When it comes to retirement savings, perhaps the biggest innovation – aside from the birth of the humble 401(k) plan – is the rise of target-date retirement funds (TDFs). As fiduciary rules have changed and sponsors/employees look for simplicity when it comes to asset management, assets in TDFs have exploded over the last decade or so. And there are plenty of reasons why investors should consider TDFs for their portfolios.
At the same time, the rise in target-date funds could be having a few unintended side effects when it comes to our returns.
Luckily, the fixes are easy to understand and simple to correct. For investors using a target-date fund, using them correctly is paramount.
Want to know what a target-date fund is? Click here.