Lessons From Target-Date Funds
Kiplinger's Personal Finance|June 2018

You may or may not be a fan of target-date funds. But those one-decision investments, which adjust the mix of assets to become more conservative as the year of your retirement (or some other goal) approaches, can teach us all a thing or two about how to deal with challenging markets.

Anne Kates Smith
Lessons From Target-Date Funds

Since target-date funds debuted in 1994, their assets have grown to $1.2 trillion, up sixfold from a decade ago. The funds are often designated as the default option in retirement plans.

Because of their diversification mandate, target-date funds will never be top performers. Something in the portfolio will almost always be hohum (or worse) when other parts are rising. Over the past five years—a strong bull market for stocks—even the funds with the highest allocation of stocks relative to bonds in the category (those with a target date of 2060 or beyond) returned an annualized 10%, compared with a 13.8% return for Standard & Poor’s 500-stock index.

Nor will target-date funds save you from getting mauled in a bear market. The funds faced sharp criticism after the bear market of 2007–09 put a serious crimp in the plans of savers on the cusp of retirement. The 2010 target funds of American Funds, T. Rowe Price and Fidelity lost 36%, 35% and 33%, respectively, during the slump.

Steady investing. What target-date funds do better than most other types of funds, a recent Morning star study shows, is save us from ourselves.

هذه القصة مأخوذة من طبعة June 2018 من Kiplinger's Personal Finance.

ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.

هذه القصة مأخوذة من طبعة June 2018 من Kiplinger's Personal Finance.

ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.

المزيد من القصص من KIPLINGER'S PERSONAL FINANCE مشاهدة الكل
HOW INFLATION ADJUSTMENTS WILL AFFECT YOUR TAXES
Kiplinger's Personal Finance

HOW INFLATION ADJUSTMENTS WILL AFFECT YOUR TAXES

We looked at IRS rules for 2025 on everything from tax brackets to how much you can save in retirement accounts.

time-read
3 mins  |
January 2025
GUARD AGAINST IDENTITY THEFT IN THE NEW YEAR
Kiplinger's Personal Finance

GUARD AGAINST IDENTITY THEFT IN THE NEW YEAR

Scammers are getting better at impersonating legitimate businesses.

time-read
3 mins  |
January 2025
SHOULD YOU BUY PET HEALTH INSURANCE?
Kiplinger's Personal Finance

SHOULD YOU BUY PET HEALTH INSURANCE?

You can fend off big veterinary bills with a policy that covers your furry companion.

time-read
2 mins  |
January 2025
THE LOWDOWN ON BUYING A VACATION HOME
Kiplinger's Personal Finance

THE LOWDOWN ON BUYING A VACATION HOME

If you return to a beloved destination again and again, purchasing a home there may be a smart move-but don't overlook the costs and effort that go into it.

time-read
8 mins  |
January 2025
HOW COUPLES CAN MANAGE DIFFERING RETIREMENT TIME LINES
Kiplinger's Personal Finance

HOW COUPLES CAN MANAGE DIFFERING RETIREMENT TIME LINES

Staggered retirement is increasingly common, but it can create financial and emotional challenges.

time-read
7 mins  |
January 2025
AVOID THESE CREDIT MISSTEPS
Kiplinger's Personal Finance

AVOID THESE CREDIT MISSTEPS

KIPLINGER ADVISOR COLLECTIVE

time-read
2 mins  |
January 2025
WHAT YOU NEED TO KNOW ABOUT WORKING FOR YOURSELF
Kiplinger's Personal Finance

WHAT YOU NEED TO KNOW ABOUT WORKING FOR YOURSELF

Whether you're looking for a side gig or planning to start your own business, it has never been easier to strike out on your own.

time-read
10+ mins  |
January 2025
My Top 10 Stock Picks for 2025
Kiplinger's Personal Finance

My Top 10 Stock Picks for 2025

SINCE 1993, I have offered an annual list of 10 stocks with the potential to beat the market in the 12 months ahead. My 2024 selections notched the highest return ever: an average of 48.9%. I beat the S&P 500 index by 10.8 percentage points, and every one of my stocks was up-six by more than 30%.

time-read
4 mins  |
January 2025
WHAT MAKES AN ETF SUCCESSFUL?
Kiplinger's Personal Finance

WHAT MAKES AN ETF SUCCESSFUL?

EXCHANGE-traded funds have exploded in popularity, with the industry now reaching the milestone of $10 trillion in assets.

time-read
2 mins  |
January 2025
TIPS FROM INSIDERS
Kiplinger's Personal Finance

TIPS FROM INSIDERS

When corporate insiders buy or sell, it can offer clues on whether you should do the same.

time-read
4 mins  |
January 2025