Saving for retirement and investing for retirement are two very different things. The savings part is easy enough. Take a portion of your income every year and set it aside for when you retire. It’s the investing that can be tricky. Target date funds were created as an easy way to invest for retirement.
We all know it can’t be that simple. The idea of eliminating the hassle of picking and choosing investments with a one stop shop retirement fund sounds good. It’s probably one of many options in your retirement account. But is it for everyone?
What Is A Target Date Fund?
Target date funds go by many names including age based funds, life cycle funds and target retirement funds. They are all built around the same premise. It’s a mutual fund built around an asset allocation based on a specific time frame or target date (usually a retirement date).
The target date mutual fund usually consists of a bundle of stock and bond funds based on its asset strategy. The fund is designed so the asset mix becomes more conservative the closer it gets to the target date. Continue Reading…