![Fidelity vs Vanguard [TARGET DATE FUNDS] | Target Date Funds Explained | Fidelity Investments](https://i.ytimg.com/vi/AbKj9WkpKJI/maxresdefault.jpg "Fidelity vs Vanguard [TARGET DATE FUNDS] | Target Date Funds Explained | Fidelity Investments")
MY EXACT Dividend Stock Portfolio — See it in M1 Finance! ||
The Average Joe investor out there has so many investment options and choices in 2020. More choice than EVER BEFORE! Choices ranging from individual stocks, bonds, exchange-traded funds, index funds, actively managed mutual funds, and TARGET DATE FUNDS! But you might be asking yourself: Are Target Date Funds the RIGHT INVESTMENT for me?
WHAT ARE TARGET DATE FUNDS
Target Date Funds, according to the SEC, are often mutual funds and hold a mix of stocks, bonds, and other investments. Over time, the mix gradually shifts according to the fund’s investment strategy. Target date funds are designed to be long-term investments for individuals with particular retirement dates in mind. The name of the fund often refers to its target date. For example, you might see funds with names like “Portfolio 2030,” “Retirement Fund 2030,” or “Target 2030″ that are designed for individuals who intend to retire in or near the year 2030. Most target date funds are designed so that the fund’s mix of investments will automatically change in a way that is intended to become more conservative as you approach the target date. Typically, the funds shift over time from a mix with a lot of stock investments in the beginning to a mix weighted more toward bonds.
VANGUARD VS. FIDELITY TARGET DATE FUNDS: TARGET DATE 2050
Vanguard Target Retirement 2050 Fund (VFIFX)
0.15% Expense Ratio
Minimum Investment: $1,000
Price as of 02/27/2020: $36.98/Share
Asset allocation as of 01/31/2020:
– 89.55% Stocks
– 10.41% Bonds
– 00.04% Short-Term Reserves
Historical Returns:
1 yr 15.13%
3 yr 10.52%
5 yr 8.51%
10 yr 10.24%
Fidelity Freedom 2050 Fund (FFFHX)
0.75% Expense Ratio
Minimum Investment: $0.00
Price as of 02/27/2020: $11.19/Share
Asset allocation as of 01/31/2020:
– 93.22% Stocks
– 06.21% Bonds
– 00.57% Short-Term Reserves
Historical Returns:
1 yr 14.22%
3 yr 10.10%
5 yr 8.52%
10 yr 9.52%
VANGUARD VS. FIDELITY TARGET DATE FUNDS: TARGET DATE 2025
Vanguard Target Retirement 2025 Fund (VTTVX)
0.13% Expense Ratio
Minimum Investment: $1,000
Price as of 02/27/2020: $19.10/Share
Asset allocation as of 01/31/2020:
– 59.63% Stocks
– 40.32% Bonds
– 00.05% Short-Term Reserves
Historical Returns:
1 yr 13.49%
3 yr 8.95%
5 yr 7.12%
10 yr 8.87%
Fidelity Freedom 2025 Fund (FFTWX)
0.65% Expense Ratio
Minimum Investment: $0.00
Price as of 02/27/2020: $13.71/Share
Asset allocation as of 01/31/2020:
– 62.46% Stocks
– 32.75% Bonds
– 04.79% Short-Term Reserves
Historical Returns:
1 yr 12.45%
3 yr 8.51%
5 yr 7.10%
10 yr 8.30%
WHY TARGET DATE FUNDS MAY BE A GOOD FIT
– One Stop shop for the beginner investor which is hands off
– Instant diversification and automatic re-balancing over time
WHY TARGET DATE FUNDS ARE A BAD IDEA FOR YOU
– Everybody has a different risk profile
– The right asset allocation model for one person is wrong for another
– high fees compared to the actual individual funds…(read more)
LEARN MORE ABOUT: IRA Accounts
CONVERT IRA TO GOLD: Gold IRA Account
CONVERT IRA TO SILVER: Silver IRA Account
REVEALED: Best Gold Backed IRA
Fidelity also has a set of index-based TDFs that are cheaper.
Fidelity Target Date fund FIPFX expense ratio is .12 cheaper than Vanguard
Is FIS overpriced?
Hey Joe I know this is an old video but last year I lump summed into a target date fund. FIPFX to be specific. I'm up 11.22% total and ordinarily I'd be happy but this wasn't an ordinary year. My brokerage that is all in on VOO did over 2x that return. This has me rethinking my strategy for my Roth in 2022. Any insight on what happened? I'm a young guy just 31 so I was expecting my target date to be fairly aggressive. Maybe the foreign stock allocation?
When Vanguard first came out with its target date funds, it had a post-retirement equity percentage which was far too low to account for increased lifespans. T. Rowe Price has done a better job conceptually all along on target date funds.
I wish you would do a video review of the Schwab target date account. I’d like to see your comparison to the Vanguard target date account.
