Investors are flocking to target-date retirement funds. These funds, which often are the default option in workplace 401(k) plans, received $70 billion in net inflows last year, bringing their total assets to over $1 trillion, according to a new report from Morningstar.
Most investors don’t have much expertise in building a portfolio of mutual funds. But target-date funds – which invest across several asset types, in different allocations, as you age – do it all for you. All you have to know is what year you plan to retire. If you plan to retire in 22 years, you’d pick the Vanguard Target Retirement 2040 Fund (VFORX), for example. The fund will become more conservative as you get closer to taking your money out in retirement.
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