I haven't actually funded my Roth this year. The money is sitting in a savings account, waiting for me to figure out what to invest it in. Back in 2008 when I started saving for retirement, I spent a long time obsessing about what to invest in before finally settling on Vanguard Balanced Index (VBINX), which is about 60% total U.S. stock market and 40% total U.S. bond market. It wasn't a perfect choice; I could definitely use exposure to international markets, but I figured I should dive in with a not completely unreasonable choice and reassess later on.
I never quite got to the reassess part of the plan. Then the stock market tanked, and I got a lot more skittish about investing. I'd been telling myself that I believe in investing for the long term, buying and holding, and indexing, but I'm pretty risk adverse to begin with. (A 60% /40% portfolio isn't exactly what the blanket advice for people in their early twenties suggests, after all.) It was easiest to just quit thinking about it entirely. I have no idea how much I have in my Roth right now, and I'm going to keep telling myself it doesn't matter.
That doesn't really encourage thorough research into the options available. I really want to stick my head in the sand, throw $5,000 in a c.d. and be done with it, but that isn't a rational choice if I ever want to have enough to retire. What do you think, is sticking with VBINX for another year a reasonable default option, or should I try to find the time to do some more research?
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3 comments:
I like Vanguards target date funds -- if the one for your "age" is too aggressive for you (and if you really want 60/40, it probably is), you can pick a different one. It takes care of the international exposure, even with a small amount of "emerging markets".
Just my opinion. I actually have my roth at fidelity, even though vanguards lifecycle funds seem more in line with what i want. I have been meaning to move it...
I go through this agony too. And I have too many accounts. Just pick a day and do it!
The issue is, I'd like to get about 60/40 and stick with it, not get more conservative over the next few decades, at least not until I'm very close to retirement. On the other hand, I could just shift from one target date to another as the years go by. I'm thinking that for now I'll continue to focus on making a non-stupid choice rather than being freaked out about whether it is optimal.
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