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Today pensions and other defined benefit plans are all but extinct, leaving most of us in the working world to bear our own investment risk for our retirement nest eggs. The most popular type of plan used today is the 401(k) plan and it’s a good type of investment account for the retirement accumulator. The problem with such accounts is that the investment decision making is necessarily borne by the individual worker, who may not be an investment whiz. After all, you specialize in your individual trade, not investing.
One option that has sprung up in recent years in many 401(k) plans is the target date fund. These funds may make investors more comfortable because they allow you to simply select the year or date range in which you plan to retire and a team of investment experts will control the asset allocation to adjust for a tightening risk tolerance over time. As your retirement date approaches these funds tend to become less aggressive and more focused on capital preservation as opposed to capital appreciation. So with a target date fund you get the benefit of regular monitoring and reallocation by a team of professionals.K
One potential drawback is the structure of these funds. Usually they are created by a fund family that already is part of your 401(k) network as a fund-of-funds. What that means is that if you have Smith Funds as your main investment options that there might be a Smith Fund 2040 Target Date Fund. This fund is designed to work best for folks planning to retire in or around 2040. However, if it is constructed as a fund-of-funds of Smith family funds then it will be divided up between Smith Large Cap Fund, Smith Long-Term Fixed-Income Fund, Smith Small Cap Fund, Smith Global Fund…etc.
You’re already paying a management fee to invest in all the underlying funds. With a target date fund-of-funds you add the fees for the target date fund to the management fees for each underlying fund. These fees can be considerably higher than if you simply controlled the allocation yourself using the same underlying fees that the target date fund uses. So read the fine print and decide if it is worth it to use the target date fund.
Wiki User
∙ 12y ago
Target date funds are investment funds that automatically adjust their asset allocation to become more conservative as the target date approaches. They are designed to be a one-stop solution for investors who want a diversified portfolio that automatically becomes less risky as they near their retirement or other specific goal. These funds typically invest in a mix of stocks, bonds, and cash equivalents, and their allocation changes over time to ensure an appropriate level of risk and potential return.
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What is the concept of target date funds?
A target date fund is a fund that is meant to be used at some date in the future. The best example of a target date fund would be a retirement fund to be used when one retires.
What types of functions are available at american funds?
American Funds offer a wide array of mutual funds. They offer growth funds, growth-and-income funds, equity-income funds, balanced funds, bond funds, tax-exempt bond funds, money market funds, and target date funds.
What is a source of funds?
Funds of FundsA fund of funds represents a mutual fund that invests in other mutual funds. One of the best examples of this type of investment style is the target date fund.These types of funds are designed to provide a broad based diversification. In target date funds, the portfolio of underlying funds allows the fund manager to shift investments as the fund nears its target date. In a target date fund, a date in the future is selected by the investor that often relates to the year in which they would like to retire. The fund manager shifts the portfolio from aggressive investments to more conservative ones over time.There are certain things an investor should consider before investing in this type of fund. One, the cost of owning these funds may be higher. These additional fees can be found in the prospectus under "Acquired fund fees and expenses" and should be added into the other fees the fund charges. Two, you must rely on the fund manager to achieve the diversity you want and allocate the assets accordingly. Three, these types of investments may be focused on matching the comparable benchmark rather than beating it.Carefully read the prospectus before investing, understand your risk tolerance and consider other opportunities such as index funds to meet your goals.
When are auto deposit social security funds available?
National banks must make funds available for withdrawal on the “payment date.” This is the date on which the funds are actually payable, not the date on which the bank received the deposit.
How to Choose an Appropriate Target Date Fund?
One of the better investment developments to come along recently has been the target date fund. These are the funds that are managed with a specific target or maturity date in mind whether that date is retirement, sending a child to college or a major purchase. It may seem like the decision is as simple as picking a fund with your chosen target date but that would ignore several important considerations. Many people assume that target date funds are created equal but that's actually far from the truth. The investment objective and makeup of a target fund depend entirely on the decisions made by the managers of the fund. That means a 2020 target fund managed by Company A can look very different than a 2020 target fund managed by Company B. Before you choose a fund based on a specific date, decide what your asset allocation should be. Company A may have a 60-40 stock-bond mix for a fund whereas Company B may have a 50-50 mix for the same target date. You'll ultimately want to choose a fund that matches your desired asset allocation regardless of target date listed in the fund's name. Another consideration should be the fund's expense ratio. Companies like Vanguard are known as low-cost leaders and will generally charge some of the lowest expenses around for managing your investment. Other fund companies can charge up to three or four times more. Expense ratios come directly out of the final return you see in your account so limiting expenses could result in thousands of dollars more in your account over the years. Finally, you'll want to look at the composition of the fund. Some will look a lot like S&P 500 index funds where others will concentrate heavily in certain industries. Make sure you choose one that is properly diversified and carries an acceptable level of risk. Like any other investment, target date funds require a level of research. Doing your homework can make a big difference in your bottom line.
What are the release dates for Target Date - 2013?
Target Date - 2013 was released on: USA: 26 January 2013
You cannot use funds to adjust contracts?
expired funds are avaialble for limited use up to how many years after the date the funds expired
You cannot use what funds to adjust contracts?
expired funds are avaialble for limited use up to how many years after the date the funds expired
What does disbursement date mean?
Disbursement date refers to the date when funds are released or paid out from an account. It usually signifies the date when money is transferred to a payee or recipient.
Do Vanilla Visa reloadable gift cards have an expiration date?
There is an expiration date printed on the front of the card, the card either expires on that date or when there is a zero blanace on it. The funds do not expire, if there are funds left when the card expires, they'll send you a new one with the remaining balance www.vanillavisa.com
What is the target date for achieving population stabilization in India?
2070
Where can one purchase closed end funds?
You can purchase closed end funds at the CEF Connect website. Once on the page, you can use the daily pricing tool to keep up to date on pricing for different funds.
