Is a Target Date Retirement Fund for You?

tracking your money

All of my 401 K money is in a target date fund. I’ve haven’t talked about my this strategy for a couple of reasons. The choice illustrates my lack of sophistication when it comes to investing. Plus some writers have expressed negative opinions about this investment choice.

This type of fund may be the right choice for you so let’s talk about it together without embarrassment.

What is A Target Date Fund?

A target date fund may also be called a lifecycle or age-based fund. It is a mutual fund consisting of a mix of assets (stocks, bonds, etc.) that becomes more conservative over time based on the target date.

Typically the target date is included in the name. Investors selecting the Vanguard Target Retirement 2020 Fund most likely plan to retire during or close to the year 2020. The year may be adjusted based on tolerance for risk. I chose a fund later than I plan to retire because it was more aggressive.

Until target date funds were offered at my employer, I muddled my way through selecting funds and trying to keep them balanced based on my risk tolerance. I’m sure I lost a lot of potential earnings with this haphazard method.

Pros of a Target Date Fund

tracking your money

There are many reasons people like me choose this type of mutual fund. Target date funds are simple and that appeals to us. I don’t have to decide which funds from the list of options to pick let alone worry divid

Re-balancing is automatic and handled by the fund manager. No need to move funds around because the ratios are out of whack.ing my contribution among them.

Lastly, it’s hands off once you get started. Just pick the desired target fund and you don’t have to think about it. I don’t worry because an individual fund might be doing bad this week resulting in no stress.

Cons of a Target Date Fund

I alluded to one of the problem with lifecycle funds. They don’t take the risk tolerance of individual investors into account. The assumption is that all people planning to retire in 2030 (or whatever date) want the same allocations. The way around this problem is to select the fund with the desired balance instead of by date.

Another concern is the one size fits all approach. Everyone in the fund has the same stocks, bonds, etc. If you want an unique portfolio, this isn’t the right option for you.

Be selective in choosing the fund because some consist of funds from a single company (for example all Fidelity or all Vanguard). Diversification is important to ensure all your eggs aren’t in one basket.

When comparing my annual returns to some of my friends, I’m comfortable with my decision to invest in a target date fund. I usually beat or come close to their returns with a lot less stress. Maybe it’s also the choice for you. What’s your retirement fund investment strategy?

Bank Scams and Fraud: What You Should Know

Portrait of a depressed young businessmanTo protect yourself from bank fraud, you should understand it in its simplicity and complexity. Since bank fraud can apply to any machinations of financial institutions or any scam that besets them, the exact modality of bank fraud can be incredibly complex. Let’s examine two examples of bank fraud and how you can protect yourself.

Bank Fraud by Banks

What is bank fraud? By in large, financial institutions are honest, and law abiding, but when they do decide to break the rules, the consequences can be monetarily staggering. One of the most infamous bank frauds in history was uncovered in 1991 when the Bank of Credit and Commerce International (BCCI) was raided to find about $10-$17 billion in fraudulent activities.

The fraud took place over a couple decades and used an intricate, international web of banks and shell companies that created subterfuge for their misdealing. BCCI used dubious lending, fake records, rogue trading, unregulated risk management, money laundering, and illegal contracts.

BCCI’s fraud, as large scale as it was, pales in comparison to the recent LIBOR (London inter-bank offered rate) banking scandal. This scandal, revealed in the spring of 2012, is further reaching than other bank frauds because LIBOR is used to setting interest rates on more than $800 trillion dollars — giving it global significance in the finance industry. Employees at Barclays Bank are accused of working in collusion with LIBOR officials to set the rate so that they could make short-term gains on trades they had made in the market. The resolution of this bank fraud will be tied up in the courts for years to come, but with more than 20 different banks, that lost billions of dollars, cleaning up this mess will be long term.

Unfortunately, for the average consumer, there’s not much to be done to prevent bank fraud perpetrated by banks. The best thing to do is research your financial institutions history of bank fraud, keep your own bank records, report any suspicious bank dealings to authorities, and know your rights in dealing with fraudulent banks.

Bank Fraud by Scammers

Banks as institutions are defrauded when someone or an entity purposely misrepresent themselves (through identity theft or forged documents) to obtain funds from the bank. Although security measures have improved over the years, crooks and scammers also continue to refine their methods to keep up. As a consumer, the number one way for you to protect yourself and your bank from bank fraud is to safeguard your personal information.

Crooks and scammers surreptitiously gather confidential consumer information to commit this type of bank fraud, from phishing and ATM skimming to online shopping and file sharing. Plus there are a litany of ways fraudsters can use your information once they’ve obtained it, all of them costly to the bank and possibly your accounts.

