The Risks of Putting Your Retirement Plan on Autopilot

The funds start out heavily invested in riskier, but potentially higher-return assets (such as stocks and real estate investment trusts) and, as the target date approaches, they increase their exposure to less volatile assets (such as bonds and cash).

…retirement savings into TDFs without getting sued. Money poured in. As of March 2010, according to the SEC, TDFs held $270 billion in assets, most of which has come in since 2006.
TDFs were invented in the 1990s and are designed to simplify investing. They have names like Fidelity Freedom 2030 (FFFEX) or American Funds 2010 (AAATX), and the idea is for investors to choose the fund with a date closest to their retirement date. The funds start out heavily invested in riskier, but potentially higher-return assets (such as stocks and real estate investment trusts) and, as the target date approaches, they increase their exposure to less volatile assets (such as bonds and cash).
Ramit Sethi, author of I Will Teach You to Be Rich, is a big TDF fan….

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The Risks of Putting Your Retirement Plan on Autopilot

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