The trouble is, you got to pay for someone to do it for you.
How much are you paying for the service?
A lot. Let's take a look at 2 examples.
BlackRock's LifePath 2040 has a projected 10-year expense of $2,478 per $10,000 invested.
If right now you are at age 40 and you put $300,000 in it, in 10 years you would have paid BlackRock $74,340. Do you get better return with this service? In the past 5 years its average return was only 1.9%. What do you get from its service? A gradually declining portion of your portfolio invested in the stock market, that's it!
Vanguard is known for its low cost approach to investment, indeed its Target Retirement 2040 fund has a 10-year cost of only $230 per $10,000 invested. But why pay someone else $230 when you can do it by yourself?
The Vanguard Target 2040 invests in the following index funds right now:
- 62.7% in Vanguard Total Stock Market Index Fund (VTSAX)
- 27.2% in Vanguard Total International Stock Index Fund (VTIAX)
- 10.1% in Vanguard Total Bond Market Index Fund (VBTLX)
If you have $100,000 to invest, you can open a Vanguard account and achieve the same Target 2040 fund's results, but only with a 10-year cost of $109 per $10,000 invested!