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For most participants of Nationwide’s Supplemental Retirement Plans, diversifying investments is important because it can help reduce the potential of overall market losses in your retirement account. If you are unsure about how to manage your asset allocation or prefer not to manage it yourself, selecting a target date fund (TDF) from the Plan’s menu of investment options could be the ideal solution.
A TDF is a mutual fund that is managed to adjust its asset allocation to become more conservative as you approach retirement — your target date. In the early years, the fund invests more heavily in growth-oriented assets such as stocks. As the target date nears, the fund gradually shifts toward more conservative investments such as bonds and cash equivalents.
Benefits of using a target date fund
- Professional management: TDF portfolio managers adjust the fund’s investments based on market conditions and its target date, helping to optimize returns and manage risk
- Diversification within a single fund: The fund manager invests to spread risk across various asset classes, which can enhance the stability and performance of your investments over time
- Automatic asset rebalancing: You don’t have to worry about making adjustments yourself as you get closer to retirement
- Convenience: Simply choose a fund with a target date closest to your expected retirement year, and the fund takes care of the rest
Things to consider about TDFs
- Retirement assets held outside of the Plan might affect your overall asset allocation and diversification, the risks you’ve assumed and the fees you’re paying
- TDF glide paths can vary widely, even among those with the same target date
- Investing in a TDF doesn’t necessarily safeguard against losses or guarantee that you’ll have enough income for retirement
For assistance in understanding how to use a TDF as an investment strategy, log in to your Nationwide Retirement Plan account at nrsforu.com to:
- Contact your Retirement Specialist
- Select a TDF or otherwise manage your investments