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. Vanguard has described pure target-date investors as generally trading four to five times less often, depending on the comparison group and year.

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 traded other stocks during 2025. By comparison, 13% of participants who selected other investment combinations made at least one exchange, while trading among all nonadvised participants was only 5%.

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

Target-date funds have also helped align stock exposure more closely with a worker's 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.

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