Personal Finance


If volatility in your retirement plan investments is giving you motion sickness, then maybe it’s time to share your grievances with your boss.

Young investors in target-date funds white-knuckled their way through February because those funds are heavily invested in stocks for that age group and subject to short-term market swings.

Even some investors approaching retirement saw their target-date funds take a dive during last month’s rout: Fidelity’s Freedom 2020 Fund took a 6 percent hit between Jan. 26 and Feb. 8.

“Investing for retirement is a long-term commitment — not a 10-day time frame — and as a result, the Freedom Funds are a lifetime savings solutions for shareholders,” said Vincent Loporchio, a Fidelity spokesman.

Target-date funds are a mix mostly of stock and bond funds, but not always. As you age, the fund managers move more of the investments to less risky bonds from higher-risk equities. However, the mix of their investments can vary widely among target-date funds.

Investors in target-date funds at work face a conundrum: They don’t necessarily have the savvy to choose their own investments, but they may find themselves questioning their employers’ appetite for risk — especially if they saw their balances drop sharply last month.

Investments in target-date mutual funds approached $1.16 trillion at the end of January, according to Morningstar. Approximately 8 of 10 retirement plans offered these funds in 2015, the Investment Company Institute found.

Click the image below to enlarge.



Source link

Products You May Like

Articles You May Like

CPR AM on tapping into the silver economy
Here’s why a Roth IRA makes sense for millennials
The US is losing an unassailable $600 billion trade case
Wall Street doesn’t care about your good earnings right now
Apple stock (AAPL) goes negative for the year

Leave a Reply

Your email address will not be published. Required fields are marked *