Originally Posted by
SwampFoxx
I’ve heard several guys say to stay away from investing in the retirement target date positions offered by Schwab. Anybody mind explaining why? Also, can someone explain what the difference is between the B fund and C fund. I’ve tried to research it and all that I can come up with is that we’re being paid our 16% from two different sources??? Something like 9% coming from the B fund and the other 6% coming from the C fund??? How or if that effects my account... I don’t know.
For a post bankruptcy new-hire, the B and C are effectively the same thing in practice. (The C was added when the pension was obliterated.)
If you don't want to manage
anything,
ever, the target date funds are perfect. They are a basket of low-cost and automatically balanced index funds. Literally set it and forget it.
Individual index funds have lower fees, however, if you want to build your own portfolio. Fees can add up over time.
Compare:
PRAP 2040 Target Fund (pdf)
PRAP Total US Equity Index Fund (pdf)
One big knock folks have for the target date funds is the fact that they get 'conservative' early (the mix of stocks vs bonds vs cash). However, one can simply select a different target for a different mix as desired.