Mar 22 2009
Invest with Target-date funds
Target-date funds are somewhat like asset allocation funds; however, the mix of their assets will vary based on the date the fund is set to “mature.” These are frequently designed for retirement portfolios. Investors would thus pick the maturity date that most closely corresponds to the year they plan to retire, whether that’s 2010 or 2040. The mix of assets in the 2010 fund, which is obviously for an older investor, will be far more conservative than the mix of assets in the 2040 fund. However, the mix will change as the target date nears. These are quickly becoming a favorite in company 401(k) plans because tax laws encourage companies to offer these funds and make them the default options for people who fail to choose an investment mix.
Risk: Mixed
Potential for capital appreciation: Varies
Potential for current income: Varies
