busy but you have over 20 years to find some spare time to make a switch! You have plenty of time to decide that the LifeStrategy Growth is too aggressive and shift to the life-cycle fund, or one of the more conservative LifeStrategy funds, or to something else entirely. As a "single decision", buy and forget it mutual fund, you could do a lot worse than LifeStrategy Growth -- it would certainly be on my short list of suggestions. At 22 in a relatively small IRA it might even be too conservative, but that depends on your personal comfort level with investments.

-Tad

You all have really helped out a bunch! Thank you for all of the great responses and advice, I really appreciate it :- )