The 401(k) Investment Rule People Are Breaking
A new report concludes that many investors are coloring outside the lines in one area of their 401(k)s and defined-contribution retirement plans. The investment rule they're breaking has to do with target-date funds or TDFs. These funds, designed specifically for retirement savers, are highly diversified and feature risk profiles that gradually become more conservative over time.
If you own a TDF, it should be the only position in your retirement portfolio. And yet, according to a John Hancock white paper, more than 25% of TDF investors are breaking this rule and holding their TDF alongside at least one other type of fund.
Target-date funds (TDFs) weren't originally intended to be mixed with other assets in a participant's portfolio.
Source Fool.com
