What is the purpose of a Target Retirement fund and who would benefit from it?
What will be an ideal response?
Answer: A target retirement fund is designed to make sure that an individual is properly diversified based on how much longer they have until retirement. A younger person's fund would have a greater percentage of common stocks verses bonds because they have enough time remaining to be exposed to more risk. As a person nears retirement age, the fund's managers automatically change the make-up of the investments in the fund to more conservative, less volatile investments more appropriate for someone needing their money fairly soon.
These types of funds are ideal for the average person who does not have the time, expertise or desire to put in the effort necessary to manage their own monies. With these funds, a person just states what year they plan on retiring and then set up automatic payments and everything else is decided by professional investment managers.
You might also like to view...
Which of the following questions are addressed by an effective sales presentation?
A. What is the value-added of the product? B. What is the sales turnover ratio of the organization? C. What is the shareholding pattern of the board of directors of the organization? D. What is the estimated growth in sales of a product in the next quarter? E. What are the marketing strategies adopted by the company to ensure its sales?
Hershey's expects to sell $2 million of its new candy bar, although $200,000 of this amount would
have been spent on its existing candy bar. The $2 million is the appropriate cash inflow for the new candy bar project, while the $200,000 will be counted against the return on the old candy bar. Indicate whether the statement is true or false
Of the following, only ___ would not be considered proper financial management during both good and bad times.
A. investing excess cash in CDs, government securities, or conservative securities B. making sure that funds are available to meet tax deadlines C. paying bills promptly D. investing all excess cash in long-term securities E. planning for sufficient financing when needed
Whole Foods tried to overcome some of the limitations of a divisional structure by
A. redistributing financial support. B. reducing power conflicts. C. decentralizing key activities. D. centralizing the purchasing function.