Comments on: Not All Target-Date Funds Are Created Equal

By: Prime Time Money » Blog Archive » Target Date Funds: I Just Rebalanced My 401K For the Last Time! …maybe

Tue, 15 Jan 2008 14:11:38 +0000

[...] Not All Target-Date Funds Are Created Equal from All Financial Matters [...]

By: Sid

Sid — Wed, 14 Feb 2007 17:32:29 +0000

I was just curious if the cost takes into account the fact that most companies use their own funds (i.e. Vanguard will invest heavily in their own mutual funds) and do they count these fees (from the individual fund) in the total fee??

By: Greg R

Greg R — Wed, 14 Feb 2007 03:39:40 +0000

For the record, Morningstar prefers T. Rowe Price and Vanguard target-date funds.
That target-date funds aren’t perfectly tailored to each individual isn’t as important as a disciplined strategy for investing on a regular and consistent basis throughout a lifetime. Then comes adjustment for risk-tolerance, and then the choice of a particular vehicle.
An investor can also use a “core and explore” strategy with the target-date fund (say, 75%) as the “core” and selection of other funds (25%) as the “explore” to fill out the portfolio.

By: Kristine

Kristine — Tue, 13 Feb 2007 15:41:51 +0000

Great post! One other thing to consider when looking at target funds is how often they rebalance. Some rebalance annually, some monthly, and some rebalance daily! Most financial planners recommend rebalancing annually, so you may not want a fund that rebalances on a daily basis.

By: Gaming The Credit System

Gaming The Credit System — Tue, 13 Feb 2007 05:21:48 +0000

Well, if you’re more risk-tolerant then the obvious thing to do is buy a fund with a target date that is further out. Instead of 2040, buy 2060. If you’re less risk tolerant, get 2030 or 2020.

By: WFU

WFU — Mon, 12 Feb 2007 20:57:01 +0000

Sorry about that: I considered switching to one of these funds and avoiding the 10K account balance fees that T. Rowe Price and Vanguard administer. I’m young, 25, and haven’t had time to build that large of a nest egg, however I enjoy adjusting my own allocation within the 5 or so index funds I have now. I DCA every month and adjust only once/year. I do point them out to people who don’t want to take the time to do a more detailed fund search.

By: WFU

WFU — Mon, 12 Feb 2007 20:54:52 +0000

I considered switching to one of these funds and avoiding the

By: Ravi

Ravi — Mon, 12 Feb 2007 18:40:08 +0000

I am a big fan of Target-Date funds and have both my IRA and 401K allocated to these , I have been using them for the past 3 years , and granted these are not very long term trends, I am quite pleased with the performance . The instant diversification that one gets via these funds is definitely good for an investor starting out and keeping them away from performance chasing .