For those researching where to invest 100K, this article shows why investing this sum of money in a lifecycle fund such as the Vanguard Target Retirement 2050 Fund (MUTF:VFIFX) is an excellent decision due to maximizing returns at the appropriate times and incredible simplicity.
Lifecycle Funds: the Amazingly Easy Solution of How to Invest 100K
Researching how to invest 100K can seem complicated, but it absolutely does not have to be. Lifecycle funds (also called target date funds or age-based funds) are the simplest, most hands-off solution to investing your money for life. If you are interested in the best way to invest 100K until you retire with minimal effort, these are the way to go.
The first step is to choose your retirement date. Let’s say you want to retire in the year 2050 and want a fund with low expenses. An outstanding choice is the Vanguard Target Retirement 2050 Fund (MUTF:VFIFX). It is a no load fund with an expense ratio of 0.18%. This super low fee means you’ll get higher returns over time, as research overwhelmingly supports low fees.
The fund manager changes the asset allocation for you as time goes on, making the portfolio more conservative as you approach retirement. This is why these funds are so worry-free and are a great choice for the best place to invest 100K. If you’re retiring in 40 years, it makes sense to have a high risk, high return portfolio because you can accept large fluctuations at a young age when you don’t need the money. As you approach retirement, it makes sense to move away from a high-risk portfolio to one with smaller fluctuations because you will be withdrawing the money soon. Reducing risk as you approach retirement is one of the most basic investing money tips, and these do it for you automatically.
Example: the Fidelity Freedom 2050 Fund Adjusting Over Time
The Fidelity Freedom 2050 fund’s 2014 holdings are: 63% domestic equity funds, 27% international equity funds, 10% bond funds, and 0% short-term funds. In 2050, it will hold 37% domestic equity funds, 16% international equity funds, 35% bond funds, and 12% short-term funds. In short, it gradually moves away from risky stocks towards the less risky bond fonds and short-term funds. A truly autopilot way to invest 100K.
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“Asset Allocation Funds: Fidelity Freedom ® Funds.” Fidelity Freedom Funds. N.p., n.d. Web. 06 Dec. 2013.