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The One Fund I Use to Invest for Retirement – VFORX

Could one fund take care of your retirement needs?

We’re so boring when it comes to investing and retirement.

But I think boring is good.

We do the vast majority of our retirement investing through one single fund: Vanguard Target Retirement 2040 Fund (VFORX).

We invest in this fund within my Rollover IRA (my old 401K), our Roth IRAs, and in my new Solo 401K.

Our goal every year will be to max out those last two accounts using this one fund.

Vanguard’s Target Retirement 2040 Fund is what’s known as a target-date retirement fund, which is a type of mutual fund. Meaning, it is a collection of multiple stock funds, bond funds, and cash funds.

Specifically, this target fund contains these three funds:

Vanguard Total Stock Market Index Fund Investor Shares
Vanguard Total International Stock Index Fund Investor Shares
Vanguard Total Bond Market II Index Fund Investor Shares

What makes target-date funds different from other mutual funds is that they automatically adjusts their asset allocation between those fund types as the fund ages. For example, a target fund might be invested in 90% stocks / 10% bonds right now, but by the time you retire, it might be invested in 40% stocks / 40% bonds / 20% cash.

Which makes sense, because as you age, your acceptable risk (% in stocks) should go down because you are getting closer to actually needing those funds. Vanguard has more target funds than just this one. Here is there complete list:

Vanguard’s Target Retirement 2010 Fund
Vanguard’s Target Retirement 2015 Fund
Vanguard’s Target Retirement 2020 Fund
Vanguard’s Target Retirement 2025 Fund
Vanguard’s Target Retirement 2030 Fund
Vanguard’s Target Retirement 2035 Fund
Vanguard’s Target Retirement 2040 Fund
Vanguard’s Target Retirement 2045 Fund
Vanguard’s Target Retirement 2050 Fund
Vanguard’s Target Retirement 2055 Fund
Vanguard’s Target Retirement 2060 Fund

I chose this particular fund from Vanguard for several reasons. Here are a few:

1. My Age – The Vanguard Target Retirement 2040 Fund is built for someone who is retiring on or with a few years of the year 2040. My guess is that I won’t be able to work (or at least won’t want to work) when I’m 65. I turn 65 in the year 2040. Mrs. PT will turn 60 (I married young, I know).

As a reminder, I don’t invest for retirement to get rich necessarily. I invest in retirement to take care of my self (food, shelter, care) when I can no longer get up and go to a job or business.

2. My Risk Tolerance – Again, the Vanguard Target Retirement 2040 Fund is supposedly built for someone who is retiring on or with a few years of the year 2040. I’ve looked at the asset allocation of the fund, and I am comfortable with that based on my own risk tolerance.

Age and risk tolerance go hand-in-hand. The number on the fund (i.e. my age) isn’t the only thing that guides me in my choice of asset allocation. I also consider my own tolerance for risk, something I discovered recently by meeting with a financial planner.

Vanguard Target Retirement 2040 Fund Allocation at Retirement

3. Expenses – Unlike some other target-date funds, which were often criticized for their expenses, this particular fund (as with most Vanguard funds), is inexpensive. It currently has an expense ratio of 0.19%. That’s actually low for any mutual fund, period.

I like to keep my investing expenses low, because unlike performance, it’s something I can completely control. How much you pay to invest in retirement matters.

4. Convenience – If there were no target-date funds, I would have to create this type of investment product by investing in multiple mutual funds to get to the right level of asset allocation and diversity. I would also have to re-balance them myself each year to maintain the proper allocation. I see no reason to fool with this type of work.

5. Performance – I have no reason to believe that this fund won’t perform the same or better than any other retirement investment over the next 28 years. It’s anyone’s guess what will happen. History is not a guarantee of future performance, but we can look to history as a guide.

This fund is investing in stocks and bonds, the two most historically common asset classes for retirement investing. Why are they the most common? Because they performed the best historically. Good enough for me for now.

