This is a guest post by Mapgirl. a single, 30-something woman with a mortgage who has all her student loans paid off. Shes outside most of the demographics being written about in mainstream personal finance media. Shes hoping to fill the niche. If you like what you read (I often do), stop by her blog or consider subscribing to her RSS feed .

Recently, I came across an old article from October 2006 Kiplinger about target-date mutual funds. and I agree with most of the arguments in the article about why these funds are arent for everyone. Jim recently wrote a devils advocate post about index funds. about which you could make some of the same arguments.

First of all, target-date funds are not without risk, and youll have to evaluate them on the same basis of performance as you would any other mutual fund. You could stick your money into one of these funds and get a piddly 4% return. If youre not paying attention, youll be screwed when the targeted date comes around with an underfunded retirement. If you decide to go with a target date fund, make sure its performing to your expectations like you would with any other investment.

Second, the Kiplinger article points out that these funds are one-stop shopping and are meant to be the ONLY investment in your portfolio. However, if you already have investments, to reallocate them into these funds will have tax fallout. They say its probably not a good idea for someone already saving, but a great place to start if you are young in your 20s. Sure, if you are young in your 20s and you arent inclined to to save, nor to pay attention to retirement saving, then this is a perfectly fine investment vehicle.

The other part I cant really say better, so let me quote:

The alternative to not remaking your existing portfolio is to undermine the purpose of the target fund. Suppose, to take an exaggerated example, you throw $1 million into a target fund that has three-fourths of its assets in stocks and one-fourth in bonds. But say you have another $1 million socked away in municipal bonds. Presumably, your goal in investing in the target fund is to acquire a portfolio thats 75% stocks and 25% bonds. But if you keep the munis, you end up with a portfolio thats 62.5% in bonds and only 37.5% in stocks.

Third, they write that a 55 year old investor is 9 years away from retirement, but the target date fund has only 60% stocks in it so a target date fund isnt a very good choice. I have a way around that which is to move to the next one with a date in the future which will carry more stocks. I personally like a lot of risk and I would move to the fund designated for people 5-10 years younger than me just to keep a higher level of risk. Im surprised the article doesnt mention this as a possible strategy for being in a target date fund when you dont think its holding enough stocks.

The final point of the article is the piece de resistance. They write that most people dont have the stomach to sit in one investment for 30 years, which is the whole point of these target date funds. I would agree. I couldnt have just one iron in the fire when it comes to retirement. Seems

kind of a bad idea, but I suppose a fund like this is better than holding onto CDs or US Treasuries, which is certainly what some people do with their money.

What about you? Can you stomach holding onto one investment for 30 years? Are you in a target fund? Why?