25 year old here and fairly new to investing. My technical knowledge can be a bit bit lacking, so bear with me here.
For my retirement accounts (401k and Roth IRA), I'm a fan of "set and forget" approaches, so I like Target Date funds. However, I'm also willing to consider ETFs, which I already do in my private brokerage account.
I need someone to check my understanding of these two target date funds in a Roth IRA. Since a Roth IRA essentially handles the tax burden up front, dividends can grow inside a Roth IRA more efficiently. My Roth is through Fidelity, so I put this year's contribution toward their 2055 Target Date Index Fund (FDEWX). Vanguard has a similar counterpart (VFFVX).
From what I can see, these two perform pretty similarly. However, VFFVX pays a dividend, which plays into the whole Roth IRA thing. FDEWX to my understanding does not pay a dividend. Is there something that FDEWX is offering that I'm missing that might even the playing field between the two? If not, I don't see why I shouldn't drop a bomb towards VFFVX in January for my next Roth contribution.
On a side note, should I consider taking on a bit more risk and look into a dividend stock ETF instead? I wouldn't be looking to flip the ETF in the near term, opting more for just letting it grow over the years while sitting on the dividends. I'm still pretty young, have no debt, and have enough cash reserves to support myself and keep my figurative Monopoly pieces in the market if I were to lose my job with a simultaneous market downturn. Just another thing to consider I guess?
Submitted December 19, 2017 at 08:02AM by foxygrandpa092 http://ift.tt/2AZ70V0
