I recently saw a statistic that assets in target date funds are now at $481 billion. This is not surprising considering almost every 401(k) plan in America offers target date funds for their employees. Many investors choose these funds due to their ease of use. You simply select the fund that is closest to your planned retirement year and the fund will automatically become more conservative the closer you get to that date.

But it's not quite that simple. Consider: not all target date funds are created equal. For instance, PIMCO's 2015 fund is 26% stocks and the rest in bonds and cash, while T Rowe Price's 2015 fund has 61% in stocks. The industry average is about 50%. This demonstrates a need to look past the date and truly understand the fund.

The other issue with these funds is the idea that they become more "conservative" over time. Conservative is a very subjective term. For instance, in an environment where bond prices are historically high, is it really appropriate to constantly increase your exposure? Maybe, maybe not. Increasing bond holdings now may not necessarily mean becoming more conservative.

On the other hand, you don't really need to complicate your investment process. You might simply select a few funds and rebalance them periodically. That way you won't wake up one morning and realize that your investment is nothing close to what you believed it to be.

Sam DiNorma

DiNorma, Samuel

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).