Now a days everyone who has a job most likely has access to a company sponsored 401k. The most popular choice among 401k accounts are called “Target Date Funds”. A target-date fund is an investment mix based on your age and the year you expect to retire. They are aggressive based and they gradually become conservative as you near your retirement date. Depending on your contribution percent and if your employer matches, it makes sense to stay in a target-date fund for a few years while you build your money.
- Age may be a good starting point, but it shouldn’t be the only factor in determining your allocation.
- You may be able to reduce costs by creating your own mix of investments.
- Target-date funds don’t take into account early retirement when your savings will need to last longer.
“A target-date fund is a diversified investment mix based on your age and the year you expect to retire.”