Think like a Target-Date retirement fund

How do you invest successfully in the stock market? Answer: Buy low, sell high! Not a novel idea, but one that is consistently overlooked. More often than not, long-term investors are employing the opposite strategy – buying high and selling low – which typically results in an overly-anxious and underwhelming investment experience. Not to mention, a less desirable retirement lifestyle…

The concept of buying low and selling high is a strategy employed by target-date retirement funds. Here in Canada, many employers utilize these types of funds in their Defined Contribution Pension Plans offered to their employees.

In short, target-date retirement funds invest in a combination of stocks and bonds. The longer the duration to retirement, the higher the percentage exposure to stocks. The shorter the duration to retirement (or if in retirement), the higher the exposure to bonds. Over time, the fund automatically reduces the stock exposure and increases the bond exposure as the “target retirement date” approaches.

While invested in the fund, investors don’t have to worry about how it is being managed through daily, weekly, monthly, even annual volatility. The fund adjusts its weightings (percentage between stocks and bonds) automatically by increasing the stock exposure when the market drops and reducing the stock exposure when the market goes up. No timing the market. Just staying true to the target percentages of stocks and bonds.

This, my friends, is called “rebalancing” – an unemotional and simplest method to buy low and sell high. At The McClelland Financial Group, we employ rebalancing in the management of our clients’ portfolios. The only downside with target-date retirement funds is that they don’t necessarily accommodate its investors’ unique situations or timeframes. Through our investment management process, we can provide the flexibility of maintaining a more aggressive portfolio (if necessary) as the target retirement date approaches. Whether it’s a target-date retirement fund or regular rebalancing, buying low and selling high has never been easier.


Carlo Cansino FMA, FCSI, CFP
Senior Financial Planning Advisor
The McClelland Financial Group of Assante Capital Management Ltd.


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