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The beauty of target-date funds is that they are very convenient for the person who isn’t interested in getting more in the weeds of investing. Eliza Arnold, the founder of 401(k) provider Arnie ...
Most 401(k) plans have at least three investment choices, though others offer many more options. The average plan offers about 13 investment options, according to the Investment Company Institute.
Many employees accept the default investment option, typically a target-date fund – based on their projected retirement age – when signing up for a 401(k), and never think anymore about it.
A target date fund ( TDF ), also known as a lifecycle fund, dynamic-risk fund, or age-based fund, is a collective investment scheme, often a mutual fund or a collective trust fund, designed to provide a simple investment solution through a portfolio whose asset allocation mix becomes more conservative as the target date (usually retirement ...
401 (k) In the United States, a 401 (k) plan is an employer-sponsored, defined-contribution, personal pension (savings) account, as defined in subsection 401 (k) of the U.S. Internal Revenue Code. [1] Periodic employee contributions come directly out of their paychecks, and may be matched by the employer. This pre-tax option is what makes 401 ...
To be fair, target funds are probably better than defaulting to a money market fund or throwing darts to pick your 401(k) options -- something plenty of 401(k) participants do, unfortunately.
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