At the end of 2011, more than half of all recently hired 401(k) participants owned target-date mutual funds. When a worker is auto-enrolled, a target-date fund is often the default investment for retirement plan contributions.
Target-date funds are hybrid mutual funds that generally include a mix of assets (stocks, bonds, and cash alternatives) that automatically shifts as the account holder ages.
The target date is the approximate date when an investor plans to withdraw his or her money — typically the year when he or she expects to retire (such as 2030, 2040, or 2050). The further away the date is, the greater the risks that the target-date fund usually takes. The mix of investments generally becomes more conservative as the date grows closer. The “glide path” is a formula that determines how the asset mix will change over time.
Two funds with the same target date often have different investment holdings, turnover rates, and glide paths. Therefore, an investor must look beyond the target date to evaluate whether a particular fund is an appropriate investment.
The principal value of target-date funds is not guaranteed. The return and principal value of all mutual funds fluctuate with changes in market conditions. Shares, when sold, may be worth more or less than their original cost.
Mutual funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.
INVESTING RISK DISCLOSURE
Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money. Before investing, consider the funds’ investment objectives, risks, charges, and expenses. Contact Mahoney Asset Management for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.
IMPORTANT CONSUMER INFORMATION
This web site has been prepared solely for informational purposes. It is not an offer to buy or sell any security; nor is it a solicitation of an offer to buy or sell any security.This site and the opinions and information therein are based on sources which we believe to be dependable, but we can not guarantee the accuracy of such information.
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An investor may obtain information concerning a broker-dealer, an investment advisor, or a representative of a broker-dealer or an investment advisor, including their licenser status and disciplinary history, by contacting the investor’s state securities law administrator.
The financial calculator results shown represent analysis and estimates based on the assumptions you have provided, but they do not reflect all relevant elements of your personal situation. The actual effects of your financial decisions may vary significantly from these estimates–so these estimates should not be regarded as predictions, advice, or recommendations. Mahoney Asset Managment does not provide legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences.
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