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Vanguard Expands Target Date Funds to Young Investors

This article was written by Flexo in Investing. 6 comments.

Do you plan to retire in 2055? For some reason, that particular year strikes me as the distant future. It’s only 45 years from now — a year today’s 20-year-olds will be checking out of the cubicle and checking into active adult communities. Perhaps it’s because it’s one century after the year Dr. Brown had the idea for the flux capacitor and Marty McFly encountered his mom and dad as teenagers, back in time.

Vanguard is catering directly to teenagers and recent former teenagers with a new target date fund with 2055 as the target year. Target date funds are designed for investors who want a simple way to have a portfolio with age-appropriate risk exposure that changes over time as the retirement date approaches. We’ve explored the drawbacks and benefits of this hands-off approach to asset allocation and portfolio management, and if it means anything, I do not have use a target date retirement fund for myself.

The Vanguard Target Retirement 2055 Fund launched yesterday with a low expense ratio of 0.19% with 90% of the portfolio in stocks and 10% in bonds. You’ll also need a minimum of $3,000 to begin investing in this fund. Other brokerages have yet to catch up with Vanguard. Fidelity’s farthest-looking target date fund is calibrated for a retirement year of 2050. T. Rowe Price does offer a 2055 fund with a similar current allocation as the Vanguard fund but with a significantly higher expense ratio of of 0.79%.

It’s going to be difficult for Vanguard to market this investment to its intended audience. These probably work best in 401(k)s that new employees enroll in automatically. With a typical life of working until the age of 65, today’s 20-year-olds are either not thinking that far into the future or are wary of the stock market given its recent recession and volatility.

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He’s teasing you; nobody has two television sets.

This article was written by Smithee in Consumer. 17 comments.

That’s a line from one of my favorites movies, Back to the Future, during the scene where Marty McFly almost has dinner with his mother and grandparents. If there ever was a commentary on consumerism, this is near the top of my list:

Lorraine Baines: Our first television. Dad just picked it up today. Do you have a television?

Marty: Well, yeah, you know, we have… two of ‘em.

Milton: Wow! You must be rich!

The joke, of course, is that thirty years in Marty’s past, it’d be ridiculous to think that people could afford two televisions. And I think it was about a year after the movie came out that my sister and I both got a black-and-white set for Christmas. (That TV was cool, not just because it was mine, but because if I plugged in the Nintendo and set it to Channel 2, the TV became a police scanner. I am not making this up.) Having a TV in my room set me free from watching whatever my parents and sister wanted to watch. As the youngest, I finally had a little bit of power.

Now in 2010 and at age 34, I have all the power in the world, at least as far as TV is concerned. We hooked up a Mac Mini to a projector ($900 used), and we blast the image onto a $75 screen. We can watch anything online, anything in the iTunes store, anything on Netflix, etc. etc.

But I think I take it for granted that with the prevalence of DVRs and high bandwidth, each of us can watch whatever we want, whenever we want. I know objectively that’s not the case. Not everybody will elect for super-high bandwidth, or even a DVR from the cable company. Those things cost extra, and some people will undoubtedly find them to cost more than they’re worth.

That’s to say nothing of the fact that using a projector in your home is rare. People are much more likely to spring for one flat-panel TV in the main viewing area. But that begs the question: what do the kids use in their rooms? I’m especially curious to find out if they forgo traditional TVs entirely and just watch stuff on their computers.

So, if you wouldn’t mind helping me escape from the echo chamber of cutting-edge entertainment technology, could you help me with a little survey? Especially if you have kids in the house, I’d like to know the following:

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If you do not see a survey above, click here.

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Smart Power Meters

This article was written by Smithee in Frugality. 14 comments.

We all have power meters attached to the buildings in which we live, and the little needle keeps spinning around and around, ad nauseum, at least until solar panels become affordable. I recently read a story of a family who managed to install solar panels, and while that would normally have cost over $20,000, with various national and state rebate programs, they only spent $8,000.

Wow. Imagine having $8,000 to spend.

We’re customers of Green Mountain Energy here in Dallas, so our bill payments go toward producing more renewable energy (see the big bathtub analogy for more on how this works). But the hardware is operated by a company called Oncor, which has decided it’s time to upgrade our power meters to be smarter. Oncor worked through some calculations (Surcharge Analysis PDF) and figured that the best way to install them would be to charge the average customer $2.12. Every month. For eleven years.

That’s $291.72 for a new power meter.

Within the last month, a hundred grants were given out to companies making improvements to power meters. The company in our area was not one of them. So residents of DFW are likely stuck with the fee.

On their FAQ about the Advanced Meters, Oncor made this suggestion for dealing with the extra $2.12 per month:

How can you offset this fee? Just replace a 100W light bulb with an Energy Star CFL light bulb and you could save more than $2.30 a month.

That’s cute, and likely true, but I don’t believe we’re still using any of the old style bulbs at our house.

This entire scenario of being charged over an eleven-year period for something that won’t be available to everyone until 2012 would be supremely depressing, were it not for the fact that I’m a big data nerd. I love efficiency, and you can’t improve efficiency unless you know exactly what is being wasted. A smart meter will do that for me.

But what’s depressing again is that I could have this right now, for only $200. The Energy Detective (TED) Series 5000 is a device that attaches to the power control panel on the inside of your house, rather than the outside. Other than that, it does all the same stuff: analyze your power usage in real-time, and over regular intervals, then adjust your behavior accordingly.

I’d be excited to get a TED set up in my house, then walk around unplugging one thing at a time, finding the major offenders, maybe put some devices on a schedule; or find out exactly how much we’d save by keeping the house, say, 2 degrees warmer. Those are just a couple of examples. For all I know, more energy is being wasted when two particular devices are running together for one hour than by running both separately for one hour each. Like I said, I’m a big data nerd.

I’d be very interested to hear your story of using a smart meter. Has anybody had the pleasure, yet?

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Compact Fluorescent to Become Mainstream

This article was written by Flexo in Economy. 23 comments.

Congress will likely pass a bill this week that will have a positive effect on global warming. The bill requires requires light bulb manufacturers to create products that consume 25% to 30% less energy than the typical incandescent bulbs on the market today by 2012 to 2014. The goal doesn’t end there; by 2020, light bulbs must be 70% more efficient. Compact fluorescent bulbs (CFLs) already meet this objective, but they cost four times comparable incandescent bulbs on average.

light bulb The good news is they last much, much longer. The difference in price is easily recovered due to the bulb’s long life. Additionally, replacing one incandescent bulb with a fluorescent will save an average consumer $5 on their electricity bill each year. With bulbs costing $4, there is no argument that a switch to compact fluorescent isn’t worth it.

I have compact fluorescent bulbs in most of the sockets in my apartment. I can’t say that I’m a fan of the color of light they produce. Also, many CFLs cannot be placed on dimmers. With improvements to the technology, I’m positive that better bulbs will continue to be made and prices will decline over time.

As my incandescents continue to die, I replace them with compact fluorescents. The small expense now will go a long way to saving money later. I’m helping the environment as well.

photo: Bludgeoner86
It’s lights out for traditional light bulbs [USA Today]

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