Vanguard 529: Target date Portfolios or choosing your own?

There are great free online tools where you can test scenarios yourself to see performance differences and other metrics. Testfol dot io is one such site. Here is a link comparing the Vanguard Target Retirement 2035 Fund to the Golden Butterfly portfolio created by Tyler at Portfolio Charts. Portfolio Charts dot com is another great site for comparing portfolios.

testfol.io

The target date funds generally have higher fees but do not necessarily have better results. You need to find more details on each available fund's fees and expenses. There is usually a Net % expenses shown.

Real examples from the funds I am able to choose in my 401k:

Target date 2060 fund has a 0.29% Net expense (All the target date funds are 0.29%)

Blend of Large US Equity has a 0.02% Net expense

Blend of foreign Large Equity has a 0.04% Net expense

Blend of Small and Mid cap US Equities has a 0.05% Net expense

Most of the fixed income (bond) options I have range from 0.29% - 0.49% Net expense

Etc, etc.

Expenses can be a huge drag on returns and they only get worse the longer you hold the investement.

The extra leg work I would recommend would not be trying to choose stocks you think are winners, but digging into the fees and expenses of the funds available for you to select. As JL Collins puts it, "forget about the needle. Buy the haystack."

The New York 529 allows you to choose a Vanguard growth fund over a target date fund. I just changed mine this way.

In my state I have a Vanguard 529 fund. I don’t have the ability to have an individualized portfolio; I have to pick some fund. They have Target date funds and a variety of other funds. I did some research into the funds and found one that is called Vanguard Total Stock Market Index Portfolio which seemed as close to VTSAX/VTI as I could get. It’s been doing well. My kids are young so I will likely move the money to something more conservative when they get closer to college age.

Target date funds are notoriously mediocre. Don’t use them if you don’t have to.

Are you referring to picking your own investments vs a target date fund?