OK I am back... and this post is really long....
I am read, David Bachs' "Automatic Millionaire". Currently Reading his "Start Late Finish Rich". Also some holds came in at the library, I have "The Joy of Simple Living", "Your Money or your Life", and "Smart Couples Finish Rich" to read next also.
On the deciding on where to start putting my retirement money front, I have decided to put my 403b money in a Targeted fund. I used Morningstar and Yahoo Finance Fund tools to first get an Idea of which funds and they basically came back to the same three. T. Rowe Price's Retirement 2030, Vanguard's Target Retirement 2030, and Fidelity's Freedom 2030. (screen shots of Morningstar's summary of each
). I am still going to start with my original 5% this year but, David Bach has me thinking I need to suck it up and start with 10%, gotta crunch the numbers on that first.
(just a warning, some of the screen shots are pretty large...)
It seems like for me the hardest part of all of this is actually coming down to pulling a trigger on a single fund.
Morningstar's fund compare has me thinking Vanguard or T. Rowe Price (see screen shots
) but, Fidelity's has been around longer.
Since the ages of the funds are so different It's really difficult to compare apples to apples so I had an Idea. Since these are all funds of funds, I went back and used the Morningstar compare to to pull a list of all of the funds each targeted fund currently holds to try and give a better idea of their returns over 5 years. Again more Morningstar screen shots.T. Rowe Price's Retirement 2030 HoldingsVanguard's Target Retirement 2030 HoldingsFidelity's Freedom 2030 Holdings
This actually turned out to be helpful because it gave a really clear picture of how all the funds were spread out, and Fidelity's seems like it is really widely diversified compared to the others, I don't know if that is because of the maturity of the fund though, the others could shift over time I suppose but, on the whole gave a really great picture of how the funds did within their individual asset allocations.
OK, so here is where I'd like the input from you folks that know this stuff better than I do, I am not asking for you to pick a fund for me but, I have "Investor's Block", I need input on how I should weigh the minute details in order to break a somewhat three way tie, and there may not be if that's the case than OK. I sort of feel like there is no more "logic" to apply at this point and I am more at "Gut Feeling" decision time.
Here is where I am at.
After much internet reading it's clear there is no easy answer in the "What's better long term, indexed vs. managed question", but I haven't read "Boggleheads" yet (down to 2nd in line on the library wait list) either so that may change the outcome entirely.
So Right now my gut says...
Fidelity Freedom 2030
- If I read the Prospectus right No Fees.
- .74% expense Ratio
- more mature well diversified fund with good overall performance.
- Holdings have had consistent and steady returns for the last 5 years.
T. Rowe Price Retirement 2030
- $10 Annual management Fee
- .76% expense ratio.
- A very aggressive allocation with 91% socks currently and it seems a more aggressive strategy for growth overall even after target date.
- Holdings have excellent returns for last 5 years.
Vanguard Target 2030
- $20 Annual management Fee, unless I register online AND accept electronic delivery of statements.
- .21% expense Ratio
- Indexed, a plus if you believe indexing out performs management
- A more conservative allocation in less individual funds, a little to conservative for the target date I feel.
- Holdings have had very good returns over the last 5 years.
So what it comes down to is my gut says this in the end..
Low expenses are great for Vanguard but, I feel the funds held aren't diversified enough and the strategy is a tad too conservative for my tastes. Fidelity is well spread out but, for the expense and returns it's just doesn't seems to come in 3rd of the three. T. Rowe Price is .5% more than Vanguard but, IF
the performance over the life of the fund is similar to the last 3 (or 5 if you look at the holdings) the .5% is kind of a moot point. and While not hugely more aggressive than the other two, T. Rowe Price seems to fit better with what I think the allocation should look like for someone my age.
So the gut says put my money in T. Rowe Price's Retirement 2030... but, after all that, is that what this sort of life affecting decision comes down too?? Gut Instinct ???