Target Date Funds (TAG 401k Fund)

The Vanguard Target Date Funds, which most Animation Guild 401(k) participants are using, will be changing their investment lineups in coming months.



Right now, the Target Date Funds stock allocations are invested 70% in Total U.S. Stock Market and 30% in International Stocks. By the end of 2015, that will change to



60% U.S. stocks

40% International stocks.



The new allocation will bring Target Date funds closer to the actual world market, which is (approximately) 50% U.S. and 50% everything else.



As for bonds, the current allocation is: 80% Total Bond Market (U.S.), and 20% Total International Bond. The newer lineup will be



70% U.S. Bond

30% International Bond.



The intent is to bring more diversification to the Target Date portfolios, which these changes do. The costs of the TAG 401(k) Target Date Funds will remain low.



There's a bajillion different investment strategies, and all of them have their points, The Target Date Funds are good for most people because they allow you to set up a program and then not think about it anymore. A professional team is rebalancing a broadly diversified mix of stocks and bonds, and it ceases being a worry. (Okay, it ceases being a major worry.)



You could also use actively-managed funds, but they will probably -- over time -- fail to outperform market index funds because they cost more, and costs kill active funds' advantages. You could tilt to small cap or value, but that strategy might under-perform the total market for years ... or decades.



So if you are somebody whose head throbs trying to figure out which investment road to take, Target Date funds are probably a good highway to travel. The key is sticking with it.