As we near retirement, the ability to recoup investment losses becomes critical. Therefore, a strategy to reduce risk as you near retirement should be targeted. Target Date Funds, which are usually mutual funds, self-adjust their portfolio based upon a fixed date. As time passes, exposure to stocks is replaced with an increasing use of bonds.
Each fund has a designed Glide path to allocate funds. Think of an airplane coming in for a landing. Most of the flight is high (meaning it has more risk) and as the target date approaches the plane takes a steep glide-path to approach the landing. These funds relieve you the task of frequently reallocating your investment as you approach retirement. They should be used over a long investment horizon. Call us today to determine if this strategy might be appropriate for you.