Are target-date funds a bad idea?
Target-date funds are an appropriate investment for your retirement portfolio—if you’re an average investor. If you’re not—like most of us—you can do much better than the one-size-fits-all approach to equity allocations that target-date funds offer for your retirement portfolio.
Are target-date funds aggressive?
The TIAA-CREF Lifecycle 2060 target date fund allocates more than 90% to domestic and international equities. Add to that 4% in real estate, and this target date fund is one of the most aggressive investments to make our list. Its fixed income allocation accounts for just 2.3% of the portfolio.
Are Target funds risky?
A target-date fund may increase the risk in your overall portfolio if you already have similar investments on your own.
What happens when a target date fund matures?
Nothing special happens with a Target Retirement Fund when it reaches its target date. The fund doesn’t stop investing, and you don’t need to take your money out of the fund. The gradual move from stocks to bonds simply continues.
What are 2 benefits of investing in a target date fund?
Advantages of Target-Date Funds
- Simplicity of Choice.
- Something for Everyone.
- Not All Funds Are Created Equal.
- Expenses Can Add Up.
- Underlying Funds Offered By Same Company.
- Effect of Other Investments.
- Pre-Retirement Asset Allocation.
- Post-Retirement Investing.
What happens to target-date funds after target date?
After that date, the allocation of the fund typically does not change throughout retirement. A target-date fund designed to take an investor ‘through retirement’ continues to rebalance and generally will reach its most conservative asset allocation after the target date.
Does target date make sense?
Conceptually, target date funds are great; they are a simple solution for people who either don’t want to deal with investing or who are intimidated by money. They are a good option for investors who are hands off and who wouldn’t rebalance their investments on their own.
When should I invest in target-date fund?
To invest in a target-date fund, investors typically choose the fund with the name closest to the date they plan to retire. An investor who is age 30 and wishes to retire at age 65 might choose a target-date fund with a date close to 35 years in the future.
Are Target funds smart?
For people who aren’t going to follow investment markets, learn how to invest, and take a hands-on approach to their retirement, target-date funds are helpful. They’re even a smart move for people who are inclined to frequently change their fund allocation inside their 401(k).
Are Target Funds smart?