AboutWarren Boroson Expertise Author of "Keys to Investing in Mutual Funds" (Barrons) and "Ultimate Mutual Fund Guide" (Probus). Columnist for Gannett News Service.
Experience Author of 20 books; winner of 1996 Personal Finance award from Investment Company Institute and Washington University. Formerly on staffs of Money and Sylvia Porter's Magazine. Had a radio program (on WEVD)about mutual funds and a newsletter, FundDigest.
Expert: Warren Boroson Date: 2/21/2008 Subject: Long term S&P 500 vs Diversified index
Question Hi Warren,
If given the choice between Vanguard 500 vs Vanguard LifeStrategy High Growth and one intended to buy and hold for long time(say 30+ yrs) which fund would you select and why?
Thank You
Jim
Answer Dear Jim--
I'd recommend a Vanguard Target Retirement fund--one whose date coincides closely with the date you plan to retire.
Unlike the Vanguard 500, it's diversified. Bonds as well as stocks, along with foreign stocks, and a higher exposure to U.S. small-caps.
A second advantage: It automatically becomes more conservative as you grow older--moving from heavily into stocks to heavily into bonds.
It can be hard to sell stocks when the market is up. A target-retirement fund will do what it's tough for you to do.
I've interviewed parents with 529 plans who didn't cut back on their exposure to stocks when their kids approached college age. A tragic mistake.
Your choice is obvious and important: a target retirement fund!
