Last week, I wrote a guide to choosing a target-date fund for a popular personal-finance blog, Get Rich Slowly. The guide compares target-date funds from Fidelity, T Rowe Price, and Vanguard using various criteria, including their glide paths.
In the comments, there were questions about expanding the comparison beyond those 3 fund families. So, here’s the glide path chart expanded to 5 fund families (source: Morningstar 7/8/2010):
And to compare costs, here’s an updated list of expense ratios for their 2040 funds (source: Morningstar 7/8/2010). Vanguard is still the low-cost leader by a large margin due to its use of low-cost index funds.
|2040 Fund||Ticker||Expense Ratio|
|Fidelity Freedom 2040||FFFFX||0.81%|
|T. Rowe Price Retirement 2040||TRRDX||0.79%|
|Vanguard Target Retirement 2040||VFORX||0.20%|
|Principal LifeTime 2040 Instl||PTDIX||0.82%|
|TIAA-CREF Lifecycle 2040 Retire||TCLOX||0.72%|
Even though they’re not ideal for everyone, target-date funds are still useful investments for many people. They’re certainly better than other strategies commonly used by beginning investors: picking stocks, picking mutual funds using past performance, or not investing at all.