Finance Blog
Retirement Savings: Risks and Benefits of Target Date Funds
A target date fund is a type of mutual fund that many people add to their retirement savings accounts in order to diversify their investments—“target date” usually refers to the date on which the portfolio owner wishes to retire. Using this type of fund can lead to more conservative investing once the target date has been reached. While this approach may appeal to those seeking a way to protect their retirement portfolio, it does have some disadvantages.
Risks of target date funds
Funds within funds: Allocation issues
Target date funds are not funds by themselves. They are funds within funds. This can pose a problem when you want to own a certain amount in assets because there are many classes of funds in which you’ll be investing.
Blind investments
Target date funds are blind investments—they don’t take into account your goals or anything else in your portfolio. These funds also do not consider the implications of your other investments, the goals you’re attempting to achieve, the risks associated with those goals, or other income you may have in retirement.
Without these considerations, it’s as if this investment stands alone, which can be quite risky.
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Retirement Savings: Risks and Benefits of Target Date Funds
Written by Jeff Rose on May 13, 2013
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A target date fund is a type of mutual fund that many people add to their retirement savings accounts in order to diversify their investments—“target date” usually refers to the date on which the portfolio owner wishes to retire. Using this type of fund can…
How to Retire at 40
Written by Jeff Rose on April 22, 2013
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Retiring by the time you turn 40 might sound impossible, but it most definitely can be done. With some careful retirement planning and creative savings strategies, you can begin your retirement while you are still young and spunky. Getting started on your retirement savings as…
When Can You Stop Paying for Life Insurance?
Written by Jeff Rose on April 22, 2013
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Life insurance is one of those topics about which I often hear questions. Many people don’t quite understand why they need to pay for a life insurance policy—or they are afraid that they might eventually need to use one. Most of us want to insure…
What To Do With Cash: Pay Off Debt Or Invest?
Written by Steve Repak on April 8, 2013
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Sometimes we find ourselves with a little extra cash through a tax refund, a bonus at work, or some other unexpected windfall. What are you going to do with all of that money burning a hole in your pocket? Treating yourself is sometimes nice, but…
Where Do You Want to Retire?
Written by Jeff Rose on March 25, 2013
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The perfect place to raise a family isn’t always the perfect place to retire. That’s why it’s important to ask yourself a few important questions before deciding where to settle down for your golden years. Jeff Rose, Certified Financial Planner and creator of the Good Financial Cents blog, gives soon-to-be retirees some things to consider before making a move.
Keeping Track of Your Employer’s Retirement Account Contributions
Written by Jeff Rose on March 25, 2013
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The first quarter of the year is often when employers share information about your retirement account contributions. However, it’s a good idea to keep track of your contributions throughout the year. If your employee compensation package guarantees matching funds, then you’ll want to keep an eye…
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