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    Build Your Own Target Fund: We Can Do Better: Financial Freedom, #269
    Build Your Own Target Fund: We Can Do Better: Financial Freedom, #269
    Build Your Own Target Fund: We Can Do Better: Financial Freedom, #269
    Ebook90 pages59 minutes

    Build Your Own Target Fund: We Can Do Better: Financial Freedom, #269

    By Joshua King

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    About this ebook

    Do you like target date funds? I do not. I can do better by buying index funds and treasuries myself.

     

    A target date fund aims to capture a 60/40 portfolio inside one fund. As you get closer to the target (say 2050), the fund converts index funds into bonds.

     

    Eventually, your target date fund will be primarily bonds, and you will sell shares to generate income during retirement.

     

    I don't like target date funds because they use bond funds instead of individual treasuries, municipals, corporates, and mortgage-backed securities. 

     

    I can use index funds and individual bonds to increase my safety and income while adding some closed-end funds for high income. Together, I can create and maintain a level of safety, preservation, and income I couldn't with a target date fund. Good Luck!

     

    LanguageEnglish
    PublisherJoshua King
    Release dateSep 24, 2024
    ISBN9798227443953
    Build Your Own Target Fund: We Can Do Better: Financial Freedom, #269

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      Build Your Own Target Fund - Joshua King

      Table of Contents

      MILITARY FAMILY INVESTING | Joshua King | Home of the Free PDF

      Build Your Own Target Fund

      All Right Reserved Military Family Investing | 01  Build Your Own Target Fund

      02  Dividend Investing 106: 60/40 Portfolio

      03  Middle-Class Investing 106: Using Bonds

      04  Your 401K Is Not Enough

      05  Individual Treasury Bonds vs. Treasury Bond Funds

      06  Middle-Class Investing 107: Index Funds

      07  Treasury Bonds vs. Municipal Bonds

      08  30 Monthly-Stocks in One Account

      09  The Pros and Cons of Closed-End Funds

      10  Renting Rooms to Financial Independence

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      MILITARY FAMILY INVESTING

      Joshua King

      Home of the Free PDF

      www.militaryfamilyinvesting.com

      Build Your Own Target Fund

      We Can Do Better

      01  Build Your Own Target Fund

      02  Dividend Investing 106: 60/40 Portfolio

      03  Middle-Class Investing 106: Using Bonds

      04  Your 401K Is Not Enough

      05  Individual Treasury Bonds vs. Treasury Bond Funds

      06  Middle-Class Investing 107: Index Funds

      07  Treasury Bonds vs. Municipal Bonds

      08  30 Monthly-Stocks in One Account

      09  The Pros and Cons of Closed-End Funds

      10  Renting Rooms to Financial Independence

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      Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it.  I have no business relationship with any company whose stock is mentioned in this article.

      All Right Reserved Military Family Investing

      01  Build Your Own Target Fund

      Target date funds are all the rage nowadays, especially inside company-sponsored 401k (k) programs. However, I don’t trust them and don't like them for a few reasons.

      Let's review our retirement goals before I get into the target date funds. We want to preserve capital, facilitate growth, and generate income during retirement. That’s why many people gravitate toward the 60/40 retirement plan for their nest eggs.

      The 60/40 (60% index funds and 40% bonds) plan aims to sell shares of your index funds while bonds generate income. Together, you should be able to live on 4% of your portfolio annually.

      Spicy Dividends for a Bland Life

      Along came target date funds. Target date funds are mutual or exchange-traded funds that combine the 60/40 strategy in one package.

      When I was in the military, I bought the 2040 target date fund inside my Thrift Saving Plan, the military’s 401 (k). As the target year approaches, the fund converts index funds into bonds.

      Let’s examine how this conversion happens. The year is 2010, and my 2040 target date fund is 80% index funds and 20% bonds. By 2040, the ratio is 40% stocks and 60% bonds. Eventually, the fund is almost 100% bonds.

      Therefore, inside of the fund, you are losing all of your growth in favor of a flight to safety. This is fine if you have your growth outside of this fund.

      Tired of Being Broke, Behind, and Bullied?

      Why I don’t like target date funds. The first reason I don’t like target date funds is that they are just a collection of other funds.

      When I was digging around my 2040 TSP target date fund’s prospectus, I noticed it was just other TSP funds. For example, the growth element was just the common stock and international funds. So basically, it was the S&P 500 (SPY) and an international fund. That’s not the problem.

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