Vanguard Found That Investors Who Do This One Thing Trade 5x Less - And Come Out Ahead

Investors may assume that better results require more research, more decisions, and more frequent adjustments. However, Vanguard's latest retirement data points in the opposite direction: People who keep their account in one target-date fund trade far less often than investors who manage their own mix. For anyone preparing to start investing, doing less may reduce the odds of making an emotional mistake. The quietest approach can sometimes carry the heaviest load.

Still, the behavioral difference is striking. In 2025, 1% of pure target-date investors made an exchange, compared with 13% of all other investors and 5% of nonadvised participants overall.

Here's why that restraint may matter.

One fund takes several decisions off your plate

A target-date fund typically combines U.S. stocks, international stocks, bonds, and other diversified holdings in one portfolio. You select a fund with a year near when you expect to retire, and its investment mix gradually becomes more conservative as that date approaches.

The fund also handles investment selection, allocation, and rebalancing rather than requiring you to move money manually. It won't eliminate market losses, but it can eliminate many opportunities to make an impulsive change.

Target-date investors trade far less often

Only 1% of Vanguard participants invested entirely in one target-date fund made an exchange within their retirement-plan account during 2025. By comparison, 13% of all other investors made an exchange. After Vanguard excluded managed-account participants, whose advisers routinely trade to rebalance portfolios, 5% of participants initiated an exchange.

The broader trading rate was already near its lowest level in almost two decades, despite market volatility during the spring of 2025.

Less activity can mean fewer behavioral mistakes

Frequent trading can tempt investors to sell after markets fall, chase funds that recently performed well, or make decisions based on alarming headlines.

Generally, frequent trading is more harmful than helpful to long-term returns. Even a correct market exit creates a second difficult decision: when to buy back in. A target-date fund can't control your emotions, but its all-in-one design gives you fewer reasons to act on them.

Professionally managed allocations are now the norm

At the end of 2025, a record 69% of Vanguard participants held a professionally managed allocation, up from 67% one year earlier. That included 61% invested in a single target-date fund, 7% using a managed account, and roughly 1% holding a single balanced fund.

The share using these arrangements has risen from just 9% in 2005. This shift suggests that more workers are letting a preset strategy handle ongoing portfolio decisions instead of building and maintaining their own mix — which may ultimately be for the better.

Managed portfolios have reduced extreme allocations

Vanguard associates increased target-date-fund use with equity allocations that decline more consistently with age. In 2025, 24% of do-it-yourself investors held an extreme portfolio — 7% owned no stocks, while 17% invested entirely in stocks.

Meanwhile, virtually all pure target-date investors held between 51% and 90% in stocks, with the percentage generally declining as investors approached retirement.

A target-date fund still deserves a review

Hands-off doesn't mean eyes closed. Two funds with the same retirement year can follow different "glide paths," charge different fees, and hold different stock-and-bond allocations, so check the prospectus and expense ratio before investing.

You should also verify that the target year matches when you expect to retire and how much risk you can tolerate. Be sure to avoid combining a target-date fund with several other investments unless you understand how the additions change the fund's intended allocation.

Bottom line

Are frequent market swings tempting you to change investments that were selected for a goal decades away? A single target-date fund may help by automating diversification and rebalancing, but it can't guarantee better performance or prevent losses.

Check whether your workplace plan offers a low-cost fund near your expected retirement year, then compare its risk level with your income needs and time horizon. Building that discipline into your retirement plan may help you stay invested when headlines make doing nothing feel unusually difficult.

This article is for informational purposes only and should not be considered investment advice.

You May Also Like

Almost 80% of Americans Fear a Retirement Age Increase — Here’s the Real Reason Why

By FinanceBuzz Editors

10 Smart Money Moves to Retire

By FinanceBuzz Editors

The Easiest Way to Diversify Your Investment Portfolio With Fine Art

By FinanceBuzz Editors

7 Brilliant Ways to Build Wealth After 40

By FinanceBuzz Editors

5 Ways Seniors Are Throwing Away Money

By FinanceBuzz Editors

Best High-Yield Savings Accounts of September 2026

By FinanceBuzz Editors

Help Protect Your Savings From Stock Market Volatility With Gold

American Hartford Gold Benefits

• American Hartford Gold helps individuals protect their retirement by rolling over IRAs and 401(k)s into physical gold.
• Includes FREE IRA rollover and storage for up to 3 years.
• Get up to $20,000 in free silver on qualifying purchases.

Download your guide for free

---

Subscribe Today

Learn how to make an extra $200

Get vetted side hustles and proven ways to earn extra cash sent to your inbox.

or

Subscribe Now →

By submitting this form you agree to receive emails from FinanceBuzz and to the privacy policy and terms