A word of caution if you are going to invest for retirement and are considering a target-date fund, remember that they are not all created equal. Study expense ratios and be sure to understand the underlying asset allocation, so that you can be sure you agree with it. Don’t just default to your retirement date.

While you may be retiring around 2040 like me, you don’t necessarily have the same risk tolerance as me. For example, in 2038, you might not like that 50% of your money is tied up in stocks and could be subject to market turmoil like we saw in 2008.

Additionally, there are other factors (like the type of account you are using, the size of your portfolio, etc.) that might prevent target-date funds from being the best choice for you.

One last point…As I was studying this today, I started wondering about risk, and the risk that might be present in these types of funds because (1) you are keeping your funds with one mutual fund company, and (2) you are allowing just a few (in this fund’s case, three) fund managers to decide your fate. I’m not sure how big of a concern this is and I couldn’t find any commentary on the subject. If you have an opinion, I’d love to hear from you in the comments.

Speaking of comments, I’d love to hear your thoughts on this target fund from Vanguard and your general thoughts on target-date retirement funds.

As always, the above wasn’t investing advice. I’m not an investing professional. Seek professional investing advice before making decisions about your own retirement. I’m simply sharing with you my own investing choices and philosophies.

Image by Daquella manera

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30 Ridiculously Cheap (and Creative) Valentine’s Day Ideas

by Emily Guy Birken · 3 comments

Cheap Valentine's Day Ideas As a longtime cheapskate, and a new cheapskate mom, I have often been bemused by the amount of money people spend to prove to their spouses and children just how much they love them.

No time is this more true than on February 14 of each year, when love advertising goes into overdrive to convince consumers that true love is measured by wallet thickness.

For a family on a budget, the prospect of children’s parties at school, gifts or mementos from parents to kids, and the all-important Valentine’s gift between spouses can make you wish that the calendar could just skip from January to March.

Fortunately, making this year the most memorable Valentine’s Day yet for your family can cost next to nothing. Here are some cheap Valentine’s Day ideas that will leave your wallet untouched and your family delighted:

Ideas For Kids’ Valentine’s Day Parties

The yearly Valentine exchange in the primary school classroom is an important part of American childhood. In many classrooms, students are asked to give a Valentine to everyone in class, which means your child is on the hook for anywhere from 20 to 30 cards.

1. The obvious money-saving answer is to make the cards. But what if you’re missing the crafty gene, or are fresh out of red and pink construction paper, or your child insists that everyone is giving Valentines with their favorite licensed character on it?

One option is to purchase the cards at the dollar store. Some offer cards for as low as fifty cents each. They will mean just as much as an expensive card. Or, if you save your cards from year to year, recycle the ones from last year by cutting off the cover.

2. Make cookies and cupcakes at home rather than stopping by the bakery for baked goods.

3. You can print out licensed character Valentines from www.dltk-holidays.com/valentines/cards.htm. These can be printed in color or black and white, so your child can decorate them himself, or if you’re short on time you can put these together the night before.

Something Special for the Kids at Home

4. If you desire to shower your child with balloons and stuffed animals, consider a dollar bag of balloons over the dollar a pop mylar ones and blow up the entire bag of colored latex balloons. Some stores will blow up balloons with helium for a low fee.

5. A small stuffed animal from the dollar store works just as well as the high priced toy from gift shops or toy stores.

6. Children need your time more than material goods any day. A day with you means more that store bought gifts. Spend the day playing games and having fun making Valentines cookies will mean more than expensive gifts.

If you walk down the aisles of any major department store after Christmas, it seems like Valentine’s Day has become another major decorating and gift-giving holiday for children. But you really don’t need to spend money to let your kids know you love them.

7. Instead of buying Valentine candy, bake heart-shaped cookies or pink-frosted cupcakes with your children. They’ll remember the time with you long after the sugar high has worn off.

8. Instead of a heart-themed gift, play a game with your kids. AmazingMoms.com has a great list of creative and easy Valentines games to help your little cupids have a great day.

