Target Dated Funds - Invest for your future self

• You’re putting away savings for the short term - Yep!

• You have a plan to pay down your existing debt - Yep!

Now you need a simple way to start investing for the long term, to financially protect the future version of you.

So, what are Target Dated Funds?

Target Dated Funds are a type of professionally managed mutual fund that holds a mix of stocks, bonds and other investments. Each fund focuses on a particular target date, typically around the date you wish to retire, so over time, as it approaches your target date, the mix of assets in the fund gradually shifts from seeking higher returns, to more stable returns with less risk.

Why are they so popular?

Target Dated Funds have become hugely popular with investors because you can basically set it and forget it! A 30-year old who plans to retire at 65, would choose a Target Dated Fund with a name such as the “Target 2058 Fund” - Yes, the names are as simple as that! - The fund would initially focus on growth, so the majority of the funds’ assets would consist of stocks, but as it gets closer to your target retirement date, the fund would gradually shift to lower risk investments, such as bonds and money market funds to protect the assets you have built up over that 30+ year period.

It’s professionally managed on your behalf, and you can easily view the assets in the fund at any point.

How can I invest in one?

Most companies offer their employees Target Dated Funds as a pension or 401K product. You can also purchase a Target Dated Fund yourself through a Brokerage Account.

Today’s Takeaway:

Target Dated Funds are an ideal “set it and forget it” investment product, particularly if you want an investment that is focused on your future. But keep in mind:

• Compare the fees and choose a low-cost fund

• When multiple funds have the same target date, compare and choose one which matches your risk level

• Don’t go too conservative if you are investing for the long term, you want to benefit from growth over a longer period of time

• As your life goals change, review whether the composition of the fund still fits your needs

• Speak to a professional financial advisor to help you choose the product which best matches your goals and re-assess it over time.

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