Broker Check


| April 26, 2017

The other day I came across an article in the Wall Street Journal, and it got me to thinking (again) about Target Date Funds and 401k plans.

These funds seem like the perfect answer to how one should invest their 401k account. They’re diversified, they adjust as you get older, they often have low fees, they are often professionally managed, and you can set it and forget it!

What could possibly go wrong? Plenty!

Many 401k plan participants haven’t a clue as to what makes up their Target Fund.

So the question that everyone should be asking is, how much risk are you taking, or better yet, what will happen to the account balance if the market crashes like it did in 2007 – 2009, or interest rates rise?

Follow that up with, are you willing to take that risk?

For a great look at some of the issues to consider with Target Funds, CLICK HERE to read: “Is It Prudent for Investors to Use Target-Date Funds for Retirement Savings?”

Fred Cook - CAVU Financial, LLC

And Now A Word From Our Attorneys: (Notice this is longer than my post!)

The article referenced was prepared by a third party and is provided for informational purposes only. It contains references to individuals or entities that are not affiliated with LPL Financial, CAVU Financial, or Stratos Wealth Partners.

The opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

The target date is the approximate date when investors plan to start withdrawing their money. The principal value of a target fund is not guaranteed at any time, including at the target date.

Investing in mutual funds involves risk, including possible loss of principal.