Target funds vs index funds

Google / Admin
yessirz

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yessirz
Nov 18, 2019 15 Comments

My financial advisor told me Target funds are better than index funds for retirement, however this article makes a good case for index funds. What is everyone else here buying in their 401k? https://www.myroadtofire.com/blog/3-ways-to-maximize-your-401k-retirement-account

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TOP 15 Comments
  • Amazon
    qazwsxedc1

    Go to company page Amazon

    qazwsxedc1
    Ignore financial advisor and ask randos here . Great strategy !

    More seriously , target funds are a mix of other index funds so you’ll be good
    Nov 18, 2019 3
    • Thumbtack / Eng
      bgse43

      Go to company page Thumbtack Eng

      bgse43
      Lot of target funds will get you more or less the same (mix of equity index, international, bond index). You can allocate directly to index funds yourself but one benefit of target funds is they rebalance on your behalf depending on circumstances (not hard to do this yourself, of course). Another thing to check would be expense ratios for both scenarios - if target fund is too expense, you might be better off doing it yourself.
      Nov 18, 2019
    • Volvo / R&D
      ascnrdrkly

      Go to company page Volvo R&D

      ascnrdrkly
      The advisor is not impartial and will push a specific product if it's in their interest
      Nov 18, 2019
  • Target funds become less risky as you get closer to the retirement, index fund has same risk irrespective
    Nov 18, 2019 0
  • Amazon
    Dr. Jones

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    Dr. Jones
    Target funds have higher fees, that’s why “advisors” push them.
    Nov 18, 2019 0
  • Intel
    zgklodg

    Go to company page Intel

    zgklodg
    Target Funds have high expense ratios, no surprise
    Nov 18, 2019 0
  • VMware
    isgieho

    Go to company page VMware

    isgieho
    Target funds keep rebalancing in favor of safer options like bonds with time.

    The problem is that you have a small amount of your net worth in such funds so that level of complication doesn’t help much in the bigger picture.

    A simpler strategy is to just buy index funds and keep 100-<age> %age of your net worth in safe investments like bonds, savings etc over time.
    Nov 18, 2019 1