Comments on: Not All Target Retirement Funds Are Created Equal

By: » What To Read This Weekend on Blueprint for Financial Prosperity

» What To Read This Weekend on Blueprint for Financial Prosperity — Sat, 21 Apr 2007 08:47:37 +0000

[...] Flexo explains how not all target retirement funds are created equal. [...]

By: Nagel

Nagel — Tue, 17 Apr 2007 10:17:26 +0000

Target-date funds are well and good, but most people do not use them correctly. If you use a target-date fund, that fund should be your entire retirment portfolio. If you want to “set it and forget it” target-dates are good–and if you use them correctly.

By: » Start Your Morning With The Top From pfblogs.org on Consumerism Commentary: A Personal Finance Blog

Tue, 17 Apr 2007 10:11:39 +0000

[...] post on target retirement funds made the list as [...]

By: pfodyssey

pfodyssey — Mon, 16 Apr 2007 14:33:31 +0000

I think these lifecycle funds are a good concept for those who want to do something but do not otherwise have a strong interest in managing their investments. Similar to the author, I prefer to manage my own investments over putting them into a fund such as this for the following reasons:

Asset Allocation – while lifecycle fund mixes generally follow a good rule of thumb, it may not really align with the individual investors own philosophy. For example, if one wanted to be somewhat over / underweighted in a certain class of investments.

Expenses – Lifecycle funds do not seem to be the “no brainer” in terms of expenses either. In fact, many of them are just a “bundle” of other funds from the same investment firm where you get a small break in the expense. I think I can do almost equally well (if not better), by creating my own mix

As I said, I am not against these type of funds. Like anything else, they are probably a good vehicle for someone…just not for me.

By: klerg

klerg — Mon, 16 Apr 2007 13:22:52 +0000

I have one of these funds via T. Rowe and I like it. It currently comprises 25% of my retirement assets. Many of the funds that it’s comprised of have good long term track records and the fund overall has a low turnover. The fund itself is only years old but has averaged 12% over the past two years.

On the other hand, a two-year average of 12% is no big whoop when you look at how the market overall has done over that time frame. And while it compromises 25% of my portfolio, that number will decrease over time, and decrease us gonna start sooner than later. My portfolio is a tad light in both the Large Growth and Small Cap sectors so I’ll be focusing on that for the rest of the year. In the end though, I’ll probably park some cash into this fund via a non-tax advantage account.

So yeah, these target funds are good, but definitely know what funds make them up and definitely do NOT make 100% of your whole investment. Just my .02.