An Introduction

Hi. Welcome to BourGroup and my blog. Phil

Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.

I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.

"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.

Monday, February 24, 2014

Target Date Funds and the Glide Path


Target date or lifestyle funds have quite different glide paths depending on the company. The glide path is how the fund moves from a 80-90% stock portion when there are still 20+ years to go to a much less aggressive stock position as the target date is reached.

As stated in a Journal of Financial Planning article by Bodie, Fullmer and Treussard (March 2010),  "...some glide paths seek only to manage TO the target date, while others go further - to manage THROUGH the target date, presumably for the rest of the investor's life..."

The stock portion of the target date fund could be in a range from 25% or less to as much as 70% or more by the time the target date arrives. The answer to which is better is impossible to answer as it depends on the individual's level of risk, income needs and other factors.

The important thing is to know how your target date or lifestyle fund is moving from aggressive to less aggressive. They mostly do but some studies have even shown that this general glide path direction may not be the right answer anyway.