Outside the Box: This simple investment plan beats target-date funds

This may be like trying to persuade true believers that the Easter Bunny doesn’t really bring those candy eggs, but here goes.

About 70% of U.S. companies automatically enroll employees into 401(k)-type plans, and more than 86% of these firms now direct people’s money by default into “target-date funds” (TDFs). These financial products were little-known before Congress formally recognized them as recently as 2006.

Now that they’ve taken over, target-date funds are under fire from experts who say the products don’t work as well as simpler and cheaper investment strategies.

Citing studies by institutional advisory firm Research Affiliates, Barron’s associate editor Randall W.

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