Target date funds are a way to seamlessly keep your portfolio’s assets allocated appropriately right through your working life, right up until retirement. Kirayaka International has found them to be particularly popular amongst those who would rather take a fire and forget approach to their investing.
Target date funds are essentially a collection of investment strategies that are applied to the fund’s assets at different stages of the funds life. If a fund is due to expire in 2030, it will begin with a more adventurous outlook, taking on greater risk and seeking greater returns and gradually reduce its risk exposure as you approach the maturation date. The firm that controls the fund makes all of these decisions on behalf of the investors.
So is this a good idea? Well as with most investments the answer depends mostly on the investor.
Kirayaka International believes target date funds to be well suited for those without any financial investment knowledge and that are not looking to attain any. They remove the investor from the decision making process, to a much greater extent than even mutual funds and so are not suitable for anyone that wants to take a personal interest in how their investments are being managed.
Target date funds certainly have their place as a financial instrument, but if you have any interest in how your money is invested, then Kirayaka International would suggest that they are not for you.
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