{"id":1472,"date":"2025-04-19T13:30:38","date_gmt":"2025-04-19T13:30:38","guid":{"rendered":"https:\/\/staging8.dynaserverx.com\/newenglandtrust.com\/?post_type=newsletter&#038;p=1472"},"modified":"2025-04-19T13:30:38","modified_gmt":"2025-04-19T13:30:38","slug":"are-you-missing-the-bulls-eye-with-a-target-date-fund","status":"publish","type":"newsletter","link":"https:\/\/staging8.dynaserverx.com\/newenglandtrust.com\/newsletter\/are-you-missing-the-bulls-eye-with-a-target-date-fund\/","title":{"rendered":"Are You Missing the Bull\u2019s-Eye with a Target-Date Fund?"},"content":{"rendered":"<p>In fact, target-date funds are not as simple as they appear to be. Like all investment options, they have strengths and weaknesses.<\/p>\n<h2>Focused on time<\/h2>\n<p>Target-date funds offer a professionally managed mix of assets \u2014 typically a combination of other funds containing stocks, bonds, and cash alternatives \u2014 selected for a specific time horizon.<\/p>\n<p>The target date, usually included in the fund\u2019s name, is the approximate date when an investor would begin to withdraw money for retirement (or another purpose, such as paying for college). An investor expecting to retire in 2055, for example, might choose a 2055 fund. As the target date approaches, the fund typically shifts toward a more conservative asset allocation to help preserve the value it may have accumulated and potentially provide income.<\/p>\n<h2>One size may not fit all<\/h2>\n<p>Target-date funds utilize basic asset allocation principles that are often used to construct more complex portfolios. But the allocation is based solely on the target date and does not take into account the investor\u2019s risk tolerance, personal goals, asset levels, sources of income, or any other factors that make an investor unique.<\/p>\n<p>An investor with $200,000 in a target-date fund has the same asset allocation as an investor with $20,000 in the fund. An investor who also has a pension and might be comfortable taking more risk with 401(k) investments is placed in the same risk category as an investor who will depend primarily on savings in the 401(k) account.<\/p>\n<p>Considering this one-size-fits-all approach, target-date funds may be especially appealing to novice investors with relatively low assets or to those who prefer a simple set-and-forget option in their 401(k), IRA, or other investment account. But even if simplicity is the goal, it\u2019s important for any investor who keeps assets in a target-date fund to learn more about the specific fund and how it operates.<\/p>\n<hr \/>\n<h2>Growing Trend<\/h2>\n<p>Percentage of 401(k) participants holding target-date funds<\/p>\n<figure id=\"attachment_1474\" aria-describedby=\"caption-attachment-1474\" style=\"width: 395px\" class=\"wp-caption aligncenter\"><img fetchpriority=\"high\" decoding=\"async\" class=\"wp-image-1474 size-full\" src=\"https:\/\/staging8.dynaserverx.com\/newenglandtrust.com\/wp-content\/uploads\/2025\/04\/WA_25042_Target-Date-Fund-CHART-e1745069416262.jpg\" alt=\"Percentage of 401(k) participants holding target-date funds: 26% in 2007, 45% in 2012, 56% in 2017, and 68% in 2022.\" width=\"395\" height=\"231\" srcset=\"https:\/\/staging8.dynaserverx.com\/newenglandtrust.com\/wp-content\/uploads\/2025\/04\/WA_25042_Target-Date-Fund-CHART-e1745069416262.jpg 395w, https:\/\/staging8.dynaserverx.com\/newenglandtrust.com\/wp-content\/uploads\/2025\/04\/WA_25042_Target-Date-Fund-CHART-e1745069416262-300x175.jpg 300w\" sizes=\"(max-width: 395px) 100vw, 395px\" \/><figcaption id=\"caption-attachment-1474\" class=\"wp-caption-text\">Source: Investment Company Institute, 2024 (2022 year-end data, most recent available)<\/figcaption><\/figure>\n<hr \/>\n<h2>Glide to or beyond retirement<\/h2>\n<p>The transition from more aggressive to more conservative investment allocations is driven by a formula called the glide path, which determines how the asset mix will change over time. The glide path may end at the target date or continue to shift assets beyond the target date, taking the fund into your retirement years.<\/p>\n<p>Funds with the same target date may vary not only in their glide path but also in the underlying asset allocation, investment holdings, turnover rate, fees, and fund performance. Be sure you understand the asset mix of your fund and how it changes over time. It\u2019s especially important to closely examine your target-date fund as you approach retirement. You can find detailed information in the prospectus.<\/p>\n<p>Asset allocation is a widely accepted method to help manage investment risk. It does not guarantee a profit or protect against investment loss, and there is no guarantee that you will be prepared for retirement on the target date or that the fund will meet its stated goals. Keep in mind that investing in other securities outside of a target-date fund may change your overall asset allocation. It\u2019s generally wise to consider the allocation strategy of your full portfolio.<\/p>\n<p>The principal value of a target-date fund is not guaranteed before, on, or after the target date. The return and principal value of all mutual funds fluctuate with changes in market conditions. Shares, when sold, may be worth more or less than their original cost.<\/p>\n<p><em>Mutual funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.<\/em><\/p>\n<p>This information is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek guidance from an independent tax or legal professional. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Broadridge Advisor Solutions. \u00a9 2025 Broadridge Financial Solutions, Inc.<\/p>\n","protected":false},"featured_media":1473,"template":"","meta":{"_acf_changed":false},"newsletter-category":[37],"class_list":["post-1472","newsletter","type-newsletter","status-publish","has-post-thumbnail","hentry","newsletter-category-april"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.3.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Are You Missing the Bull\u2019s-Eye with a Target-Date Fund? - New England Trust<\/title>\n<meta name=\"description\" content=\"In Evanston, IL, Robard Flaremoor offers Financial Planning Services &amp; Financial Advice. \u2018Financial Services\u2019 from College Funding to Wealth Protection. \u2018Tax Services\u2019 include Tax Preparation, Tax Reduction, and Tax Management\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/staging8.dynaserverx.com\/newenglandtrust.com\/newsletter\/are-you-missing-the-bulls-eye-with-a-target-date-fund\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Are You Missing the Bull\u2019s-Eye with a Target-Date Fund? 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