Fidelity Freedom 2040 Fund? (FFFFX)

[jpg7n16]

The fund went from a high of around 10.5 in 2007 through a terrible year (for all funds everywhere) in 2008, and is starting to recover, but hasn't fully yet. So if like pikey, you happened to begin investing right before the big downswing, obviously your returns will be worse than someone who started just after the big drop - say in mid '09.

But you should be happy that the price went lower over this time. Buyers benefit from low prices. And pikey (and the OP) will be net buyers over the next 40 years. So the lower the price goes in the short term, the better for buyers. Obviously, we prefer higher prices 40 years from now when we begin selling off - which prices will likely rise- but until then, the lower the better!

[ea1776]

DH and I (both 27) have each of our Roth IRAs and his TSP in target funds. I'm not really that interested in managing our funds or making sure they are balanced so I think target funds are the right choice for us. I like the fact that I can just set it and forget it.

However I'm wondering if that is really true. We currently have the majority of our funds in a 2045 fund, but some are in a 2040 (based on fund availabilities). When they reach their "maturity" DH and I will be 58 or 63. Will target funds still have enough growth to last us into our 70s, 80s and beyond? If not, would it be appropriate for us to buy later-date target funds (when they become available)? Would it make us too heavy in any one area? Should we stop contributing entirely to one fund? split it evenly? Split it based on a certain percentage?

Thanks for your thoughts and input!!

Just wanted to comment on far-in-the-future-target-funds (i.e. target 2100) not being available. At this point in time, such a fund would be invested either entirely or primarily in stocks (domestic & international would be best). You could achieve the same thing by investing in a total world stock index fund (or your favorite domestic/international diversified stock fund with the primary investment objective being long term capital growth), then moving it all to a target fund immediately when the target fund becomes available (i.e. for target 2100 maybe it would be available by 2045 or something).

In other words, a target fund really far in the future doesn't need to "do anything special" inside the fund in the way of allocating between stocks and bonds. Because the target withdrawal date is so far ahead, your goal is capital growth (more aggressive strategy), which of course means a heavy stock allocation. Depending on how aggressive you are, you could choose the appropriate growth fund to "wait" in until the target fund becomes available. Hope I didn't lose ya' there.

[jIM_Ohio]

DH and I (both 27) have each of our Roth IRAs and his TSP in target funds. I'm not really that interested in managing our funds or making sure they are balanced so I think target funds are the right choice for us. I like the fact that I can just set it and forget it.

However I'm wondering if that is really true. We currently have the majority of our funds in a 2045 fund, but some are in a 2040 (based on fund availabilities). When they reach their "maturity" DH and I will be 58 or 63. Will target funds still have enough growth to last us into our 70s, 80s and beyond? If not, would it be appropriate for us to buy later-date target funds (when they become available)? Would it make us too heavy in any one area? Should we stop contributing entirely to one fund? split it evenly? Split it based on a certain percentage?

Thanks for your thoughts and input!!

If you choose the set it and forget it mindset, you have to take the good with the bad.
If I choose the manage it every step of the way process, I also have to take the good with the bad.

Set it and forget it...
main attributes- the mutual fund company chooses your allocation based on some averages (average age of retirement, average returns of given allocations along the way) and many other statistical features.

The good in this case is you get someone else managing your allocations and the amount of education you need is also less.

The bad is you have less education in some cases, and the other bad is that its possible (highly probable?) that the allocation at various points along the way does not match the allocation you might want for a given part of your life.


Manage it every step- you need to know allocation and diversification. You need to know your life and the plan which you want to follow. You need to correlate your allocation to that plan.

The good in this case is you have complete control
The bad in this case is the only person to blame for failures is yourself and the bad is also it takes more time than some alternatives.

If the bad outweighs the good, then consider another alternative.