Sunday, January 15, 2012

Planning for annual retirement contributions

Although I am still not ready to make my annual retirement contributions since I haven't yet done (or even started) my taxes to know how much I can contribute, I am at least starting the planning process. My default, and most likely path, is to continue with my autopilot strategy and simply invest once again in the appropriate target date fund. In my case, I expect to retire at age 70 or so in another 13 years or so, so a 2025 target-date fund is most appropriate.
 
In recent years I have been using the Fidelity Freedom 2025 Fund (FFTWWX). I have been thinking about switching to Vanguard's equivalent fund, Vangard Target Retirement 2025 Fund (VTTVX) since its expenses and return are better, but the total size of my account is still too small to warrant the hassle of moving the account, especially since I already have several Fidelity accounts. Although, I could open a Vanguard account for this year and see how it goes before making the decision to move.
 
My other thought is that I'm not so keen on bonds and all the other stuff that goes into a target date fund, so I may decide to go simply with straight stocks or a more aggressive stock mutual fund. That would somewhat defeat the purpose of my autopilot strategy, but at least considering it as a viable alternative and would help me better evaluate whether the target-date approach is best, for me.
 
Overall, I am moderately happy with my Fidelity target-date fund, although not thrilled with its performance over the past year, I just have this concern that it is somewhat inefficient in terms of fees and complexity, and may be a little too high a price to pay for the convenience of being on autopilot. OTOH, my portfolio is still too small to warrant a significant investment of my time.

1 Comments:

At 8:46 PM EST , Anonymous QUALITY STOCKS UNDER 5 DOLLARS said...

In this economy its really hard to contribute to a retirement plan.

 

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