Valentine’s Day Gifts for Your Sweetheart

Despite what the diamond, chocolate and rose industries might advertise, it is possible to have a romantic Valentine’s Day without spending money on your sweetheart. Though the word “budget” does not necessarily call romance to mind, “creative” certainly does.

Valentines Day has become so commercial that we have been sold a bill of good telling us we must spend to win the hearts of our loved ones. Reality is, that is simply not the case. Valentines Day is a day to share time and feelings of love with others, and that, can be done on a budget without sacrificing the day.

9. Knowing your boyfriend, husband (or girlfriend or wife) is the key to providing a romantic, memorable, and cheap Valentines gift. Take over a hated chore; cook her favorite meal for dinner; make a date to look at the stars. The gift you give is only limited by your imagination, and it will likely be much more romantic than anything store bought.

Here’s a few more ideas:

10. Make a mix tape. You know, a collection of your favorite songs or songs with a specific theme. Mix “tapes” are made easier these days because of iTunes.

11. Plan a movie night, at home. Get free movies with Redbox using their codes, or just pay a $1.

12. Write a special, hand-written note. Nothings says I love you, like the words “I Love You” handwritten on a note. Well, maybe saying “I Love You” says it better…but you get my point.

13. Cook a nice meal from scratch. If you never do any cooking, make a special effort sometime this weekend to cook up something nice. Or, if you both like to cook, why not make a date to cook up something new and extra special. For dessert, make your own chocolate covered strawberries.

14. Plan a picnic if the weather is nice. You supply the food and drink and a nice blanket. Find your favorite place and just hang out. I know you Yanks are laughing at me right now. But it’s warm enough here.

15. Go for a walk. How long has it been since you and your loved on just walked together? Pick out a park you’ve never visited, or go to your old favorite. Couple it with the picnic idea and you’re set.

16. Give Valentines cards while you’re at the store. Some people like to go to the card store together and pick out cards, then read them to each other. Pick a funny card and a sweet card. Then, when you’re done, just put the cards back. A fun outing and doesn’t cost a thing.

17. Go out to eat. You can still do this and be frugal if you learn the tricks to save money when dining out.

18. Valentine’s Day does not have to put your budget into a tailspin. Keeping the spirit of fun will help you give your family the holiday they dream of, without spending a dime.

Adults often scramble to spend money on expensive flowers and dinners. There are countless ways to share the day without going broke. Look at local specials advertised in your area.

19. White Castle has the classic dinner for two, great for a date night; just pretend you are a couple of teenagers and go.

20. Need a more expensive and grown up meal deal, try going to lunch rather than dinner.

21. Most restaurants offer a lower price lunch special than the price of dinner. Use coupons and buy one get one offers for entrees and desserts.

22. Go out for coffee and dessert at a very up scale place and skip the expensive meal.

23. Go to the grocery store and buy the supplies for a dinner. Use your coupons, shop specials and cook a special dinner at home. Add a few candles, dim the lights and enjoy.

24. Discover your city. Spend the day visiting local landmarks and museums. Depending on where you live and the weather in your area, plan a day outside. Go ice skating and carry a thermos of hot chocolate.

25. Pack a dinner and go to the lake, build a fire, and star gaze. Check out a book about astronomy from the library and take with you as you study the heavens.

26. It seems like we cannot have Valentine’s Day without flowers. Consider a potted plant, one that can be kept. Some stores offer potted miniature rose plants, or other flowering plants. These last long after the flowers fad, but if you need cut flowers, consider buying them from a discount or grocery store.

27. Shop thrift stores, Salvation Army or Good Will for a special container to use as a vase for the flowers.

28. Thrift stores often have Valentines Day themed coffee mugs, red and white or pink dinner plates and other decorations. Buy them there and recycle buy filling with candy, or other treats. Wrap with colored cellophane from the dollar store and you have a Valentines happy for less than half the cost from a gift store.

