Another fad in investing, like “smart” beta, is target date funds that allocate assets in an investor’s portfolio by the investor’s age. Target date funds follow an ancient concept: put most of your money, say 90%, in the stock market while you’re young because you’ll have the time to recover from market collapses. But as you get older you have less time to recover so you reallocate to bonds and cash while keeping just half your funds in the market. In the past, most advisers recommended getting completely out of stocks and into bonds, but the ridiculously low returns on bonds has forced older people to take greater risks and stay in the stock market longer.
