Thu Jul 18 2024, by Tyler Gardner

Three Reasons to Avoid Target Date Retirement Funds

I'm Tyler, a former financial advisor and portfolio manager. Now I make financial content for free so that you don't have to pay for it.

1. They Treat Us As If We're All the Same

You, me, cousin Joe, sister Susie, grandma Betty—apparently our age is the only thing that determines where our assets should be invested. But, I hear from all of you daily, and I know that's not true. You do not have the same goals as the 45-year-old sitting next to you.

2. High Fees Can Erode Your Returns

Some funds charge between 0.5% and 1% annually. That's similar to working with a financial advisor. It may seem insignificant in the short run, but over 30 to 40 years of investing, a 1% fee could easily eat away at hundreds of thousands of dollars of your money.

3. The Easy Option is Misleading

Target date retirement funds tend to be marketed and sold to the general public through 401(k)s and 403(b)s as the easy investment option. You don't even have to think about it. But come on, you know what an easier option is? Taking just 15 minutes a year to rebalance your portfolio according to your own wants, needs, desires, and goals. And you can do that for free.

If any of this is helpful, like and follow, and I'll keep trying to get you one step closer to where you need to be.

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