Target-date funds provide one-stop investing approach
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Not every target-date fund is created equal, however. While expenses are coming down across the board, some annual fees top 1 percent.
“There’s sometimes still a perception that a 2020 target-date fund from one place is the same as a 2020 fund from another,” Yang said. “But that’s definitely not the case. You have to make sure that the one you have is right for you.”
If a target-date fund is invested heavily in stocks, for example, you want to consider whether you can stomach the inevitable highs and lows that come with owning stocks. If not, then consider finding an alternative, whether that’s a target-date fund with less stock exposure or building a portfolio of mutual funds on your own.
Keep in mind, too, that investment strategies can change.
In addition to lowering fees, Vanguard is raising its stake overseas. By yearend, target-date funds will invest as much as 40 percent in international stocks, up from 30 percent today. Likewise, exposure to international bonds will jump to 30 percent from as much as 20 percent.