Simplify and diversify at the same time according to your investing time horizon!
Target-date funds, also referred to as target-retirement or life-cycle funds, offer diversification and a strategy that seeks to reduce your investment risk over time, all in one fund.
The funds invest in a variety of underlying funds in proportions that gradually become more conservative over time. You pick the specific fund that currently has the right mix for you of different types of investments, such as stocks and bonds, knowing that the fund's risk level is designed to become more conservative over time.
Each fund has a target date in its name that corresponds to the date upon which you expect to begin to take gradual withdrawals, such as soon after your retirement.
It is important to understand that the funds are designed to be withdrawn over a long retirement period and are not designed to prevent losses. Although the amount of risk they take is designed to decline over the years, they will continue to invest in some higher-risk assets even after the target date is reached.
The Vantagepoint Milestone Funds are target-date funds available:
- to IRA and RHS plan investors (see table below); and
- to certain 401 and 457 plan investors as an underlying fund of the VantageTrust (log into your account to view availability and fee-adjusted profile information).
Please note that the Milestone Funds are not a complete solution for all of your retirement savings needs. An investment in a dated Milestone Fund includes the risk of loss, including near, at or after the target date of the applicable dated Milestone Fund. There also is no guarantee that a Milestone Fund will provide adequate income at and through an investor's retirement. Selecting a Milestone Fund (or any of The Vantagepoint Funds) does not guarantee that you will have adequate savings for retirement.
As always, be sure to review your overall investment strategy (see how ICMA-RC can help). Prefer a simple, diversified approach that invests according to your comfort level with risk? Then learn more about The Vantagepoint Model Portfolio Funds.