How to Manage a Lifecycle Fund

Most people invest in stocks and bonds in order to facilitate retirement. Designed specifically for retirement needs, lifecycle funds have become increasingly popular in recent years. With flexible investment options, lifecycle funds are a great way to secure your future. But they may not be for everyone.

Instructions

Difficulty: Challenging

Things You’ll Need:

• List of lifecycle funds
• Financial plan
• Financial adviser

Invest in Lifecycle Mutual Funds

1. Sit down with your financial adviser and draft a realistic, easy to manage retirement plan. You'll need to consider your age, lifestyle goals and projected income in order to develop a reasonable strategy.
2. Based on your financial plan, decide which path would best suit your needs. If you're close to retirement, you may need a more aggressive approach. If you've got 30 to 40 years of hard work ahead of you, you may find you have more options.
3. Take a look at the different lifecycle funds available. You can find them by browsing the finance section of your local newspaper or by looking on financial Web sites.
4. Determine your risk tolerance. If you're running out of time to invest in your retirement, you may not want to pursue an aggressive lifecycle fund.
5. Make a list of all of the qualities you want in a lifecycle fund. The more specific you are, the easier it will be to find the perfect fund for your investment needs.
6. Choose a fund. You'll want your fund's prospectus on hand as well as your itemized list before you make your decision.
7. Contact the fund to find out how you can purchase shares. The optimal situation would be to purchase directly from the fund. When you buy through a broker or fund supermarket, you end up paying more up front.
8. Stay on top of your portfolio. You need to carefully manage your fund to ensure you're getting everything you need out of it. It will also help you re-balance your fund as your financial needs change.

Tips & Warnings

• Lifecycle funds are designed to self-balance at set intervals, which can save you time and help you manage your portfolio easier.
• It may be difficult to find a lifecycle fund that fits in with your retirement goals. You may find that potential investments end either too soon or too late.
• Some investors feel lifecycle funds shortchange investors by offering limited fund choices. International funds, value stocks and small company funds are among the most commonly overlooked areas.