If you’re one of the roughly 75% of investors who are using a target-date fund in your retirement plan, you need to read this. We’ve written about why you should say no to target-date funds before, but new research provides the clearest evidence yet for why these funds must be avoided.
As you begin to set aside money for retirement, one of the first and most critical decisions you’ll face is what type of account to put that money in. Should you contribute to your 401(k) first? Or is paying down debt a better idea? What about an IRA or a 529 plan? Should you be contributing to those as well? And what do mason jars and your mattress have to do with any of this? These are the types of questions we’ll attempt to answer as we explore the most effective way to save for retirement.
When it comes to investing, the focus is usually on returns, or risk. But believe it or not, the small expenses that you incur along the way can actually have a huge impact on your overall net worth. While these expenses can’t be avoided, they can certainly be minimized … and doing so can save you a fortune.
These days, the rage is all about passive investing. That’s because over the last few decades, it’s become crystal clear that active management (aka. stock picking) doesn’t work. Even the most astute stock pickers, with millions of dollars’ worth of research at their fingertips, consistently underperform basic index funds.
Mutual funds have long been a staple for investors, offering instant diversification and the prospect of having a professional money manager in charge of your portfolio. But changes to the structure of investment vehicles, specifically the introduction of exchanged-traded funds (ETFs), have rendered the old-school mutual fund obsolete.
