Most individual 401(k) investors choose the default option.
The target date mutual fund closest to their expected retirement year.
It feels simple and sensible.
A mutual fund that adjusts over time sounds helpful.
It removes the need to rebalance.
I understand you are busy with work and life.
But let’s pause a moment on the target date mutual fund concept.
Target date funds follow a preset path.
When stock markets decline the fund stays on its path.
There’s no mechanism to manage 401(k) principal risk.
No defined limit on potential 401(k) loss.
No clear point to reduce risk to protect what you’ve built.
With the stock market near-all time highs.
Wars, politics, inflation, gas prices, and layoffs.
Are you comfortable with a formula managing your 401(k)?
Let me clear something up for you.
“Set-it-and-forget-it” does not protect 401(k) principal.
The last several years of 401(k) stock market gains.
The last several years of 401(k) contributions.
Pre-set stock and bond allocations.
Is not the same as stock market risk management.
A target date mutual fund tells you where your 401(k) money goes.
It doesn’t protect how much 401(k) principal you can lose.
If you don’t define your comfortable level of 401(k) stock market risk.
A 401(k) target date mutual fund will.
Is it worth revisiting your 401(k) target date mutual funds now?
If so, let’s get a connection started.
P.S. Target date mutual funds don’t handle your 401(k) principal risk.
