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Rate Risks For Target-Date Funds

Sunday, April 28, 2013 - 6:14 AM
From the Wall Street Journal:
Millions of workers saving for retirement risk losing part of their nest eggs if interest rates jump.

The cause for concern: target-date mutual funds, designed for investors who lack the time or expertise to balance their investment portfolios.

Read more

As this article shows, there's no simple investing method that eliminates risk.
4
Ken TuminKen Tumin5,467 posts since
Nov 29, 2009
Rep Points: 124,994
1. Sunday, April 28, 2013 - 10:48 AM
.

Dear KenBDG,

After a while I am noticing material at link posted by you, and the conclusion drawn by you is something that I mostly agree with!  Points of agreement:

1) Millions of workers saving for retirement risk losing part of their nest eggs if interest rates jump.
  • I agree that there are millions of workers who save for retirement in risky products.
  • For the lack of better word, I must describe them as "savers".  But I'm open to use a different word if any.
  • A while back we had some posts about congressman's Campbell's usage of the word "saver" and some hair-splitting regarding this.  Looks like the jury is still out about who this saver is? Link to that post is: http://www.depositaccounts.com/blog/2013/03/rep-campbell-talks-with-depositaccountscom-on-the-risks-of-the-feds-monetary-policy.html
2) The cause for concern: target-date mutual funds, designed for investors who lack the time or expertise to balance their investment portfolios.
  • I agree.  It is quite irresponsible to create products with a saver in mind who is rather ignorant.
  • Going a step further, I must conclude that responsibility of understanding the risks of any product, and determining its suitability is with the saver who decides to use it.
  • And the next step will be to conclude that if a saver is willingly taking the risk (no matter what the excuse - lack of time, lack of knowledge, lack of acumen) then such a saver deserves all of the profit/loss s/he gets.
3) As this article shows, there's no simple investing method that eliminates risk.
  • Indeed.  This article shows it quite well.
  • In fact going a step further, I must write that there is no method simple or complex or something in between to eliminate risk. 
  • Actually bottom line is that there no way to eliminate risk.  Manage - Yes, Hedge - Yes, Reduce - Yes, Minimize - Yes, Eliminate - No way Jose.
Yours Truly,
- Anon
1
ytytytytytytytyt158 posts since
Jan 28, 2013
Rep Points: 623
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