"Target-date funds gradually shift more resources from stocks to bonds over time. These funds aim to reduce an investor's risk as they get closer to the target retirement year. However, this cookie-cutter approach isn't suitable for everyone, and going too deep into bonds may make it difficult to keep up with inflation. Furthermore, some target-date funds have lofty expense ratios, which makes it even harder to deliver enticing returns."
"The Invesco QQQ Trust ( NASDAQ:QQQ) mirrors the Nasdaq Composite. It's a growth-oriented ETF with a lot of exposure to tech stocks, especially the Magnificent Seven. Investors shouldn't put all of their eggs in one basket, and they especially shouldn't go all-in on a growth ETF. However, it's good for every retirement portfolio to include some growth. QQQ is optimal for any funds that you won't have to touch for at least three years."
Target-date funds gradually shift allocations from stocks into bonds as the target year approaches to reduce risk. A uniform glide path can be unsuitable for individual circumstances, and excessive bond exposure can hinder the portfolio's ability to keep pace with inflation. Elevated expense ratios on some target-date funds further erode potential returns. An alternative is to allocate across three ETFs tailored to needs, combining a growth-oriented ETF, a total-stock-market ETF, and bond exposure. The Invesco QQQ Trust offers concentrated tech-driven growth with a 0.18% expense ratio, while Vanguard's VTI provides broad-market exposure with a 0.03% expense ratio and a modest SEC yield.
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