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The Economic Perspective: “Target Funds”

Mary: I’m Mary Walden, with economist MW, welcoming you to the economic
perspective. Today’s program looks at target funds. Mike, you have followed the
investment world for years, and there seems to always be something new, at least to me.
Recently I heard the term “target fund.” What is a target fund, and why should I be
interested?
Mike: Summary Answer
a. Based on the investment principle that should move to safety in your
investments as age
b. So, have riskier investments when young, based on idea that have plenty
of time for any “downs” to be recovered
c. In contrast, as age, want to move to safety
d. Target funds automatically do this
e. Use index funds – more stocks when young, more bonds when older
f. Of course, investors can do this on their own, but may forget
g. I’m MW
Mary: And I’m Mary Walden for the Economic Perspective, an NC State Extension
program from the Department of Agricultural and Resource Economics.