29. Go to the library and check out romantic movies.

30. While you’re at it, check out books about Valentine’s Day and read with your children.

It really is what is in your heart that counts. Count your dollars saved as part of helping keep your budget in line while making the day special. The values you teach your children about sharing without over spending is an act of love.

Couples are a lot happier when not in debt. That counts when you make Valentine’s Day special without making each other over spend. Have a happy and cheap Valentine’s Day.

List your cheap Valentine’s Day ideas in the comments below…

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Finding a Valet Parking Job or Starting a Valet Parking Business of Your Own

by Philip Taylor · 4 comments

If you are looking for a good part-time job or business to start, you should definitely consider the valet parking industry.

You’ve no doubt seen valets at nice restaurants and hotels. But did you know there are third-party valet service companies geared towards the private party (e.g. weddings) industry?

When people throw a big wedding or party, one of the things they don’t want their nicely-dressed guests dealing with is finding a place to park and then walking a long distance. A third-party valet service is a nice way to impress your guest and show them you appreciate their attendance. It’s also a good way to ensure your party doesn’t cause a riff with city parking ordinances.

My Valet Parking Job

I worked for a valet parking service company in college and it was one of my favorite part-time job experiences. It offered flexible hours and I could make a good amount of money (tips only) with little work.

The company I worked for did mostly private parties, so I worked a lot of weekend nights where I easily brought home over $50 for two hours of work. Each person would tip around two bucks.

It was good, quick money (in cash) and it fit my already busy schedule which had me at classes during the week and waiting tables most nights.

Who says you have to wait till you're rich to drive nice cars?

If you are interested in finding a valet parking job, I suggest you start with the phone book and/or craigslist. Find the local companies in your area and solicit your services.

If you aren’t having luck with making direct calls to companies, I suggest you pound the pavement (of the nice neighborhoods) on Friday and Saturday nights to meet the companies where they are at. Other places to inquire are local country clubs and nice restaurants.

Get to know the other valets and they can tell you about any opportunities.

Along with a smile and friendly disposition, you’ll need to be at least 18, have a drivers license, and you’ll most likely be subject to a drug and background check. You’ll also need to be able to drive a standard transmission.

Starting a Valet Parking Company

I could see how owning a valet parking company would be very appealing to many entrepreneurs looking for a lean operation to run. I reached out to Tulsa Valet Parking business owner, Joel Reyes for the inside scoop on starting your on valet parking company.

Mr. Reyes started his parking business back in 2005 while balancing a full-time career in marketing. He decided to start the business after discovering the poor service from other valet parking businesses in town.

I asked Mr. Reyes what his three biggest concerns would be in staring a valet parking business.

Insurance – As I suspected, insurance was most important. Insurance companies view the parking industry as very high risk and rates are as high at $20,000 in your first year. Your first step in establishing this business will need to be to reach out to an insurance agency and find the rates in your area. Along with insurance, be sure to inquire with your local and state governments about any permits or licenses required to operate.
Quality Staff – Finding quality valets is critical to your success. Start with people you know and trust and then hire only based on referrals from current staff members. At the valet company I used to work at, only one or two trusted valets were allowed to recruit others. Always check driving records and get a copy of their current license. Mr. Reyes says he pays his valets minimum wage and ensures the staff do a “tip share” at each event.
Client Contacts – As with most things in life, it’s all about who you know. Reach out to your connections to build your initial client base. Then expand your business with cold calls and professional face-to-face networking. This is a high-end client business, and your customers expect (and will respond to) a very professional approach to marketing material, website, phone calls and face time.

Have you ever worked as a valet or considered owning your own valet business?

