Finance

Are Target-Date Funds Good Investments? — Oblivious Investor

When I speak with people who are early in their careers, by far the most common questions I get are:

  1. How do IRAs and 401(k) plans work, and
  2. Which fund(s) should I buy in my retirement accounts?

For question #2, target-date funds are always the first thing I bring up.

Christine Benz of Morningstar wrote recently that, “from where I sit, target-date funds have been nothing short of the biggest positive development for investors since the index fund.”

That’s my point of view as well. They’re not a good fit for every circumstance (most notably, they’re a poor fit for taxable accounts). But they are nonetheless, an absolute revolution of the investment industry, for the better of the client/investor.

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