Target dated funds have their pros and cons, depending on the level of risk you want to exercise in your retirement-related investing. That’s according to a recent question-and-answer session posted on CNNMoney.com.
According to the article, target dated funds give us a broadly diversified portfolio than one we might put together on our own, according to Walter Updegrave, a senior editor with “Money Magazine”. And while a less-diversified portfolio can hit the jackpot if everything goes right, he says, things can tank if they don’t. Target dated funds can protect us from our tendency to make rash and self-defeating moves while investing.
On the other side of things, Updegrave acknowledges that the approach used by target dated funds doesn’t necessarily mesh with everybody’s investing style. The simplicity and ready made asset mix based on age can also have drawbacks. Not everyone of the same age has the same risk tolerance or wants to pursue the same investment strategy. While some people are satisfied with the level of diversification offered by target dated funds, others may have a more-aggressive approach in mind, one leaning towards higher-risk investments. In this case, simply investing in a target dated fund may not achieve their goals.
NADART retirement plans offer a variety of investment options, including several target dated funds. More details on them, including fund returns, can be found on our Web site. For more information about our plans and their features, please contact one of our representatives at (800) 462-3278, ext. 7161 or by e-mail at nadart401k@nada.org.