Lifecycle Fund Basics

first_imgGlide paths are a critical factor in fund performance and investment companies use many types of glide path strategies to determine the percentage of stock in the fund portfolio at different points in time. By Barbara O’Neill, Ph.D., CFP®, Rutgers Cooperative Extension, [email protected] Thrift Savings Plan (TSP) L (Lifecycle) Fund is a popular investment choice among service members. Also known as target date funds or TDFs, lifecycle funds are “all in one” portfolios that typically include three types of investment categories known as asset classes: stocks, bonds, and cash equivalents (e.g., money market funds). Their asset allocation weights (e.g., 50% stock, 30% bonds, 20% cash) automatically adjust and get more conservative (i.e., lower stock percentage) over time without any need for investors to take action.Lifecycle funds typically have a date in their name such as the “2040 Fund” or “2050 Fund” and investors chose a fund with a date that matches, or is close to, their expected year of retirement. Dates are typically spaced out at 5- or 10-year intervals (e.g., 2030, 2035, etc.), depending on the lifecycle mutual fund provider. The TSP currently has five available lifecycle fund options: L2020, L2030, L2040, L2050, and L income.Lifecycle funds, as an investment category, were created in 1994 and have gained popularity in the last decade as a qualified default investment alternative (QDIA) for tax-deferred retirement savings plans such as 401(k)s and, more recently, TSP accounts for new federal employees. Some employees who are enrolled in employer retirement savings plans fail to provide instructions for investing their deposits. In these situations, employers invest their plan contributions in the default investment.Below are some key facts about lifecycle funds:They generally only make sense if they include the bulk of someone’s retirement savings. Otherwise, their asset allocation is altered by “outside” investments, which contradicts the whole premise of using them. “To” glide paths assume that retirement age is the target date and, at that point, the portfolio’s stock percentage weighting and investment mix remains static. “Through” glide paths continue to decrease the stock percentage for a designated number of years after the target date before leveling off. A defining characteristic is their glide path, which determines the asset allocation mix over time. Pictured as a descending staircase, the glide path indicates how the stock percentage decreases over time.center_img The “landing point” is the point in the glide path where a lifecycle fund reaches its lowest stock percentage allocation. Not surprisingly, funds with different glide paths and landing points have very different risk profiles. When a TSP L fund reaches its target date, it is automatically rolled into the L income fund, which is the most conservative L fund with a focus on capital preservation. Lifecycle funds are not without controversy. Performance issues during the 2007-2009 financial crisis brought to light the fact that many were not as conservatively positioned as their names implied. This led to new disclosure rules by the U.S. Securities and Exchange Commission in 2010, including better disclosure of glide paths and portfolio composition.Do you want to know more about lifecycle funds and the TSP Lifecycle (L) Fund? The eXtension Military Families Learning Network held a 90-minute webinar on target date funds in 2015. To view the webinar video archive, visit the event page.last_img read more

9 days agoSheffield Utd boss Wilder hails strength of Arsenal squad

first_imgSheffield Utd boss Wilder hails strength of Arsenal squadby Paul Vegas9 days agoSend to a friendShare the loveSheffield United boss Chris Wilder knows they face a huge test against Arsenal on Monday.Wilder was speaking at his pre-match press conference this morning ahead of Monday night’s game.He said: “If you look through their team, they don’t get to where they are by being bang average.“Even players like David Luiz and the captain of Switzerland [Granit Xhaka]. The Premier League player of the month [Pierre-Emerick Aubameyang]… Lacazette looks like being fit and available, and they spent £60m on a winger in the summer [Pepe]. “It’s elite football and they’ve also got some players not even getting in the squad who are quite tasty, too!” About the authorPaul VegasShare the loveHave your saylast_img read more

Grange Sad at Passing of Guitarist “Bo Pee” Bowen

first_imgStory Highlights Bowen, 62, was a sought-after touring and session guitarist. The Minister of Culture, Gender, Entertainment and Sport, the Honourable Olivia Grange, has expressed deep sadness at the sudden passing of famous guitarist Winston “Bo Pee” Bowen who passed away on Tuesday. The Minister of Culture, Gender, Entertainment and Sport, the Honourable Olivia Grange, has expressed deep sadness at the sudden passing of famous guitarist Winston “Bo Pee” Bowen who passed away on Tuesday.Bowen, 62, was a sought-after touring and session guitarist.Minister Grange described Bowen as a one-of-a-kind personality and a special musician.Minister Grange said:“Winston emerged out of the West Kingston Culture Group of which I was a part and he was a member of the New Vibrations Band along with Dean Fraser, Ronald Robinson and Chico Chin. Many other musicians and singers came out of that experience at a time when the music was just finding its feet. The struggle was real but people like Winston Bowen made it easier because of his wonderful character and his dedication to the music. He provided musical support for the who’s who in Reggae music and he is now sorely missed.“I wish to extend my deepest condolences to his widow Lorna, his children, grandchildren and the wider family. May his soul rest in peace.” Minister Grange described Bowen as a one-of-a-kind personality and a special musician.last_img read more

Uh Did The Selection Committee Actually Get It Right

Embed Code FiveThirtyEight More: Apple Podcasts | ESPN App | RSS | Embed Welcome to the return of Hot Takedown, FiveThirtyEight’s sports podcast! On today’s episode (March 19, 2019), we discuss Mike Trout’s deal before we jump into March Madness. It looks like conference tournament wins didn’t help out with bracket seeding for a few key men’s teams, and Jay Williams of ESPN’s “First Take” makes the case that the tourneys shouldn’t be considered. We also ponder why UConn was awarded a second seed in the women’s tournament — and if geographic advantage is an appropriate consolation.In our second segment, we weigh recent moves in NFL free agency and hear Colin Cowherd of Fox Sports Radio contemplate the role of culture in structuring a young team.Finally, our Rabbit Hole of the week is a deep dive into Geoff’s very specific ideas of what makes a great NCAA mascot.Here’s what we’re reading this week:In the wake of Mike Trout’s new historic deal, we’re looking back at Neil’s piece reflecting on Mike Trout’s dearth of championships.Our March Madness guides for both the men’s and women’s bracket — which wouldn’t be complete without our full predictions for the tournaments.Kevin Clark put together a great retrospective on the NFL free agency period for The Ringer. read more

Kane to be rested in Englands friendly against Switzerland

first_imgAccording to Gareth Southgate, England striker Harry Kane could be rested for their friendly match against Switzerland on Tuesday.Southgate is not ruling out the possibility of giving Harry Kane a break when his England team faces Switzerland on Tuesday. BBC Sport reports.Kane won the golden boot at the World Cup but drew a blank as England lost 2-1 to Spain at Wembley on Saturday.Jadon Sancho, Borussia DortmundCrouch: Liverpool could beat Man United to Jadon Sancho Andrew Smyth – September 14, 2019 Peter Crouch wouldn’t be surprised to see Jadon Sancho end up at Liverpool one day instead of his long-term pursuers Manchester United.“Harry falls in the category in which we have several players where we have to watch how much they play,” said Southgate.“It was a short break with no pre-season and everybody was back earlier than I am sure everybody would have expected for club matches, although that is entirely understandable.“We talked a bit after the World Cup about the demands of the modern player. Everybody has got to play a part in that but the clubs own the player and they have got to do the right thing for themselves.”last_img read more