Sunday, July 23, 2006

Vanguard Target Retirement Funds

The one-fund solution is a strategy that many mutual fund companies have pursued over the last several years. Investors have responded by pouring money into these one-stop solutions. The idea is that most people are too busy to keep track of their finances, let alone research and keep track of multiple funds necessary for diversification. Whether it's Vanguard's Target Retirement funds, Fidelity Freedom funds, T Rowe Price Retirement funds, they all have subtle differences but embark on the same concept; namely, provide broad diversification with a single fund that gradually becomes more conservative over time.

The other aspect of these retirement funds is that it allows investors starting out to obtain instant diversification even with low balances.

I currently have my Roth IRA in the Vanguard Target Retirement 2045, mostly b/c you all know how much I like Vanguard. However, the knock on Vanguard's Target Retirement funds was that they became too conservative too early. On the other hand, T-Rowe prices funds were much more aggressive and maintained a higher percentage of equity positions for the equivalent Vanguard fund.

I reviewed these Vanguard funds and now noticed that they added a bunch of new funds, Target Retirement 2050, 2045, 2035, 2030, 2025, etc. However, in looking at the asset allocation breakdown, there seems to be no difference between the 2050 fund through the 2030 fund!!! (They are all approximately 90% stock 10% bond). I am somewhat bothered by this b/c I recommended to my parents that they should invest in the 2035 or 2025 fund but now I'm realizing that them doing so has given them a 90%stock/10% bond allocation. I think a little too aggressive given their age of 58 and 67 respectively. I think I will call Vanguard and ask them about these aggressive positions for target 2035, 2030, 2025 and see what differentiates these funds from the more aggressive 2045, 2050 funds.
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Wednesday, July 19, 2006

Car quest: Still Searching

Well, it's been awhile since I last posted but much has happened since then.... I moved into a new apt, my wife started a new job, and I've finally been able to go out and test-drive some cars. I appreciate the suggestions from those that have posted regarding their experiences with cars. To recap, my "short list" was: Camry, Accord, TL, Audi A4, BMW 3series, Infiniti G35, Lexus IS 250. In the interim, people have suggested other cars including a VW jetta, Acura TSX, and Honda Accord LX v-6.

I've tested the following: Camry SE v-6, Accord EX V-6, Infinit G35, Acura TL. I must say, I would be happy with any of these... I went from a Altima 1995 that some dumbass crashed into and so now have been relegated to an acura integra... 1991 that is. Old-school.

Of all the cars I've tested, I have been most impressed with the acura TL. Actually, the best car to drive was the infiniti G35... it drove like a real sports car; but the entire TL package is what impressed me. Everything was standard, there is more leg-room/truck space in the back; and the interior feels more luxurious. Of course, the ride is a little mushier which in my eyes, is more of a downside than an upside (I want stiff suspension).

I never got around to the german cars.... I walked into the BMW dealership and not one person seemed willing to show me a car. (Kearny Mesa BMW). Same for the Audi dealership..."um, someone will be with you in 15 minutes". Bullshit. Maybe I shouldn't wear birkenstocks when I go car-shopping but believe me, I'm not walking in there to fool around... I'm a serious buyer.

Lesson taken is that I presume you also have less negotiating leverage with cars that are more popular such as the BMW 3 series and the Audi. In fact, it seems like everyone and their mom has a BMW in san diego.

So, would still like to test drive those german cars but will go to another dealer in the meantime. Stuck-up A-holes.
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