7. “Set It and Forget It” Allocation Drift

Investing in a Target Date Fund (TDF) is a great “set it and forget it” strategy. However, a common error occurs when investors mix a TDF with other funds.

For example, if you put 50% of your money in a “2030 Target Date Fund” and 50% in an S&P 500 fund, you may be unintentionally doubling your risk. The TDF already owns the S&P 500. By adding more on top, you are defeating the TDF’s purpose of carefully managing your risk as you age.

Action Step: If you use a Target Date Fund, it is usually designed to be 100% of your portfolio. If you want to manage your own allocation, ensure you rebalance annually so your stock/bond mix matches your risk tolerance.