Reply to Why do target date retirement funds have bonds?

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[quote=Anonymous]The presence of bonds is intended to reduce volatility.  The percentage is very low because of the long timeline in this case, which should allow the fund to ride out intermediate and shorter market swings.  As a practical matter, an allocation of anything to just a few percent of an overall portfolio will contribute little with regard to either returns or to portfolio stability.  Your fund may see returns which are ever so slightly better or worse than a 100% equity portfolio over any given period of time, but not enough to meaningfully move the needle.

So I would either not worry about it, or would invest in something else which suits your personal risk tolerance and timelines better, perhaps a S&P500 ETF analogous to the TSP C Fund.

That said, you'll need to personally have a plan and the discipline to execute it on schedule, to gradually adjust your glide path over time if you want to benefit from the premise underlying target date funds - that they automatically become progressively more conservative as their investors get closer to retirement age, reducing the risks associated with potential market declines at or near retirement.  [/quote]

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