Image by Damian Morys Foto

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Slate from Chase 15 Month Balance Transfer with NO FEE

by Michael · 2 comments

Balance transfer credit cards often provide the greatest savings for consumers even though they don’t have big up front bonuses or rewards programs. But even with the savings, one of the obvious drawbacks of applying for a balance transfer card is the balance transfer fee you’ll immediately be charged. Generally, this fee is 3% which only adds to the amount of debt a new cardholder has but for a limited time only, the Slate® from Chase is offering a 0% intro APR on balance transfers for 15 months, with NO balance transfer fee for 30 days.

The 0% intro APR offered on the Slate® from Chase also includes purchases made so for 15 months, this card will not charge any fee of any kind (as long as you pay on time and stay within your limit!). Since this card doesn’t charge a balance transfer fee, every cardholder will receive the maximum amount of savings within the twelve month interest free period.

Once the intro rate expires, the purchase and balance transfer APR becomes 11.99% – 21.99% variable depending on your credit history. Remember to make your balance transfer within the FIRST 30 days, otherwise you will be charged a 3% balance transfer fee.

The bummer about owning the Slate from Chase is that it does not have a rewards program so once you’ve exhausted the intro rate, the card has very little everyday use. This card doesn’t have an annual fee, so there’s no harm in keeping it in your wallet but try to avoid building up debt with this card … there are many other better credit cards available for everyday spending.

There’s no denying that if you have credit card debt and would like a year of interest free payments, the Slate® from Chase card and the limited time offer of no balance transfer fee is perfect for you. The no balance transfer fee offer is available on a select number of sites only until the end of the year, so to apply, use any link you find in this post.

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2011 Tax Law Changes

by Philip Taylor · 2 comments

I wanted to take a quick moment to review some of the basic tax law changes that will be relevant for those filing a 2011 return.

In the coming weeks, I might be presenting posts that break some of these important changes down even further.

But for now, I’ll just give the highlights of each change affecting the 2011 tax filing season.

The Bush tax cuts were essentially extended, leaving many things unchanged from last year to this year. Federal income tax brackets will remain unchanged, but the standard deduction will go up, while the child tax credit also remains unchanged.

This year’s biggest change came in the form of the payroll tax break to your withholding, essentially continuing the “making work pay” credit.

2011 Tax Law Changes

Here are some of the tax law changes we saw which will affect the 2011 filing year.

Payroll Tax Break – For 2011 one half (the employee half) of the Social Security portion of the payroll tax has been reduced to 4.2% That’s down 2% from the normal 6.2%. Don’t ask me how they are making up the difference. Anyway, you should have seen this change reflected in your paycheck all throughout 2011.

Of course, for any self-employed folks out there, you get the 2% break only on the employee half of your payroll tax. Accordingly, if you normally take the deduction for 50% of the self-employment tax on your 1040, then you will need to reconfigure based on the new percentages.

AGI for Saver’s Credit Increased – If you’ve previously been unable to participate in the Saver’s Credit, look again. The adjusted gross income (AGI) limits are now $56,500 (married filing jointly), $42,375 (head of households), and $28,250 (single).

Report 50% of Roth IRA Conversion – If you did a Roth IRA conversion in 2010 you had the option to report the conversion and pay the appropriate taxes in 2009, or spread your reporting out 50/50 over the 2011 and 2012 tax years. Now that returns for 2011 are due, you need to report 50% of the conversion as ordinary income on Form 1040 under Line 15a.

Standard Deduction Increased – For 2011, the standard deduction for married people filing jointly is $11,600, $5,800 for single, and $8,500 for head of household. Tax rates did not change as the government extended the Bush tax cuts.

Note that the last day to file taxes (federal personal income taxes) is April 17th, 2012.

I know there are other changes to consider when filing your 2011 tax return. If you know of any, please leave them in the comments below.

Previous year changes are on the next page.

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Guest Post: How I Got My Personal Finance Education and Its Role in My Life

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3 Ways To File Your Taxes For FREE

It’s tax time! You should have received your W2s by now so you should be ready to file your taxes. April 17th, the last day to file taxes this year, will be here before you know it. So get going. Luckily, if you meet certain criteria, you may just be able to file your federal [...]

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