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October 31, 2007


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Vanguard offers some funds like "Target Retirement 2045". These have a mix of things they invest in, and the proportion changes to become less risky as you approach the fund's "target date". Is this a good enough way of diversifying, even though all my retirement is in a single fund? Or do I need to look into more diverse funds, as well?

I have all my money for my IRA in Target Retirement 2045. From what I have seen, it's good enough.

Perhaps one needs exposure to REIT. I thought about it, and figured it was a bad time to buy REIT into the middle of a bubble. (Yeah, bad me. I shouldn't market time)

By the time REIT matures some more and their performance is more clear, perhaps Vanguard will add REIT into the retirement fund. Who knows?

I would be surprised if they did. The total stock market index has a proportionate amount of real estate exposure already. I realized this as I was moving my Roth IRA into the 2050 fund and considered having a REIT index also, but I decided against it.

I have about 25% in the 2045 Vanguard retirement fund with an eye on lowering that to 15-20% in 2008. For 20-somethings, the 2045 would be a good option for 401k IF there are awful options. However, I don't believe that these retirement accounts should make up 100% of retirement funds in an account. You are buying the market with 2045 and others, but the broad total market index for a young person should basically be the conservative portion of your account. You should also have small caps, global etc. etc.

I do like the 90/10 split and it is aggressive, however I think now is a great time to go for stocks both here and internationally. And of course IF your portfolio is large enough, you should have a litle something, something in a REIT. Again, I am speaking strictly for the 20-something or even 30-somethings.

Our time horizon is getting longer and longer away. You could purchase $1000 of 2045 in your Roth IRA 5-years ago at 22 and live another 60+ years!

No, cap weighted market indices are usually overweight large cap growth. REITs would make a nice complement to that.

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