Target date funds have become very popular over the past decade, in fact millions of people are using them because they help take the guesswork out of investing.
How a target date fund works. A target date fund is a mix of stocks, bonds and other investments. The great thing about a target date fund, is that it adapts over time so that the mix of investments is appropriate to your age. This helps make sure you have a diversified portfolio, as you age, your portfolio adjusts automatically.
Age plays a part in how we invest. The general rule of thumb, is that when you are young you can take more risks and as you get older you move to move to more conservative investments. A target date funds makes these adjustments to a more conservative approach as you get closer to your target date for retirement.
Icon’s target date funds. The target date funds in Icon were selected by Icon’s independent advisory board, all of whom are experts in investing and portfolio management. The target date fund in our plan is managed by State Street Global Advisors (SSGA). SSGA is one of the world’s largest, oldest and most respected asset managers.
Of course, you can always opt out of the target date fund and mix your own portfolio by selecting investments from a menu of funds available through Icon.
As a point of comparison, the average fees on a target date fund are: 0.55%.
Icon’s target date fund has a low flat fee of just 0.13%. Additionally, because a target date fund is a mix of funds that is professionally managed, you don’t need the added cost of having an investment advisor.