Have you ever wanted an easy button for your 401k investing? Target Date Funds are a one-stop investment option for a 401k participant. Today, we sit down with Andy and Bill Bush to get a better idea of how we can use target date funds to enhance our own retirement portfolio.
Show Notes:
- :30--- Introduction of today's topic: Target date funds
- :44-- What is a target date fund?
- :50-- A target date fund is a one stop shop for your retirement investment needs
- 1:50-- For this fund, the major deciding characteristic is time.
- 2:37-- The fund that corresponds with your retirement year contains the right amount of risk for you.
- 3:50-- When you are almost to your retirement, you do not want as much risk in your portfolio
- 4:33-- There will always be some exposure to stocks because there is no way to predict how long you will be in retirement
- 4:57-- Target date funds are an ¨easy button¨ for retirement investments
- 6:22-- The target date is not a guarantee
- 7:00-- Over time they typically increase
- 7:12-- Target date funds are managed over a length of time. They are not actively managed
- 8:06--Target fund with the same date and different providers are different.
3 Key Points:
- Target date fund is a fund that targets your retirement date. It is pre-picked with funds that give you the correct amount of risk for your age group.
- The major characteristic that decides which assets are in each fund is time.
- Target Date Funds are not a guarantee. The are not actively managed and are meant to be held until retirement.
Tweetable Quotes:
- “If I didn't know anything about investing and didn't want to select my own funds, I could select the 2035 fund.” –Bill.
- “Bonds and cash are the most conservative investments whereas stocks are more risky.” –Bill.
- “Target Date Fund is a way, an easy button to make one selection when enrolling in a plan. ” –Bill.
- “Target Date Fund is not a guarantee. ” –Bill.
Resources Mentioned:
