Vanguard 2040 Fund Fact Sheet: A Comprehensive Guide to Your Retirement Savings

Vanguard 2040 Fund Fact Sheet

Overview

The Vanguard Target Retirement 2040 Fund (VTIVX) is a target-date fund designed for individuals planning to retire around the year 2040. It offers a diversified portfolio that automatically adjusts its asset allocation based on your age and risk tolerance. As you approach retirement, the fund gradually shifts towards more conservative investments, reducing the potential for significant losses while preserving your accumulated wealth.

Key Features

• Target Retirement Date: 2040
• Expense Ratio: 0.15%
• Minimum Investment: $1,000
• Investment Objective: Long-term growth and income
• Asset Allocation: Gradually shifts from growth to conservative investments as retirement approaches

Investment Strategy

VTIVX primarily invests in a combination of:

• Index Funds: Provide broad exposure to the stock and bond markets
• Active Funds: Managed by Vanguard's experienced investment team
• International Investments: Diversify your portfolio globally

Risk Profile

Moderate: The fund's asset allocation seeks to balance potential growth with risk, making it suitable for individuals comfortable with a moderate level of volatility.

Performance

One-Year Return: 8.71%
Five-Year Return: 9.25%
Ten-Year Return: 7.86%

Source: Vanguard Performance Snapshot (March 31, 2023)

Suitability

VTIVX is ideal for:

• Individuals with a long-term investment horizon
• Investors seeking diversification and automatic asset allocation
• Savers looking for a low-cost option

Benefits

• Automatic Rebalancing: Continuously adjusts asset allocation to maintain your risk tolerance
• Broad Diversification: Provides exposure to various asset classes and sectors
• Low Expenses: Minimizes fees that can impact long-term returns
• Peace of Mind: Allows you to focus on other aspects of retirement planning

Asset Allocation By Category

Asset Allocation By Region

Frequently Asked Questions (FAQs)

1. Can I withdraw money from VTIVX before retirement?
Yes, you can withdraw funds at any time, but may incur taxes and penalties for early withdrawals.

2. How does the expense ratio affect my returns?
The expense ratio is a small annual fee that covers the fund's operating expenses. A lower expense ratio means more of your investment goes towards growth.

3. What is the difference between VTIVX and other Vanguard target-date funds?
Target-date funds differ based on their retirement target year. VTIVX is suitable for individuals retiring around 2040.

4. How can I learn more about VTIVX?
Visit Vanguard's website or contact a financial advisor for detailed information and guidance.

5. What should I do if I'm unsure about my risk tolerance?
Consult with a financial advisor to discuss your investment goals and risk profile.

6. Can I combine VTIVX with other investments?
Yes, you can create a diversified portfolio by combining VTIVX with additional investments that align with your financial objectives.

7. How often does VTIVX adjust its asset allocation?
The fund's asset allocation is reviewed and adjusted regularly to ensure alignment with the target retirement date.

8. What is the potential impact of market fluctuations on VTIVX?
All investments carry risk, and the value of VTIVX can fluctuate based on market conditions. However, the fund's diversified portfolio aims to mitigate potential losses while seeking long-term growth.