Target Retirement Funds

If you work for the Target company, then your retirement funds will be provided by Vanguard. Target retirement funds are Vanguard mutual funds which encompass a broad range of investment vehicles with varying levels of risk. There are funds for every investor, based on your individual risk level preference and how long it will be until you retire. These details are important when it comes to choosing the right mutual funds, choosing how much money should be invested in all and how that money should be spread among the various funds available. Rather than blindly choosing a fund or funds, learn more about mutual funds so you have a level of control over your Target retirement funds.

In basic terms, a mutual fund is a number of investors who operate via a manager to purchase a portfolio of many stocks and bonds. There are lots of different kinds of mutual funds and each has its own strategies and goals. Mutual funds are different from stocks, because when you buy a stock, you are buying ownership in a single company. When you invest in a mutual fund, you are buying a portion of many stocks and/or bonds being managed by a professional.

Employee retirement plans are usually 401K plans. This is a savings plan that is long term, designed for saving money for an individual’s retirement. The name 401K actually comes from a section of IRS law that permits this type of retirement planning. These plans are easy for employees, when the employee signs up for a 401K plan, they specify what percentage of their pay they want taken from their check and put into their 401K account. They don’t ever see the money, which makes it an effortless way to save.

Then, the employee is directed to choose where they want their savings to be placed. They can usually choose from a variety of different mutual funds for which prospectus reports will be provided, as well as basic information about how risky the fund is. Depending on an employee’s age, financial status and other factors, they might put all their money into one or more conservative funds or spread it out among low, medium and high risk funds. High risk mutual funds can definitely be a gamble, as there is potential for substantial gain or substantial loss.

Target retirement funds like many 401k plans may have employer matching. This means the employer matches the contribution, doubling the amount that is invested. This is not a company requirement, but the vast majority of companies do offer some kind of matching incentive. And, a 401K plan can come in handy in times of financial emergency, as money can be borrowed from the account and the loan does not show up on one’s credit report. Sometimes there may be a minimum on the amount of money that is borrowed.

Now that you know more about Target retirement funds, you can look at how much money you want taken out of each paycheck and which mutual funds you want it applied towards. The more research you do, the better off your money will be. If you have any hesitations a good strategy would be to stay with low and medium risk mutual funds. If you must invest in high risk funds only allocate a small portion of your money towards them.

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