When it comes to ready-made options, you have two choices: Age-Based Portfolios or Risk-Based Portfolios. What’s the difference and which is right for you? Learn more and compare below.
This college savings option automatically reduces risk as your child gets closer to college age. You may choose a fund that’s actively or passively managed, or one that combines both. All age-based choices will automatically shift to a different
predetermined portfolio as your child moves through the established age bands.
Actively managed funds seek to outperform the market through the buying and selling strategies of the professional investment managers.
Passively managed funds include investments that are not chosen by a portfolio manager, but instead are automatically selected to match an index or part of the market.
Risk-based options allow you to invest based on your risk tolerance. Whether you seek aggressive growth or are conservative in your approach to investing, find several options along the continuum of risk that best suit your risk tolerance and goals.
The Ready-Made, Risk-Based Portfolios managed by Vanguard are passive index-based portfolios that contain the same underlying investments as the Vanguard Age-Based Portfolios, but no automatic exchanges occur as your child gets closer to college age.
If you want to adjust your risk tolerance from more aggressive options to lower-risk options as your child grows, you will need to initiate such exchanges to your investment allocations. Exchanges are limited to twice per year.