Target-Date Funds Prove You Should Embrace Risk
In each issue of Trade of the Day, I try to introduce you to one unique concept that applies to winning trading in The War Room – without wasting a second of your time.
After all, why study for 20 hours to get an A when you can study for five hours and get the same A? It’s 15 wasted hours to achieve the same result.
That’s why each Trade of the Day issue can be consumed in five minutes or less, yet each one still provides all the valuable intelligence you need to supercharge your daily trading returns.
With that in mind, let’s talk about risk…
We can all admit that the 2018 stock market performance was truly awful. Here’s what happened in 2018:
- The S&P 500 fell 6.2%.
- The Dow fell 5.6%.
- The Nasdaq fell 3.9%.
This was the worst annual performance for all three major market indexes since 2008. But no example punches you in the gut like the performance of target-date funds.
You see, a target-date fund is a wealth management tool designed to help you invest based on your desired date of retirement.
- If you want to retire in 2025, there is a fund designed for that.
- If you want to retire in 2030, there is a different fund for that.
And so on…
All told, there are 664 of these target-date funds available right now. Together they hold more than $1.1 trillion in assets. With that in mind, get this (from Barron’s):
It has been a tough year for investors in general, but investors in target-date funds have more reason to be wondering what went wrong. Not one of 664 target-date funds on the market, which together hold more than $1.1 trillion in assets, has had a positive return, according to Morningstar.
Every. Single. One. All losers.
This absolutely boggles my mind. These funds are designed to help people retire, yet not a single target-date retirement fund was positive in 2018. How can this happen?
It’s because they’re avoiding risk.
Yes, you heard that correctly. The way people are taught to approach risk is all wrong.
Avoiding risk blinds you to opportunity. And by doing so, it causes you to lose money.
By contrast, since The War Room launched in May, we’ve had 152 winners out of 209 trades, all while embracing risk.
Action Plan: The War Room is dramatically different from any other trading platform. In our live trading recommendation portal, we welcome risk. We seek it out. We embrace it! We’ll show you how to do so too – in real time – each day in The War Room.
About Bryan Bottarelli
Bryan graduated with a business degree from the highly rated Indiana University Kelley School of Business, and his first job out of college was trading stock options on the floor of the Chicago Board Options Exchange. He was mentored by some of the country’s top floor traders in the heart of the technology boom from 1999 to 2000, where he learned to identify and implement some of his most powerful trading secrets. Now he shares his secrets with a group of elite traders. We will be republishing some of his highly sought after content from his free e-letter, Trade of the Day.