Tips for choosing funds

Consider a Vanguard Institutional Target Retirement Fund
A single Target Retirement Fund provides diversification and is designed to keep your assets invested appropriately for someone in your stage of life, up to and including your retirement years.

Investments in Target Retirement Funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in a Target Retirement Fund is not guaranteed at any time, including on or after the target date.

Consider choosing the fund with the date that's closest to the year when you expect to retire. If you are already retired, consider choosing Vanguard Institutional Target Retirement Income Fund. This fund is designed to provide current income and some capital appreciation to retirees.

Keep in mind that all investing is subject to risk, including the possible loss of the money you invest. Even though Target Retirement Funds simplify the investment process, they still require some monitoring to ensure that your portfolio is in line with your current situation. Each Target Retirement Fund invests in several broadly diversified Vanguard funds. Bond funds are subject to the risk that an issuer will fail to make payments on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer’s ability to make payments. Diversification does not ensure a profit or protect against a loss.

Look for low costs

If you’re choosing funds on your own, remember that costs have a substantial effect on long-term net returns. Fund costs are subtracted, dollar for dollar, from investment returns. The lower your costs, the more of your investment returns you can keep. One measure of a fund's cost to own is its expense ratio.*

*The cost of running the fund, expressed as a percentage of the fund's assets, as of the most recent fiscal year. For Vanguard Institutional Target Retirement Funds, this is an average weighted expense ratio, based on expenses incurred by the Vanguard funds that make up each Target Retirement Fund.

Consider an index fund

An index fund aims to track the performance of a certain index such as the Standard & Poor’s 500 Index. Index funds generally have low expense ratios because they don’t employ costly fund managers or analysts.