Avoid ‘target date’ retirement funds
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Your 2-minute guide to demystifying money and making you richer
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What’s wrong with “target date” retirement funds
When you get a new job that comes with a pension plan, you will be asked to pick a fund, or multiple funds, into which you put your savings.
This can be confusing and nerve-wracking for someone new to investing. There will be lots of complicated jargon. Who the hell knows the difference between a “mid-cap growth index fund” and a “mid-cap value index fund”?
So one thing investment platforms have started doing is offering “target date” funds. These funds ask you to pick the year in the future in which you’d like to retire. The fund then invests in stocks and bonds accordingly so that when the fateful year arrives, you’ll be in good shape.
Usually, a target fund will sta…