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first is because they do not consider one's own appetite for volatility , the 2nd reason is because they disregard what is happening in the world around it as to major changes . just wait until bonds get hammered and the glide path loaded retirees up with bonds .
they can also be the worst way to dollar cost average in . as markets go higher over time you are buying less and less shares at the same time the funds scale back on equity's as time goes on .
there is also no standard between what constitutes a given allocation for any retirement date .
the same 2010 target date fund from wells fargo in 2008-2009 lost 11.5% while the t.rowe price 2010 target fund lost 26.5%. that is a target fund that had 2 years to go before retirement. in fact the t.rowe target date fund didn't fall to below 45% equities until 5 years after the target date.
think about something else they do . after the plunge in 2008 instead of buying stock at cheap prices like conventional funds , depending on your target fund glide path they may be reducing stock and so take little advantage of low prices .
anytime you try to discard what is happening around you and go strictly by age or retirement date results are not likely to be what you expect . i rather see someone just buy a balanced fund rather than a target date fund if they are gun shy
I will take an alternate position. These can be a good approach for someone who has no idea what they are doing and no interest in following their investments. Just put the money into a fund and leave it. The allocation will gradually become more conservative with time. As with other funds, it is important to look for one with low fees. Also most of them seem to be excessively conservative. You can adjust that by picking different funds.
The thing about target date funds is they generally are too conservative for the dates most individual pick as most individuals pick a date based on retirement instead of life expectancy. Just because you retire does not mean you should be out of the market especially with many living into their 90's. Now I guess the flip side is maybe the younger generations will have to work well into their 70's or even 80's before retirement so maybe the target date funds allocation would be appropriate.
Overall setting up a properly asset allocated portfolio based on risk, time horizon and goals a set it, add to it and don't continually look at is the best. Many here are talking about market timing which rarely works and although many here claim are not truly that bright or all knowing to get it right.
first is because they do not consider one's own appetite for volatility , the 2nd reason is because they disregard what is happening in the world around it as to major changes . just wait until bonds get hammered and the glide path loaded retirees up with bonds .
they can also be the worst way to dollar cost average in . as markets go higher over time you are buying less and less shares at the same time the funds scale back on equity's as time goes on .
there is also no standard between what constitutes a given allocation for any retirement date .
the same 2010 target date fund from wells fargo in 2008-2009 lost 11.5% while the t.rowe price 2010 target fund lost 26.5%. that is a target fund that had 2 years to go before retirement. in fact the t.rowe target date fund didn't fall to below 45% equities until 5 years after the target date.
Im 30 years old so looking for a fund to match the 90 10 mix of the vanguard 2060 fund. Any recomondations. Most of the balanced vanguard funds I see are more conservative.
Im rolling over 2 old 401ks so overall less than 13k. So funds with super high minimums wont work esp if I need a couple funds
Last edited by jdm2008; 09-25-2016 at 08:26 AM..
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