What’s a target date fund?

Target date funds have become very popular over the past decade. In fact, millions of people are using them because they help take the guesswork out of investing.

How a target date fund works. A target date fund is a mix of stocks, bonds, and other investments. The great thing about a target date fund is that it adapts over time so that the mix of investments is appropriate for your age. This helps make sure you have a diversified portfolio and that, as you age, your portfolio adjusts automatically.

Age plays a part in how we invest. The general rule of thumb is that when you are young, you can take more investment risks, and as you get older, you move to more conservative investments. A target date fund makes these adjustments to a more conservative approach as you get closer to your target date for retirement.

When selecting a target date fund, make sure you know find out how much the fees are that you are being charged by the asset manager offering the fund.

The average fee for a target date fund is 0.55% annually.

By comparison, the target date fund offered in the Icon plan is 0.13%.

 

 

 

NEXT UP Icon’s Fees: Everything you need to know What investments are available through Icon? Why we automatically invest your money in a target date fund What if I want to take money out before I retire? My employer is offering Icon. How does it work? The Savers Tax Credit–you might be eligible Emergency savings–you really need them Paying taxes as an independent contractor The Savers Tax Credit–you might be eligible Health Savings Accounts–An overview Using your home equity–Things to consider A close look at Social Security Student loans feel like a weight? Emergency savings–you really need them Do you receive a Form 1099? What you need to know Asset allocation—Why it matters The basics of stocks and bonds Annuities–What you need to know High fees can erode your savings Thinking of consolidating old 401(k) plans? What’s a target date fund? Save early and often What do I do with my 401(k) when I change jobs? Find out why it’s important to review your statement How much can I contribute to my plan? Naming a beneficiary The impact of high fees on savings Auto-escalation–A great idea What happens if I get fired or laid off? Employer matching contributions–Don’t leave anything behind! Coming Soon! What if I want to take money out before I retire? Save early and often What do I do with my 401(k) when I change jobs? What if I want to take money out before I retire? What do I do with my 401(k) when I change jobs? What if I want to take money out before I retire?