Targeted funds for retirement?

A Twitter follower asks Dave his opinion of using targeted funds for retirement. Dave doesn't advise it, saying the best way to approach investing is to keep things as simple as possible.

QUESTION: David on Twitter asks Dave his opinion of using targeted funds for retirement investing. Dave isn’t a fan, and he takes the opportunity to explain his recommended investing method.

ANSWER: I don’t use targeted funds. I use four types of mutual funds — growth, growth and income, aggressive growth, and international — and I spread my money evenly across those. I don’t want to deal with certain segments, and I’m not trying to target certain situations. If you’ll just keep your investing plan very simple, and look at the track records of the mutual funds you’re picking, you’ll be fine.

In the open market, where you’re just buying any fund for your IRA or whatever, you’ve got like 8,000 funds to choose from. So, you want something that’s got at least a good 10-year track record. You’ve got limited options in a 401(k), but you still want something that’s been open a little while so that you can look at its track record.

You should be able to find good, quality funds in the four categories I mentioned earlier that will give you a strong portfolio. Remember, it’s growth, growth and income, aggressive growth, and international.


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