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Are Target Date Funds good?

Nov 19, 2023

Hello Stoic Investors,

Today we're talking about saving for your retirement.

 

Have you ever heard of Target Date Funds?

 

When we save money for retirement, there are many ways to do it.

Target Date Funds are a way to do that with a good degree of automation.

 

Imagine a basket of investments that automatically gets safer as you get closer to retirement.

That's the basic idea behind Target Date Funds.

They start off aggressive (more stocks) and get more conservative (more bonds) as you approach your

desired retirement year.

 

Two Limitations of Target Date Funds

However, even if Target Date Funds might seem like a simple choice, there are a couple of important

drawbacks to consider before you decide they're right for your retirement plan.

 

1. Uncertainty in Retirement Timing

Are you really able to tell the exact year in which you will stop working?

Life can be full of surprises. Target Date Funds pick a year for you, but what if your plans change?

You may need to adjust your retirement plan in a hurry.

 

2. Vulnerability During Economic Downturns

These funds are supposed to keep your money safe as you get older.

But when you need them the most, they might not do a good job, for example during recessions like in 2008

and 2022.

With a Target Date Fund, you would still have lost between 15% and 25%!

Which is crazy, considering that the whole point of these would be to keep your money safe.

 

So, what's a smarter way to prepare for retirement?

Make your own plan.

Don't just pick a retirement year and forget it, change how you invest based on your own financial goals and

how close you are to them.

For example, consider to use Gold to actually diversify your investments.

 

Remember, Target Date Funds, while appealing for their simplicity, may not be the safest bet for your

retirement.

 

So, note down these points and start investing today:

1. Target Date Funds start off aggressive and become more conservative the closer you get to

retirement

2. However, they don't really protect you during recessions

3. Consider to include gold as a way to diversify for your retirement portfolio


 

See you again next week.

 

Whenever you're ready, here is how I can help you:

1. Take advantage of all our Free Resources and start your journey as Stoic Investor 

2. Book a Free Consultation to ask your investing questions and we will point you in the right direction

3. Watch hundreds of Video Testimonials of Stoic Money Clients from 25 different countries

About Me

I am Vittorio Rigato, the Investing Coach behind Stoic Money.

I invested for more than 8 years, both for myself and by managing the 7-figures retirement account of my family.

After my Master Degree in Finance & Management, I worked in the FinTech industry in Frankfurt (Germany) and managed financial products with value up to €100 Millions.

In 2021 I have founded Stoic Money to teach employees and professionals worldwide how to invest to reach $1,000,000 Net Worth and beyond. Many of them reviewed Stoic Money service with a video testimonial here.

Multiple Finance News Websites like Yahoo Finance and Euronews talked about Stoic Money mission and services.

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