Dumb TDF question [Target Date Fund]

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ChinchillaWhiplash
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Dumb TDF question [Target Date Fund]

Post by ChinchillaWhiplash » Thu Sep 13, 2018 3:40 pm

Was just wondering what happens after a target date has passed with AA in a target date fund? Does it stay the same after the date? As in the year 2026 with a TDF of 2025 for example. If it was set at 50/50 equities/bonds, fi at 2025, will it keep this allocation in the following years?

Thesaints
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Re: Dumb TDF question

Post by Thesaints » Thu Sep 13, 2018 3:41 pm

ChinchillaWhiplash wrote:
Thu Sep 13, 2018 3:40 pm
Was just wondering what happens after a target date has passed with AA in a target date fund? Does it stay the same after the date? As in the year 2026 with a TDF of 2025 for example. If it was set at 50/50 equities/bonds, fi at 2025, will it keep this allocation in the following years?
Funds transition to their "payout" allocation, or whatever their issuer calls it. It is generally the same for all funds past target date.

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David Jay
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Re: Dumb TDF question

Post by David Jay » Thu Sep 13, 2018 3:55 pm

Each fund family has their own strategy.

For Vanguard, every fund eventually is rolled into TargetRetirement Income, which is permanently 30/70.

If you don’t want that you would need to move some of your assets to a different fund to change the aggregate AA of your portfolio.
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Thesaints
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Re: Dumb TDF question

Post by Thesaints » Thu Sep 13, 2018 3:59 pm

David Jay wrote:
Thu Sep 13, 2018 3:55 pm
If you don’t want that you would need to move some of your assets to a different fund to change the aggregate AA of your portfolio.
which would beget the question why they invested in that target date to begin with...

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David Jay
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Re: Dumb TDF question

Post by David Jay » Thu Sep 13, 2018 9:10 pm

Thesaints wrote:
Thu Sep 13, 2018 3:59 pm
David Jay wrote:
Thu Sep 13, 2018 3:55 pm
If you don’t want that you would need to move some of your assets to a different fund to change the aggregate AA of your portfolio.
which would beget the question why they invested in that target date to begin with...
I would suggest that portfolio investments are likely to change with stage-of-life needs. A TR may be fine during a person’s working lifetime and not during decumulation.

In my case, I have a 7-fund portfolio but I am simplifying with the intent of (if I have enough years) leaving a single LifeStrategy fund inside a Roth for my spouse.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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LadyGeek
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Re: Dumb TDF question [Target Date Fund]

Post by LadyGeek » Thu Sep 13, 2018 9:39 pm

This thread is now in the Investing - Theory, News & General forum (theory). I also retitled the thread to help with the acronym.

See the wiki: Glide paths

Although it's not explicitly stated, the graphs show the funds leveling off after the target date is reached.
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