Invested in Vanaguard . Pretty good
What good are lower expenses if the fund performs worse than what it's compared to. Look at the fund composition of the two Fidelity funds (2025 index and target date). There are far more funds in the target date fund, more management, more research. More isn't necessarily better but in this case the target date fund is performing better than the index fund. I look at the bottom line return which includes fees. Over 10 year the target date returns 7.98% while the index returns 7.68%. I also concur with others here that historically Fidelity has weighed too much on foreign investments (don't know about Vanguard). Tech stocks have ramped up like crazy and FTSE is not a home for tech like the S&P 500. I've stuck with domestic index funds and have beaten the target date fund consistently. But I do like the simplicity and diversification of the target date fund.
"What's up with the expense ratio, Fidelity?!" It's simple… they have shareholders who want profit. Vanguard on the other hand is incentivized to save its customers money because we customers are the shareholders there.
Was going to do the Vanguard 2025; after watching video will just buy the individual funds in the percentages I prefer. I agree, allocation to international stocks too high.
I agree with mostly everything, but doing this 13:28 isn't totally as simple as it's presented here. You're paying the fund managers to reallocate, research, buy and sell a many different assets on your behalf. For instance, the Target date fund may have more exposure to FANG stocks, which means it's getting a good return Yr-to-date, but the fund manager has to know when to sell off some of those overbought shares and move into value stocks or other kinds of assets. Do you know which assets to select? How many shares to buy? At what price? How many shares would you sell of Amazon? When? Do you wait until a potential collapse in price or hang on to it for a while because it may be too valuable to sell? Should you rebalance by selling or simply buy more bonds? Which ones?? THAT's what you're paying for. Some fund managers are better at this than others. They didn't just purchase stocks for you and then collect your money. I think a few good index funds would be better than these options for people under age 57 though. If you're older, these can be good options. Bonds aren't the safe havens they used to be. Now the only safe haven is diversify, diversify, diversify!!
Question can you have a target date fund and index funds in the same portfolio?
Do i need to open a roth ira account to get a target date fund
Can I invest as much as I want monthly to a target date fund
Hi! I'm new to investment! I've viewed several videos of yours and really like your detailed information! Question: I just began to learn about investment, and do you suggest invest in IRA directly through vanguard or fidelity, or if I can open an account with one of the brokers like TD Ameritrade, and invest in both ETFs/mutual funds of vanguard and fidelity and other ones like VTI, QQQ?
Oh, yes you did. #fabulous!! You're amazing. Please never stop making videos (snaps in Z-formation).
The fidelity index target date funds are a better comparison to Vanguard's, but great content.
Such a good video. Sub’d and Liked!
Very informative, thanks for the video, well done!
Fidelity has two types of target date funds. The freedom index and the freedom target date funds. The latter has higher er because it's actively managed while the freedom index has lower er because it's passively managed
Yeah, with Fidelity, you want to make sure you buy a Fidelity Freedom INDEX fund (Not the actively managed fund you are referencing). This would be the better fund for comparison to Vanguard: https://fundresearch.fidelity.com/mutual-funds/summary/315793869 I don't think it's a coincidence that they make the index versions harder to find, but they are there. Just have to search Fidelity Freedom Index Fund (year). The Fidelity Freedom Index funds are actually cheaper than Vanguard by a very small amount. I actually think the fees are well worth it for people who are not watching investing videos on youtube and just want the convenience of buying one fund and not worrying about it.
Having said that, most people graduate from their target-date funds….for good and bad reasons. A good reason would be asset location strategies. For example, you probably don't ever want to hold bonds in your Roth IRA if you can help it. You'd want to maximize the tax-free growth by keeping stocks in the Roth while putting the bonds in your 401k or other accounts.
A bad reason people leave Target Date funds could be to tweak their asset allocations too much and too often. For example, I think firms like Vanguard and Fidelity are increasing their international holdings in target-date funds for a reason, and a lot of U.S. investors are struggling with recency and home country bias. I hope it works out for them.
Excellent job as usual !!!! Hope you continue the videos and gain a crap ton of views…….I'm 47 and have $50,000 to invest for retirement, hopefully in 15 years. Should I use more than 1 index fund or is it crazy to just dump it all in a single S&P index fund and forget it? Never invested before, but I don't want to be too conservative……
I Hold VIIIX Inside my Roth 401(k) At Work -My other ETF's are VOO/SPLV.
Good Video – I just opened an account at Fidelity for myself. My wife has a few rollover accounts there from her work. Nice to compare these, Fidelity ones always have a slightly higher expense ratios from what I've seen – with the same growth.
Vanguard has a costs of 49 dollars per purchase when you have less than 50k, right?
Great video!!
Mine (FDEWX) has 9% in bonds.
I just within the last couple of weeks moved from a USAA mutual fund Roth IRA (exp. ratio: 1.11%) to FDEWX 2055, their (Fidelity's) recommendation (exp. ratio: .12%). I'm in the process of moving all my investments to Fidelity. The new account will currently cost me something like $10.00 a year. Much better then before. Maybe do a review of the FDEWX 2055 fund. I wouldn't mind hearing your opinion on it.
There’s a war out there with Vanguard, Fidelity, and Schwab haha