Never give your personal information to someone or a website that can’t confirm its identity and credibility.

Meal Plan to Save Money on Your Food and Groceries

meal planning grocery savings

Sometimes what’s convenient isn’t what’s cheap, so plan ahead. Unless you’re sticking to a dollar menu, it’s hard to spend less $10 on quality, filling meals when you’re looking for something quick and easy to quell your appetite. So don’t wait until your stomach is cramping to think about the next meal. Plan ahead!

Steals and Deals at Grocery Stores

Check out what sales are going on at the grocery stores in you area. Typically, grocery stores mail promotional newspapers to residences to highlight current sales, so scan over these to get an idea of which recipes may be bargains for the week.

When flipping through these papers, reading the rest of your mail and walking down the grocery store aisles, also be on the lookout for coupons because they are essentially free money.

Bulk Buying 

Buying mass quantities of products can save you a lot of money, but be careful. There’s an art to it and it will cost you if you don’t keep a few things in mind.

  • Is it perishable? Toilet paper and soap are no problem, but food can be a different story. If you can use it eventually then stock up, but be wary of anything that will expire.
  • Can you freeze it? Just because it’s perishable doesn’t mean you’ll lose money buying in bulk. Meat can be a great investment as long as you have the space in your freezer.
  • Will you use it? Some bulk deals sound so good that you can’t say no, but take a moment to consider whether or not you will ever finish eating that 4 pound bag of Cheezy Poofs or if you know enough recipes to spice up that 30 pound bag of potatoes.

Seasonal Savings

Seasonal savings go beyond deals on Halloween candies in November and Christmas wreaths in January. Fruits and vegetables go in and out of season and are priced accordingly.

So wait for spring to make that delicious artichoke dip and consider whipping up a sweet potato casserole in winter rather than summer. Cutting down on small costs like this will add up in a big way.

Thoughts on Saving Money on Your Groceries

Just remember that convenience costs, so plan ahead. If you follow these three rules, you’ll soon be counting all the money you’re saving. You may also find that planning ahead takes the stress out of feeding yourself and the family.

Melissa is a guest author from Food on the Table and expert on meal planning strategies that help save money.  

Photo Credits: jeffm211 and Celine.Q

Trying Out BJ’s Warehouse Club for Free

money refinance

I recently went through the mail and noticed a trial membership offer from BJ’s for 60 days. For people debating whether or not a warehouse club membership is a good deal, using a trial membership can be a great test run.

With the trial period open now, I wanted to share some highlights of a BJ’s Wholesale Club membership. Hopefully, it’ll help decide if it’s the right move for you.

Membership Costs and Benefits

Like other warehouse clubs, there are different tiers of membership, each with their own benefits.

Inner Circle ($45/year)

Here are some of the benefits:

  • Household and 1st Supplemental Card — No Additional Charge
  • Up to 3 Supplemental Cards ($20 each)

Business ($45/year)

Here are some of the benefits:

  • Household and 1st Supplemental Card — No Additional Charge
  • Up to 8 Supplemental Cards ($20 each)
  • Resale Privileges

BJ’s Rewards ($90/year)

Here are some of the benefits:

  • Household and 1st Supplemental Card — No Additional Charge
  • Up to 3 Supplemental Cards ($20 each)
  • 2% Payback (up to $500/12 mo.)
  • Dedicated Member Care Representatives
  • $20 off a complete pair of eyeglasses from BJ’s Optical

All memberships also include online shopping options and a 100% money back guarantee. BJ’s also lets you use manufacturer coupons for additional savings, something that I can’t do at Costco. I also notice that they take all major credit cards, which makes it more convenient for many shoppers.

Please check their site for details on all their benefits.

Additional Benefits

Besides the in-store savings, BJ’s has some deals on various services that many people use.

  • Auto & Home Insurance
  • Car Rentals
  • Cell Phone Deals with Verizon Wireless
  • Extended Warranties
  • Flights
  • Health Insurance
  • Optical
  • Tire Center

Depending on your needs, this can be a fantastic deal for a family.

Trial Membership Details

The membership gives you an Inner Circle membership privileges (with the exception of online shopping). you’ll need a photo ID to sign up. Check your receipts to see the expiration date of your trial. Only one membership per household is allowed.

Thoughts on BJ Wholesale Club

Don’t just assume that a warehouse club membership can save you money. Double check and use a trial to see for yourself if membership is a good idea for you.

I’d like to get some firsthand reviews of current and former members of BJ’s. How would you rate the saving you get on average? What’s the best feature of your membership? What’s the worst?

Photo Credit: MattHurst