Do I need more than a target-debt fund?

In my last blog, I gave some tips for choosing a target-debt fund (TDF). As I mentioned, TDF provides a ready portfolio for retired investors. And a balanced, well-diversified portfolio is probably the most important factor in long-term investment success.

But other things are also important and you may have additional goals outside of retirement. Suppose, for example, you are in your early 30s. You and your spouse are saving for retirement, but you want to start saving for college for your 2 young kids. At the same time, you want to buy a bigger house, but when you still have a student loan from a graduate school, you worry about paying more mortgage.

Since your eldest child is 15 years away from college, do you prioritize savings for college when you retire? To save college, do you use the 529 plan or use the Uniform Gift (UGMA) for a minor’s account? How much do you need to save? What about repaying your own education loan? Would you miss out on the opportunity to buy your dream home if you waited to pay it off? In short, what do you do with your next dollar?

As your financial situation becomes more complicated, you will have to make many more decisions. The 1960s song comes to mind: “Help! I need someone.” Someone, Such as a financial advisor. Or Something, Such as a digital advisory provider, commonly called a robo-advisor.

For the sake of definition, an advisor is a human professional who provides financial advice with education, training and experience. A Robo-Advisor is an online platform that provides consulting services through a digital interface and algorithmic programming based on user inputs. While not a perfect analogy, it is similar to hiring a Certified Public Accountant (CPA) to prepare your tax return and provide guidance, rather than using tax-planning software or online services.

In future blogs, I will evaluate different types of advisors and provide insights on how to choose the best option based on your personal financial situation. At this point, I would like to focus on what you can expect from an advisor – human or robot – and whether you are seeking professional advice.

An advisor can help you identify and prioritize your goals. For most of us, saving is the number one priority for retirement. You can’t reach your short-term or long-term goals without knowing how much to save for everyone. The basis of a sound plan is to create a budget that includes your income and expenses, establish an emergency fund, and make priorities and savings recommendations for your various goals. Many advisors provide estimates about your chances of success in reaching your goals.

An advisor will create a suitable investment portfolio for you based on your goals, age, time horizon, tax brackets, risk tolerance and other factors. There will be investment recommendations in the portfolio সাধারণত usually mutual funds or exchange-traded funds (ETFs). The advisor will consider your tax situation and try to maximize your investment through tax-efficient asset allocation and tax-advantageous accounts such as IRA.

Ongoing portfolio management, rearrangement and monitoring are also part of the package. Professional advice can help you navigate a life change – the birth of a child, the loss of a job, or the receipt of a fall from an inheritance or business sale – that requires guidance or a change in your plan.

Finally, depending on the scope of service and the cost, you can get help with insurance, philanthropy and estate planning. For me, helping to develop a thoughtful withdrawal strategy for generating income for retirement is one reason I would like to go to an advisor.

Vanguard research concluded that there are important portfolio, financial and psychological benefits associated with financial advice.

First, the advice can help you address common portfolio construction errors as a result of behavioral bias and financial illiteracy, which include taking disciplined risk, overweight in U.S. equities, and unclaimed cash.

Second, our research has determined that counseling has improved financial outcomes. Specifically, 8% of the 10 clients who received counseling had an 80% or greater chance of achieving a safe retirement. However, only 2 out of 10 clients are at risk of not reaching their goal.

Finally, many investors appreciate the emotional elements associated with an advisory or advisory service. Researchers have observed that most of the value felt among traditionally advised investors lies in their relationship and trust with their advisors. Robo-consulted investors focus on a sense of gain and control over emotional benefits.

Do you need advice? If you have confidence in your knowledge and abilities, and possess discipline, perseverance and time, you can do it yourself. If not, and your financial situation is complicated by multiple goals and other variables, consider a reasonable price advice solution.


Investments in target retirement funds are subject to the risk of their underlying funds. The year in the name of the fund refers to the approximate year (target date) when an investor in the fund retires and leaves the workforce. The fund will gradually shift from a more aggressive investment to a more conservative one based on its target date. Investment in Target Retirement Fund is not guaranteed at any time on or after the date of investment. Investors should examine the prospectus of the Target Retirement Fund for any applicable expense ratio.

The recommendations of this fund are based on the retirement age of approximately 65 years. If you want to retire significantly sooner or later, you may want to consider a fund, including allocating resources for your specific situation.

Financial advisors usually charge clients fees in addition to any fund fees and expenses.

All investments are at risk, including the potential loss of money you invest. Diversity does not guarantee gain or protect from loss. Investing in bonds is subject to interest rates, credit and risk of inflation.

We recommend that you consult with a qualified tax advisor about your personal situation.

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