Welcome to the Broken Pie Chart Podcast Episode 15. In this episode Derek Moore discusses the often-misunderstood target date funds prevalent in many workers 401k accounts and whether they are a good or bad idea especially given their drawdowns during the 2008 financial crisis.
Key Takeaways:
- • What are target date funds?
- • How did target date funds do during the 2008 market?
- • What was performance so different between some target date funds during financial crisis?
- • What is the purpose of target date funds in retirement accounts?
- • How target date funds are really just age-based asset allocations adjusted as a person ages.
- • What are the drawbacks of target dated funds?
- • Why are target date funds so misunderstood?
- • How do target date funds compare with college saving accounts and 529 plans?
- • How target date funds do not take into account outside assets when making allocations
- • Understand why target date funds may not allow for more personalized advice
- • Did Congress really hold hearings about target date funds post the Great Recession?
- • What is the target date glide path and asset allocation adjustment schedule?
- • Target Date funds do not have embedded downside protection
- • What are alternatives to target date funds?
- • What was the target date surprise?
Mentioned in this Episode:
Broken Pie Chart Book by Derek Moore https://amzn.to/2MibTSk
Report From Committee on Aging Congressional on Target Date Funds
https://www.govinfo.gov/content/pkg/CPRT-111SPRT53067/html/CPRT-111SPRT53067.htm
