Missing the Target

The Wall Street Journal: WEEKEND INVESTOR, Saturday/Sunday, June 15-16, 2013

Missing the Target, by Liam Pleven and Joe Light

“A growing number of investors have big chunks of their retirement savings in ‘target-date’ mutual funds. But these simple-seeming funds can be unexpectedly complicated…

Target-date funds have become one of the most important ways that Americas save for retirement.  But for many investors, the funds are still wide of the mark. The funds generally are set up so that investors can put their entire nest egg into a single one linked to the year they expect to retire, in effet putting a savings strategy on autopilot.  The funds typically shrink their stock allocation to become more conservative as the retirement date nears.”

Hitting a target wide of the mark or the bull’s eye is not a good hit.   “In practice, though, the simple concept can get complicated, and many investors use the funds in ways designers never intended”

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