New Here? Get the Free Newsletter

Oblivious Investor offers a free newsletter providing tips on low-maintenance investing, tax planning, and retirement planning. Join over 9,000 email subscribers:

Articles are published Monday and Friday. You can unsubscribe at any time.

Are We Still Using the LifeStrategy Growth Fund?

A reader writes in, asking:

“I’m curious if you are still using the LifeStrategy fund? Are you satisfied or do you have second thoughts?”

Yes, we’re still using Vanguard’s LifeStrategy Growth fund for our retirement savings. And yes I am still quite happy with it — precisely because I don’t have second thoughts. I think about it roughly the same way that I think about a savings account — not in the sense that it has the same risk/reward profile, because it most certainly does not, but in the sense that it takes a similar amount of maintenance and mental energy (i.e., none).

I no longer spend any time or mental energy thinking about:

  • Whether or not now is a good time to rebalance,
  • Which fund(s) my monthly contributions should go into, or
  • Whether my asset allocation is precisely right.

I know my allocation is not perfect. But by using an all-in-one fund, I forced myself to accept that ahead of time. And because it requires no maintenance, there is no longer the monthly temptation (which used to occur when making new contributions) to change something here or there in an attempt to make the portfolio slightly better in some way.

Not One-Size-Fits-All

Of course, all-in-one funds are not a perfect fit for everybody. There are plenty of reasons why any given investor might be better off taking the DIY-allocation approach. For example:

  • The fund-of-funds structure is tax-inefficient, which is relevant if you have assets in a taxable brokerage account.
  • Some people will not be able to find an all-in-one fund with an asset allocation that suits their needs (e.g., because they need to underweight U.S. stocks in their IRA in order to make up for the fact that they’re overweighting U.S. stocks in their 401(k) because their retirement plan’s only decent choice is a U.S. stock fund).
  • Some people will prefer to implement a strategy that “tilts” the portfolio in some way (most commonly toward small-cap value stocks or REITs).
  • Some people using an all-in-one fund would still worry about whether the allocation is good enough.
  • And some people with DIY allocations don’t worry about whether their allocation is good enough.

But, yes, our all-in-one fund is continuing to work quite well for us.

New to Investing? See My Related Book:

Book6FrontCoverTiltedBlue

Investing Made Simple: Investing in Index Funds Explained in 100 Pages or Less

Topics Covered in the Book:
  • Asset Allocation: Why it's so important, and how to determine your own,
  • How to to pick winning mutual funds,
  • Roth IRA vs. traditional IRA vs. 401(k),
  • Click here to see the full list.

A Testimonial:

"A wonderful book that tells its readers, with simple logical explanations, our Boglehead Philosophy for successful investing." - Taylor Larimore, author of The Bogleheads' Guide to Investing
If you want to discuss this article, I recommend starting a conversation over at the Bogleheads investing forum.
Disclaimer: By using this site, you explicitly agree to its Terms of Use and agree not to hold Simple Subjects, LLC or any of its members liable in any way for damages arising from decisions you make based on the information made available on this site. I am not a financial or investment advisor, and the information on this site is for informational and entertainment purposes only and does not constitute financial advice.

Copyright 2013 Simple Subjects, LLC - All rights reserved. To be clear: This means that, aside from small quotations, the material on this site may not be republished elsewhere without my express permission. Terms of Use and Privacy Policy