| Set it and Forget it: Index or Target funds? |
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Flinter
First Time Poster
Cash: $ 0.25
Posts: 1
Joined: 09 Feb 2013
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| Set it and Forget it: Index or Target funds? |
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I just recently moved a former employer's 401K into a rollover IRA with Schwab. I already have a Roth IRA with them (no 401K with current employer) so I figured I'd keep them in one place.
Now I'm confronted with the confusing task of how to invest it. My 401K and Roth IRA are both in 2040 Target Funds, but I'm under the impression that Index Funds perform better and can be cheaper in fees. Is this true? If so, would I be better off transferring to a higher rated and cheaper firm like Scottrade or Ameritrade? Once I research and pick some Index funds to buy, can I set-and-forget for a year or two at a time, or would I need to pay more attention to make it worth my while?
Thanks in advance.
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Sat Feb 09, 2013 10:14 pm |
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oldguy
Senior Member
Cash: $ 751.85
Posts: 3656
Joined: 21 May 2006
Location: arizona
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quote:
If so, would I be better off transferring to a higher rated and cheaper firm like Scottrade or Ameritrade? Once I research and pick some Index funds to buy, can I set-and-forget for a year or two at a time, or would I need to pay more attention to make it worth my while?
Scottrade is expensive compared to Schwab - lots of fees & service charges. You are paying about 0.84% for your 2040 Fund. That's not bad. The 2040 Fund is about 91% stocks and 9% bonds.
As for set-and-forget for a year or two - the successful investers of the previous era did best by set/forget for about 30 years. Interestingly, the clients who tried to time the market - got out during downturns & bought back when the market recovered - received a 30 yr average return of under 3%/yr - and the set/forget clients got 12%/yr during that same 30 yrs.
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Sat Feb 09, 2013 11:08 pm |
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