Vanguard offers target-date retirement funds to suit the needs of investors of various ages. A target-date fund is a mutual fund that automatically adjusts the asset mix and allocation over a time period that’s based on your age and when you want to retire.
Vanguard’s target-date retirement funds typically invest in other Vanguard index funds and provide investors with instant diversification. The company offers mutual funds for target retirement dates for every five years from 2015 to 2065.
Below, we’ll take a look at the company’s funds for people who aim to retire in 2030, 2040 and 2050. Each of the funds invests the majority of its assets in Vanguard index funds, and each portfolio includes Vanguard Total Stock Market Index Fund Investor Shares, Vanguard Total International Stock Index Fund Investor Shares, Vanguard Total Bond Market II Index Fund Investor Shares, and Vanguard Total International Bond Index Fund Investor Shares.
The information in this article was current as of July 3, 2021.
Key Takeaways
- Vanguard is well-known for its variety of low-cost index mutual funds and ETFs.
- Vanguard also offers a suite of similarly competitive target-date retirement funds.
- Target-date funds are meant to be diversified, low-maintenance investments that start out riskier and automatically shift to more conservative allocations as retirement approaches.
Vanguard Target Retirement 2030 Fund (VTHRX)
The Vanguard Target Retirement 2030 Fund (VTHRX) is designed for investors who wish to retire between 2028 and 2032, and its minimum initial investment is $1,000.
The fund was issued on June 7, 2006, and has achieved an average annual return of 7.68% since its inception. Its expense ratio is 0.14%, which is 69% lower than the average expense ratio of similar funds, according to Vanguard.
As of May 31, 2021, the net assets of the fund were $41.9 billion, of which about 65% was held in stocks and 35% in bonds. The fund had a 17% annual turnover ratio in the 2020 fiscal year.
The Vanguard Target Retirement 2030 Fund is considered a moderate-to-aggressive fund. However, the allocation of assets in the fund will change as the target date approaches, and it will become more conservative over time. This makes the fund most suitable for people who want to invest in it for 10 years or longer.
Vanguard Target Retirement 2040 Fund (VFORX)
The Vanguard Target Retirement 2040 Fund (VFORX) is best suited for investors planning to retire between 2038 and 2042, and its minimum initial investment is $1,000.
The fund was issued on June 7, 2006, and has generated an average annual return of 8.32% since its inception. According to Vanguard, the fund also has an annual expense ratio of just 0.14%. The fund has $33.1 billion in net assets, of which of about 80% are held in stocks and 20% are held in bonds.
The Vanguard Target Retirement 2040 Fund is also considered a moderate-to-aggressive fund. However, as with the 2030 fund, the Vanguard Target Retirement 2040 Fund will become more conservative over time as the allocation of assets in the fund change. Similarly, this fund is also best for people who want to invest for 10 years or more.
Vanguard Target Retirement 2050 Fund (VFIFX)
The Vanguard Target Retirement 2050 Fund (VFIFX) is for investors who will retire between 2048 and 2052, and its minimum initial investment is $1,000.
The fund has had an average annual return of 8.56% since its inception on June 6, 2006. Its expense ratio is 0.15%, which is 67% lower than that of funds with similar holdings, according to Vanguard. The fund’s net assets total $24.6 billion, and about 90% of them are held in stocks, and 10% are held in bonds.
Since the Vanguard Target Retirement 2050 Fund primarily invests in equities or stocks, it carries a high degree of volatility and is considered aggressive. Therefore, it’s best suited for investors who can tolerate the potentially high volatility of the stock market, as well as long-term investors. Like the other Vanguard target-date funds, this one will also become more conservative over time as the allocation of its assets change.