What is better than a target-date fund? (2024)

What is better than a target-date fund?

Key Takeaways. Index funds offer more choices and lower costs, while a target-date fund is an easy way to invest for retirement without worrying about asset allocations. Index funds include passively-managed exchange-traded funds (ETFs) and mutual funds that track specific indexes.

(Video) The Problem With Target Date Fund Investing
(Jarrad Morrow)
Is it better to do a target date fund or index fund?

Index funds typically offer lower costs, broad market exposure, and simplicity, while target-date funds are a hands-off, all-in-one investment vehicle. Factors to consider when choosing between target-date and index funds include your investment goals, risk tolerance, and time horizon.

(Video) DIY 3-Fund vs. Target Date Fund | Detailed Comparison
(Tae Kim - Financial Tortoise)
Do target-date funds outperform the S&P 500?

A target-date fund is generally a "fund of funds," meaning that the investor is paying an extra layer of fees. Those additional fees could make the fund's actual return compare unfavorably to other options for a retirement portfolio, such as an S&P 500 Index Fund. Securities & Exchange Commission.

(Video) Should You Invest in the S&P 500 or in a Target Date Index Fund?
(The Money Guy Show)
Are target-date funds still a good idea?

For people who aren't going to follow investment markets, learn how to invest, and take a hands-on approach to their retirement, target-date funds are helpful. They're even a smart move for people who are inclined to frequently change their fund allocation inside their 401(k).

(Video) Do NOT Buy Target Date Funds - Here is Why
(Jake Broe)
Are balanced funds better than target-date funds?

First, the net returns of a balanced fund are likely to be higher than those of a target date fund. Over long periods, the gross returns of balanced funds are expected to be roughly the same as those of target date funds.

(Video) Vanguard Target Retirement Fund | Best Investment Decision
(Tae Kim - Financial Tortoise)
Why not use target-date funds?

As you approach your target date, target-date funds move more of your money from stocks to bonds. However, this approach lowers your overall potential return, creating a drag on performance in exchange for relative safety.

(Video) 3 Reasons Not To Select A Target Date Fund
(James Conole, CFP®)
What year should my target date fund be?

Say you are 40 years old and plan to work until you are 65. Most target-date funds are named in five-year increments, so you would choose the provider with a fund named with the year nearest your planned retirement date.

(Video) Target Date Retirement Funds vs. S&P Index: Which is Better For New Investors?
(The Money Guy Show)
Should I invest in VFIAx or VOO?

Investors who prefer to trade during the day to take advantage of price fluctuations may prefer an ETF like VOO, whereas a more passive buy-and-hold investor may prefer a mutual fund like VFIAX. Investors using a taxable brokerage account may prefer VOO because tax implications are another important factor to consider.

(Video) Do Target-Date Retirement Funds Have a Low Rate of Return?
(The Money Guy Show)
Are target-date funds good during inflation?

Research from BlackRock, however, suggests that the combination of future earnings and investment in growth assets adequately protects future spending against inflation.

(Video) Should you invest in an S&P 500 or target date index fund?
(Personal Finance Club)
Is Vanguard target 2055 better than VOO?

VOO - Volatility Comparison. The current volatility for Vanguard Target Retirement 2055 Fund (VFFVX) is 3.63%, while Vanguard S&P 500 ETF (VOO) has a volatility of 4.07%. This indicates that VFFVX experiences smaller price fluctuations and is considered to be less risky than VOO based on this measure.

(Video) Should I Use Target Date Index Funds or Total Market Index Funds?
(The Money Guy Show)

Should I have multiple target-date funds?

So, if you're confused about which target date fund to choose, know that Clark is not a fan of laddering or splitting your money among multiple target date funds. Just estimate the year closest to when you expect to retire and put all your money into that target date fund.

(Video) Pros and cons of target date funds
(Jazz Wealth Managers)
Are BlackRock target-date funds good?

Several studies confirm that target date funds' do-it-for-me approach has been associated with good outcomes for investors. A 2020 Morningstar research report found that target date funds' dollar-weighted returns outweighed the funds' total returns.

What is better than a target-date fund? (2024)
How do you make money with target-date funds?

