 Email this  Print this License or reprint this articleASK KIM Are target-retirement funds, such as the Vanguard Target Retirement funds and the Fidelity Freedom funds, good choices for an IRA investment? Sure. Target funds make a lot of sense for people who aren't interested in actively managing their investments. Target-fund sponsors create a series of funds, each with a target date for a particular goal -- 2010, 2015, 2020 and so on. Each fund invests in other funds within the company's family. Funds with a date that's far in the future invest heavily in stocks; those with closer dates allocate less to stocks and more to bonds and cash. All you have to do is pick the year closest to your goal -- usually retirement -- and let the fund company do the rest. But target funds do require some portfolio maintenance. In theory, there's no need to own any other funds (lest you undercut what the target fund is trying to accomplish). So if you invest in one for your IRA, don't choose any additional funds. If you already own other funds, sell them. You also need to put your target fund in context with your other investments. If you have a bundle of money in a taxable account that's invested in stocks, your overall portfolio may still be riskier than you'd like it to be. | |
