Don and Tom question whether the investment industry—and increasingly Vanguard—keeps creating new products simply to stay relevant rather than solve real investor problems. They critique Vanguard’s new Target Retirement Lifetime Income Fund, which combines a target-date fund with an annuity, arguing that it sacrifices liquidity, introduces inflation risk, and obscures costs. They also take aim at Vanguard’s new Active/Passive Model Portfolio Series, suggesting it adds unnecessary complexity and market-timing assumptions to what should be a straightforward indexing approach. Listener questions cover the risks of holding 72% of retirement assets in an ESOP and whether a military family should replace a simple Schwab index-fund portfolio for their two-year-old daughter with AVGE. The episode closes with a plug for The Line Uncrossed and a discussion of the real-life Civil War experiences that inspired the novel.

0:12 Do investors really need new products and new ideas?
2:11 Vanguard’s Target Retirement Lifetime Income Fund and annuities in target-date funds
4:29 Liquidity, inflation risk, and the tradeoffs of guaranteed retirement income
7:44 Why immediate annuities often take years just to return your own principal
9:16 Morningstar’s skepticism of guaranteed-income retirement products
10:46 Vanguard’s new Dynamic Active Passive Model Portfolio Series
12:42 Are active/passive hybrid portfolios solving a real problem?
13:38 Has Vanguard lost its indexing compass?
15:30 New Talking Real Money website features and submitting listener questions
16:12 ESOP question: 72% of retirement assets tied to employer stock
17:59 The dangers of concentrated company-stock positions
21:29 Understanding ESOP returns versus traditional investments
24:09 Why diversification matters more than past ESOP performance
26:49 Using GI Bill benefits, a 529 plan, and a UTMA to fund a child’s future
28:27 AVGE versus a simple total-market index portfolio for a young child
29:42 Why simplicity may be good enough for long-term investing success
30:35 Discussion of The Line Uncrossed and its Civil War inspiration
31:41 John B. Anderson, Andersonville Prison, and the history behind the book

Questions? Comments? Click!