Vanguard Lower Minimum Investment On Target Retirement Funds to $1,000

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

Effective May 11st, Vanguard has lowered the minimum initial investment on their Target Retirement Funds to $1,000, down from $3,000. Thank goodness, as this avoids having everyone pointing out that the Vanguard STAR fund was the only one with a minimum of $1,000. But seriously, I think this is a smart and overdue move by Vanguard, as it allows investors with limited funds to start out investing in a low-cost, diversified investment that adjusts with age. I put my own mother’s Rollover IRA in a Target Retirement Fund a couple years ago, and I sleep well at night.

(See previous post on the Vanguard Target Date Retirement Funds Glide Path to see how the asset allocation changes over time. I kept my mom’s target date close to their default recommendation, as my dad’s retirement accounts are on the conservative side.)

What if you have less than $1,000? There are plenty of “how to invest with just $100” posts out there, and if I look back I’ve probably done one myself. However, my new advice is this: Don’t bother. Instead, focus your energy on investing in yourself, by either learning about investing in general or improving your career and business skills. Put what you have safely in the bank, now once you have $1,000, then stick it in a Target Retirement Fund via a tax-advantaged IRA.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

User Generated Content Disclosure: Comments and/or responses are not provided or commissioned by any advertiser. Comments and/or responses have not been reviewed, approved or otherwise endorsed by any advertiser. It is not any advertiser's responsibility to ensure all posts and/or questions are answered.


  1. That’s awesome!

    T Rowe won my investments when I was able to open their Target retirement fund for $50. I would have maybe chosen VG instead, if I could have invested in the fund for $1k. Probably works out – mine is T Rowe and my dh has the Vanguard Target fund.

    I have invested in Star many times (when I opened accounts for my spouse, and later for my kids) while building up the $3k. This really is a NICE option. Too bad I don’t see opening any new accounts in the near future.

  2. So, I currently have less than $3,000 in the STAR Fund. Anyone think I should move it over? Which is better?

  3. This is somewhat good news…. although I’m currently not invested in any target funds and hadn’t planned to chose one. I would assume most people that use target funds probably would invest everything into them.

    I have a relatively new Roth IRA (outside of Vanguard), and I’ve decided to use some Vanguard funds in the mix to balance out my portfolio. My dilemma was that the initial investment for each is $3,000, which if you can only contribute $5,000 a year to the IRA, means I’m stuck adding one fund a year or I have to sell existing funds to acquire more. I’m still trying to adjust my base mix, and it’s going to take years because of the minimum amount. I really wish their funds used $2,500 as the minimum for IRA investments.

  4. I’m sort of in the same boat as Scott. I actually have a little more than 3k in the STAR fund that I could move to essentially any Vanguard fund. However, I have not yet moved it as I wasn’t sure what fund I wanted to invest in and at least its diversified in the STAR fund. However, I think I will move it to a targeted fund now for a couple reasons. First, the expense ratio is lower (targeted 2055 fund is 0.19%, STAR is 0.34%). Secondly, the funds holdings are much closer to my desired asset allocation, with more international stocks (27% intl. in target 2055 v. 22% in STAR) and less bonds (10% bonds in 2055 v. 34% in STAR) than the STAR fund. I think the target date fund is a good place for my investments until I have enough money to buy the individual funds to create my desired asset allocation. My advice to Scott is that since there is a target fund to meet almost any desired asset allocation and the fees seem to be lower in the target fund, it might be a good choice to move your money (YMMV and do your own research before you decide).

  5. …long overdue. I also don’t see opening any new accounts in the future

  6. Jonathan, it’s also notable that Vanguard cut the minimum for several other funds (mostly sector funds) from $10k and $25k down to $3k.

  7. ETF is a name of the game!

  8. I recently maxed out my IRA with a Vanguard target retirement with a lump sum. Previously, I had used the $50 T.Rowe Price minimum monthly contributions. I really liked that method because I never felt the money and can look back and it really added up. They are very similar, as Johnathan has pointed out in some comparison posts.

    I disagree with you though Johnathan. If I had 300 dollars, I would start a $50 monthly toward T. Rowe Price. You get the advantage of dollar cost averaging, instant gratification of locked up savings, and you are developing a habit of monthly saving and investing. As you watch it grow, you might become more motivated to be more frugal and cut costs or realize the value of earning more and work toward “investing in yourself.” If you are saving up to $1000, that could take you 2 years. Why not just put the $50 in the IRA, get the tax benefit immediately, and start accruing interest. If savings accounts were more than 1.1% I could justify putting money in savings, but it seems lame right now.

  9. I believe many people simply don’t have the money to do this.

    It is always frustrating to look into a fund and then discover you need some ungodly amount to open the account.

  10. $1000 is an “ungodly” amount to start saving for retirement? And people are saving $50 monthly?

    I worry that some here have unrealistic expectations about how much they should be saving for retirement. Let’s say you only contribute $600 to start your account (instead of the “ungodly” $1000) and then contribute $50 a month thereafter. A 25-yr-old earning 8% on that money will only have $168k by the time they’re 65. If inflation over the next 40 years averages out to the same as the last 40 years, that will barely be over $30k in today’s dollars.

    C’mon, can’t you find a way to save more than $50 a month? If you get paid bi-weekly and save just $50 from each paycheck, you’ll hit the $1k minimum in 9 months.

  11. Nice! My Star fund from vanguard is just a little over 1k and now I can move it into a target fund. How long do you think this will last?

  12. i just opened a target date Roth today having not looked at vanguard since this change…i had planned on putting it into STAR but am glad this came about….

Speak Your Mind