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Retirement Planning: Understanding Risk and Target-Dated Mutual Funds January 18, 2009

Posted by retirementwithaplan in retirement.
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For those of you that may not be aware, I also run another blog on mutual funds. For the last six or seven posts, we have been discussing some of the aspects of risk, how important it is, what to avoid and how to capitalize on it in your retirement portfolio (first) and in your investment portfolio.

i011719iiibgThe recent downturn brought numerous people to their financial knees as they first noticed that their 401(k)s and IRAs were bleeding their hard-earned cash faster than they had ever seen happen before. Trouble has a way of doing that, making you look at the accident even though it is you in the scene.

But you are not alone. How you reacted to this became a topic of discussion at this blog. What should you do? Should you move everything into something safer, something that boasts the diversified investment strategy you never embraced and allocated assets on the basis of a retirement age somewhere off in the distant future?

Target dated funds (sometimes referred to as life-cycle funds) should be approached with caution. Here’s why.

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