Wednesday, December 16, 2009

Target-Date Mutual Funds Take Huge Risks In Junk Bonds

Voltron says: Target Date mutual funds (such as TSP "L" funds) are an easy way to automatically carry out conventional investing practices with your money. They move money over time from what is considered a risky investment (stocks) into what is considered more stable (bonds) as you approach the target date when presumably you will need the money. This doesn't work well if the bonds they choose are risky (junk bonds). Apparently some of these funds are charging quite high fees for funds that really is not much more difficult to manage than an index fund.

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