Target Date Index Fund

Investing
#1

Is a target date index fund affected by how the market fluctuates or there should always be a fixed growth rate?

Can I use my 401 that is currently under my employer plan? Or should I open a new brokerage account for just the target date index ?

Will one have to wait until they retire to be able to get the target date index? I listened to Dave Ramsey and he discouraged about Target Date index fund for he says you will not live to ‘enjoy’ the worth of such because you will be too old then and that made me so so confused.

Thank you for your advice!

#2

Welcome @SOPHIE!

So a target date index fund is simply a simple container that holds a few other index funds (like a US stock index fund, international index fund, and bond fund).

It’s named after a year because it starts migrating away from stocks and towards bonds based round a certain retirement year.

BUT, that year has absolutely nothing to do with when you’re allowed to access the money. You can trade target date index funds just like any other index fund. When you can access the money only depends on what type of account it’s in (i.e. Roth IRA or brokerage account). I assume Dave isn’t a fan because we have different views on investing, but I doubt he claimed you couldn’t access the money. That may have been a misunderstanding.

Yes, you should use your employer 401k. You can’t switch that to a different brokerage account. It’s gotta be done through payroll deduction.

#3

So basically for the TDF, all I have to do on my 401k is to put In 100% of my contributions into Eg. Schwab Mngd Ret Trust 2050 on the Schwab website since I am in my early thirties. This is under asset allocation on the Schwab website.

Please correct me if am wrong. Thank you for your time and effort!