A New CoPiloted White Paper Offers Six Considerations Before Investing in Target Date Funds

BOSTON - July 25, 2013 - PRLog -- Target date funds are a simple "set-and-forget" fund strategy being used by millions of Americans. While the use of target date funds is growing rapidly, this seemingly simple investment option has some very dangerous pitfalls.

In CoPiloted's recently released white paper, Target Date Funds: What You Should Know Before You Invest, CoPiloted’s Chief Investment Officer Michael Bolotski, Ph.D. suggests six things to consider before investing in a target date fund.

“Target date funds are much riskier than most people believe.” observes Bolotski. “Employees are being steered more and more into target date funds. At CoPiloted, we know there are better options out there.”

Even when making allowances for their one-size-fits-all approach to investing and lack of active risk controls, target date funds are not as simple as they appear.  Their assumptions around the safety of bond investments are questionable, particularly in today's record-low interest rate environment. Additionally, many target date funds charge larger fees than other plan investment options, which further reduces their long term benefit.

By simply following a few key investment principles, an investor can build a do-it-yourself portfolio using only three or four index funds that could outperform a target date fund, have lower overall costs, and enable more account diversity and less account volatility.

For investors who find the idea of creating their own portfolios challenging, or just don’t have the time or interest in doing so, the CoPiloted 401(k) management service will provide a strong alternative. After learning about each investor’s financial situation and risk tolerance, CoPiloted creates a personalized investment strategy that matches each investor’s financial situation with sound investment methods that reduce risk by diversifying into more funds and adapting dynamically to volatile markets.

Visit copiloted.com and download the white paper here (http://www.copiloted.com/Read_More/Target_Funds_What_You_...)