I’m taking your course so I can apply those concepts on my 401K elections. Based on the examples, target-date index fund is better. However, in the options that I have for the 401K, the expense ratio for the Target-Date Fund is 0.1% which is good but for the S&P 500, International, and Bond are 0.01%, 0.03% and 0.02% respectively. What do you recommend? Which option seems to be the right one?
Stephanie here is a video that might help that Jeremy made about this question:
If you want to set it and forget it go with the target date. If you want to try to mimic and rebalance go for the 3 fund.
The expense ratios may look like a big difference, but the convenience of a target date fund may be worth the cost.
You can always switch to the 3 funds over time if you feel more comfortable over time. I started with target dates before learning how to handle my own investments.
The important part about the different expense ratios is that you are well under 1%.
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Chad has a perfect answer! I’d personally go with the target date index fund. It’s a super low expense ratio and handles the rebalancing and reallocation for you!
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