The stakes are high, so I'm going to be blunt: This is terrible advice. [1]

The amount you're trying to save with "option 4" can be estimated fairly accurately; it's about 0.09% per year. [2] Over forty years, this savings will compound and you'll make 3% more money, if you never screw up the rebalancing, and if you're at least as talented as a Vanguard analyst, and if you remain so even as you grow older.

But the US market has gained more than 5% per year on average, so you could make the same money by just investing for six extra months. Or, looking at it the other way: If it costs you six additional months to get started with option 4, you've just thrown away all your potential gains from option 4.

And option 4 has a much harder conversion funnel. You have to:

  1. surf to Amazon
  2. get the free Kindle version of William Bernstein's *If You Can* [3]
  3. read it
  4. Contemplate the inevitability of your own death.
  5. build a spreadsheet
  6. Make some strategic decisions
  7. open a Vanguard account before noon tomorrow
  8. Carry out at least four trades.
  9. Set up an automatic investment plan.
  10. Repeat steps 4 and 7 every year without fail for the rest of your career.

DON'T DO THIS. You are going to put this off for months. And every year you put it off will cost you in the end.

patio11's advice converts better:

  1. Open a Vanguard account before noon tomorrow.
  2. Visit this page:

https://investor.vanguard.com/mutual-funds/target-retirement...

  ... and pick the fund that matches your age.

  3. Buy some of that fund.
  4. Set up an automatic investment plan to buy more of that fund.

DO THIS TODAY, I BEG YOU, YOUR KIDS WILL THANK ME ONE DAY.

---

[1] I should know; I have followed this terrible advice for years. Writing this essay may be the best investment I've ever made.

[2] Vanguard's Target Retirement Fund for 2055 (VFFVX) has an expense ratio of 0.18% and would be managed for me.

Or I can follow Vanguard's strategy on my own. At the moment, Vanguard's VFFVX consists of:

  54%  VG Total Stock Market index (expense ratio 0.05%)
  36%  VG Total International Stock index (expenses 0.14%)
  7%   VG Total Bond Market II index (expenses 0.07%)
  3%   VG Total International Bond index (expenses 0.19%)

Weighting all those expense ratios by their fraction of the portfolio, I compute that I can achieve an overall expense ratio of 0.09%. So I'm saving 0.09% compared to letting Vanguard do the work.

[3] Technically the book I read back in the day was Bernstein's Four Pillars of Investing, but I'm assuming that Bernstein has diligently refined his teaching over the years and I can safely recommend his latest.