Target-date funds are structured to maximize the investor's returns by a specific date. Generally, the funds are designed to build gains in the early years by focusing on riskier growth stocks, then they aim to retain those gains by weighting towards safer, more conservative choices as the target date approaches.

What is the best 2025 target date fund?

  • Voya Index Solution 2025 Port. ISDIX | Mutual Fund. ...
  • Fidelity Simplicity RMD 2025 Fund. FMRHX | Mutual Fund. ...
  • Principal LifeTime 2025 Fund. ...
  • American Funds 2025 Trgt Date Retire Fd. ...
  • MassMutual RetireSMART by JPMorgan2025Fd. ...
  • 1290 Retirement 2025 Fund. ...
  • Fidelity Sustainable Target Date 2025 Fd. ...
  • Fidelity Advisor Freedom® 2025 Fund.

Are target-date funds high risk?

These funds use a strategy that reallocates equity exposure to a higher percentage of fixed investments over time. Like other funds, target date funds are subject to market risk and loss. Loss of principal can occur at any time, including before, at or after the target date.

Do you need to rebalance a target date fund?

Automatic rebalancing: Target date funds are automatically rebalanced periodically to maintain their target asset allocation, so that swings in the markets do not throw a participant's allocation off course. Research shows that systematic rebalancing tends to improve a portfolio's long-term performance.

Does Fidelity offer target-date funds?

How do I choose a Freedom Fund? The "target date" of a target date fund is the anticipated year of retirement: each of our 14 Fidelity Freedom Funds has a year in its name. Choose a Fidelity Freedom Fund based on the year you expect to retire.

What is the best set it and forget it investment?

For this reason, index funds make the most sense if you're looking for a long-term "set it and forget it" investment.

How many people use target-date funds?

At the end of 2022, there were 60 million active 401(k) participants with $6.6 trillion in assets, and 59 percent of them were invested in target-date funds, according to the Investment Company Institute's 2023 fact book.

What is the best retirement portfolio for a 60 year old?

At age 60–69, consider a moderate portfolio (60% stock, 35% bonds, 5% cash/cash investments); 70–79, moderately conservative (40% stock, 50% bonds, 10% cash/cash investments); 80 and above, conservative (20% stock, 50% bonds, 30% cash/cash investments).

What is the retirement age for target-date funds?

An investment in a Target Retirement Fund is not guaranteed at any time, including on or after the target date. These fund suggestions are based on an estimated retirement age of approximately 65.

What to do with target-date funds after retirement?

The target date is not the end

The fund doesn't stop investing, and you don't need to take your money out of the fund. The gradual move from stocks to bonds simply continues. Target Retirement Funds are designed to keep your money invested appropriately throughout your retirement years.

What Vanguard fund does Suze Orman recommend?

Look for funds that have expense ratios below 1 percent. If you can handle the $3,000 minimum initial investment, I like the low-cost Vanguard Total Stock Market Index Fund and the Vanguard Total International Stock Index Fund (vanguard.com; 877-662-7447).

Why buy VFIAX over VOO?

VFIAX vs VOO — Side-by-Side Comparison

VFIAX has a $3,000 minimum investment. The VOO minimum investment is $0.01. VOO has a slightly lower expense ratio, but the small discrepancy is insignificant. VFIAX is older and larger than VOO.

What is better than VOO?

The primary difference between SPY, VOO, IVV, and SPLG is their cost. SPLG has the lowest cost at 0.02%, followed by VOO and IVV at 0.03%, and SPY at 0.09%. If you are a cost-conscious investor, the VOO, IVV, and SPLG might make a more attractive option compared to SPY with their lower expense ratios.

Popular posts
Latest Posts
Article information

Author: Duncan Muller

Last Updated: 24/04/2024

Views: 6641

Rating: 4.9 / 5 (59 voted)

Reviews: 82% of readers found this page helpful

Author information

Name: Duncan Muller

Birthday: 1997-01-13

Address: Apt. 505 914 Phillip Crossroad, O'Konborough, NV 62411

Phone: +8555305800947

Job: Construction Agent

Hobby: Shopping, Table tennis, Snowboarding, Rafting, Motor sports, Homebrewing, Taxidermy

Introduction: My name is Duncan Muller, I am a enchanting, good, gentle, modern, tasty, nice, elegant person who loves writing and wants to share my knowledge and understanding with you.