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Target Date Funds: I Just Rebalanced My 401K For the Last Time!

I just moved my entire 401K balance (even the portion I had rolled over from my previous job) to one fund: the Schwab Managed Ret Trust 2040 Class III.

Update: I've since rolled over my 401K and invested the entire sum in the Vanguard Target Retirement 2040 Fund.

Yes, I sold out to the ease of the target date fund. I'll no longer need to bother with the investment mix inside my 401K (assuming the fund maintains a decent return).

Don't for a second think I won't be following along though. You should always monitor your returns.  Here's a blurb from Schwab about their target funds:

“Are you looking for a way to reach your retirement goals, but don’t have the time to actively manage your portfolio? Schwab Target Funds are four actively managed funds that adjust over time as you approach retirement and one that is designed to help you produce income and additional growth potential after you’ve retired.”

I also have 100% of my contributions now going into this fund. Prior to this decision to move “all in”, I had my account spread out between a couple of large and small cap funds, an international fund, and a small amount in bond funds.

It was essentially the same mix as my new target date fund offers just in many funds. Here's the new mix (of the Schwab fund):

  • Cash – 0%
  • US Stocks – 73.2% (11% Small, 11% Mid, 51% Large)
  • Foreign Stocks – 18.3%
  • Bonds – 8.5%
  • Other – 0%

My expense ratio is 0.54% of fund assets. Not bad. Compared to other funds in Schwab's offerings, this is pretty reasonable.

It also has a four out of five Overall Morningstar Rating (here's what that means).

The goal of this particular fund is to:

“…provide total return for investors retiring in or near the year 2040 [can't wait!].  It's designed to provide a single investment fund that automatically adjusts over time to meet the changing risk and return objectives of investors saving for retirement.”

Lastly, the funds performance over the past one, three, and five year periods are 13.74, 14.21, and 15.38, respectively. All these are right up there or better than the benchmarks and category averages. I'd be happy with those returns for the next 30 years!

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Last Edited: July 26, 2017 @ 5:08 pm
About Philip Taylor

Philip Taylor, aka "PT", is a former practicing CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of FinCon, the conference and community dedicated to helping other financial influencers and brands. He created this website back in 2007 to share his thoughts on money, hold himself accountable, and to meet others passionate about moving toward financial independence.

PT uses Personal Capital to keep track of his financial life. This free software allows him to review his net worth regularly, analyze his investments, and make decisions about his financial future.

PT keeps a portion of his emergency fund in Betterment, the automatic investing tool that makes investing super simple. Betterment focuses on what matters most: savings rate, time in the market, investing costs, and taxes. PT recommends this service to anyone looking to get started investing for themselves.

All the content on this blog is original and created or edited by PT.