How to Navigate the Tricky Territory of Target Date Funds

We covered a lot of ground in our three-part Tonka Beans series on target-date funds. If you read that, you should feel more informed about what they are and why they matter to you, but you might be wondering what to do next so here’s a simple set of steps you can take:

1. Get informed about what’s happening with your money today. If you participate in your company’s 401(k) or 403(b) retirement plan, find out if your company has setup automatic contributions into a “QDIA” (see Part 2 of the target-date series for a plain-English review of the QDIA concept and why it matters to you). Make sure you’re comfortable with it. If you’re not comfortable, then contact your Human Resources office to find out how to make sure your money goes into cash until you have time to make an informed decision, not one the company made for you.
2. Get informed about your options. If your company has target-date options in the retirement plan, you’ve got to do some research on the options and find out if you’re comfortable with how aggressive or conservative the target-date funds are. There’s no shortcut for this. You’ve got to do some legwork here by looking at how the funds that are options in your company’s program compare to other funds. You can do some research on a variety of web sites including Morningstar, Vanguard, Schwab or Fidelity’s web site. All of those will let you compare different target-date funds. Remember: you want a fund with low expenses and with a mix of stocks and bonds that makes sense for you. If you need help, ask someone you trust or post a specific question on the Tonka Beans discussion boards.
3. Once you’re informed, get invested. Once you’ve done some homework and asked your questions, do not put off until tomorrow the investing you need to do today. Long-term investing will pay off more than almost anything else you can do, so keep things moving forward.


What if you only have an IRA (traditional or Roth)? It’s the same process –find out what options are available to you and do the same kind of research, then get invested. No excuses, no delays, just do it – after all, it’s your future. And if you get stuck along the way, post a question on the Tonka Beans discussion boards and we'll do whatever we can to help you out. Chances are good that lots of other people will share your questions.

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