Target-Date Funds Get More Aggressive

At the request of investors, fund companies are increasing the equity exposure in their target-date, or lifecycle, funds. Fidelity and Vanguard are two of the biggest firms to do so recently, MarketWatch reports.

Baby Boomers and financial advisers realize that with the life expectancy of many people reaching 95, retirees are going to need their nest egg to last longer than in years past.  And even in retirement, many investors are also investing more aggressively.

"You've got people retiring at 55 or 60 that are going to be living to 90, 95, so you've got to plan for 40 years," Scott Kays, a financial adviser with Kays Financial Advisory, told MarketWatch.

Jim Peterson, a vice president at the Schwab Center for Investment Research, agreed, but said that the equity exposure should be in moderately aggressive stocks.

"There's a big advantage to going from a 60% moderate allocation to stocks to an 80% moderately aggressive allocation," he said. "You're getting a majority of the upside potential from stocks, but don't have the same risk as a 90% stock portfolio."

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.