Question of the Day

There will be a financial literacy question posted every day of the month. Answer it and share what you "know." It could be the money question.

The question of the day:

What is a target date fund? Are they all the same? Why should you consider owning one?

Posted 10.23.14 | Answer the question | 2 Comments

Answers

  1. Comment by Garrett Haag on 10.23.14 at 7:27 am

    A target date fund is a fund that automatically allocates itself to a more conservative mix the closer you get to the date. A 2060 fund is much more aggressive then a 2020 fund. They are all not the same, Vanguard makes theres using index funds, while other target date funds may be made out of managed funds. The biggest difference between those 2 kinds is the price, Vanguard has there target date funds at around .17% while other places may run as high as 1%. Someone may want a target date fund if you do not have enough money to open a normal account due to many target dates having lower minimum contributions. You may also want it if you do not want to do anything with your portfolio, you just want to buy something and be done, a target date fund is for you then.

  2. Comment by Mike Finley on 10.23.14 at 9:20 am

    You covered the issue very, very well Garrett. I have nothing to add.