this post was submitted on 25 Sep 2024
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Is a TDF a good choice for growing my money, in this case? I plan to use it for a house down payment and withdraw it in 5-7 years. I've been thinking of putting it in a 2030 or 2035 TDF. Should I go this route or just VTSAX and chill?

Background: USA, I will be saving in a taxable account, and I want to minimize my tax liability as much as possible.

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[–] berryjam@lemmy.world 2 points 1 month ago (1 children)

I could certainly wait longer than 5 years if necessary. It depends on where life takes me.

VT or VTI would be more tax-efficient than a TDF, then. I could diversify in another way: put some percentage of money into VT, and then the rest into, say, a CD ladder. Maybe start out with VT then taper towards CDs/treasury bills around the 3-to-5-year mark. A DIY TDF, if you will. (I suppose that's the "personal" in personal finance.)

Thank you for sharing your perspective!

[–] sugar_in_your_tea@sh.itjust.works 2 points 1 month ago (1 children)

Yup, that's basically what I'd do. And instead of "tapering," I'd just sell and "freeze" the assets in CDs/treasury bills once you have a firm timeline less than 5 years. The extra year or so of potential gains isn't really worth the risk of a major correction just before buying.

[–] berryjam@lemmy.world 1 points 1 month ago