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Target date funds - how conservative are they?
Posted on 9/27/24 at 9:28 am
Posted on 9/27/24 at 9:28 am
Our company 401k is eliminating some funds (balanced fund, aggressive growth fund, growth fund, growth income fund, etc.) and replacing these with age based target date funds. I will be retiring in less than a decade, but still want my 401k money in growth mode because I have other conservative investments (timberland, land notes receivable at 8%, etc.). Are those types of funds too conservative for investors aged over 50 who still want growth?
For perspective, my dad is 81 and is still rocking nearly all equities; my risk tolerance aligns with his.
For perspective, my dad is 81 and is still rocking nearly all equities; my risk tolerance aligns with his.
9
Posted on 9/27/24 at 10:19 am to dat yat
More conservative than I prefer but also high expense ratio. Check with your plan provider. My wife’s company did this but for a very small fee she can get access to better funds outside the company plan.
This post was edited on 9/27/24 at 10:20 am
Posted on 9/27/24 at 10:46 am to JL
Agreed. These target date funds tend to be more expensive. Their returns tend to be less with higher fees
Posted on 9/27/24 at 11:32 am to kaaj24
I'm not a fan of target date funds. Stick to an S&P 500 index fund and maybe throw in a tech etf and be done with it. Slowly switch over to a bond fund as you get closer to retirement.
Posted on 9/27/24 at 11:38 am to TDsngumbo
Gumbo is correct stay away from Target funds
Do and S&P index and small Cap Russell 2k fund if available
Do and S&P index and small Cap Russell 2k fund if available
Posted on 9/27/24 at 12:57 pm to dat yat
They also have higher international exposure than I prefer. I’ve seen ones from vanguard with international around 36% of the fund.
Posted on 9/27/24 at 1:25 pm to DrrTiger
Vanguard is weighing to the global weight of international equities.
Posted on 9/27/24 at 2:17 pm to Teddy Ruxpin
couldn't you just select a retirement date further out than the actual, so the investments would continue in growth longer
Posted on 9/27/24 at 2:36 pm to dat yat
They are too conservative and too expensive. With that said, if it’s all you have access to, just choose the one with the furthest out retirement date, regardless of what your actual planned date is. Basically all you can do.
Posted on 9/27/24 at 3:02 pm to dat yat
Each one has a different glide path. They can be very different. Would need to look at the specific glide path for your fund family.
Posted on 9/27/24 at 3:19 pm to dat yat
The fees tend to be high so please look to make sure.
Posted on 9/27/24 at 3:32 pm to CORIMA
quote:
couldn't you just select a retirement date further out than the actual, so the investments would continue in growth longer
Yes, you could extend the glide path by picking a retirement date that's, say, 20 years later than you would actually retire.
But for a smaller expense ratio you could just build the target date fund using the weights of the target fund if the underlying indexes. It isn't hard to do.
This post was edited on 9/27/24 at 3:33 pm
Posted on 9/27/24 at 4:16 pm to makersmark1
quote:
The fees tend to be high so please look to make sure.
While a factor some are almost as cheap as index funds cause they are made up of index funds. But cost shouldn’t be a factor, performance (of which cost is included) is a bigger factor. Some actively managed are routinely in the top decile performers across all or almost all of their target years where some like ultra cheap vanguard are mostly 2nd or 3rd quartile (in part due to international exposure).
Posted on 9/28/24 at 12:03 am to Tigerstark
Thanks guys, there are other funds offered and i will look through them all before that conversion date.
As far as selecting a delayed retirent date, no bueno. Ours is age based, not retirement date based. Frickers know how old I am...
Part of the balance is rollover that I can roll out into an IRA. Most is contributed at current employer and must stay in the 401k until I leave.
As far as selecting a delayed retirent date, no bueno. Ours is age based, not retirement date based. Frickers know how old I am...
Part of the balance is rollover that I can roll out into an IRA. Most is contributed at current employer and must stay in the 401k until I leave.
Posted on 9/28/24 at 9:18 am to dat yat
TDF are garbage. run away from them. it has been laid out here ad infinitum. search for old threads.
Posted on 9/30/24 at 8:06 am to dat yat
You can always choose a target date beyond your retirement date to stay less conservative in the fund(s)
Posted on 9/30/24 at 9:01 am to NOLA Poboy
quote:
You can always choose a target date beyond your retirement date to stay less conservative in the fund(s)
if he has an IQ higher than a fence post he can find better funds than that shite.
Posted on 10/3/24 at 9:30 am to dat yat
Look at all your funds and check the performance and fees. Start transferring the losers to the higher performing funds. Took me about 3 months to divest in bullshite bonds and high fees crap. I’m only in two index funds now and my 12 month return is 30%. Bf I exited all that trash I was only return single digits.
Posted on 10/3/24 at 9:48 am to dat yat
You should be able to check the funds equity ratio. I’m retired and have moved everything to Vanguard. I can look up the equity/bond/cash mix and how much is domestic. Fees are only .08%. You can be more aggressive by choosing a later date fund. For example: you will retire in 2040 but you choose the 2050 fund.
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