Target fund vs selecting individual

[flygirl]

I’m looking at rolling over an old 401K into Vanguard and I have the option of doing individual funds or the Target fund.  I’ve kind of done an analysis of the fees for each and what the returns have been and it appears that the target fund comes out ahead slightly.
Are there any reasons I am not thinking of where a target fund is a bad idea? Do you have any arguments either way?

[farmvillelover]

I think it depends on how actively you want to monitor and rebalance your funds. Target funds are kind of set it and forget it, and will get more conservative the older you get. Which is good. Downfalls to target date funds are, IMO:

- Tend to be more conservative than what your age should be invested in
- Have higher expense ratios than if you just did a portfolio of your own index funds. Just quick example, VTSAX is a total market index fund and the expense ratio is 0.04, the Vanguard retirement target fund for a 2045 retirement date is 0.15. I think this point is more important the more you have to invest. I like this calculator for comparing expense ratios: www.begintoinvest.com/expense-ratio-calculator/

[shaynaatl]

I like target date funds for newbies to investing. Or for people that want to put as little time into watching their portfolio as possible. If you have the interest, knowledge, and time to be more detailed, then you could look into creating a proper asset allocation of multiple funds.

[covergirl82]

For 15-20 minutes of your time, you could take an investment survey through the company. (I would think most have that available.) I've done that on an annual basis and adjusted individual fund allocations that way. That enables you to have an individualized investment mix based on your retirement goals.