Target-date funds in CanadaTarget-date funds in CanadaTarget-date funds in Canada

Learn how some Canadian investors use the strategy in switching target date funds to contract higher profits. Learn more.

Saving money for retirement is a smart move. It’s important to start saving as soon as possible so that you have enough money to live off of when you stop working. However, most people don’t save enough, so it is important to know the best way to save money for retirement. 

There are many different ways to save money for retirement, and some of them are more effective than others. The best way to save money for retirement is to contribute to a RRSP or similar retirement plan. The reason is because the government will match up to your contributions up to a certain limit. This is one of the most effective ways to save because it takes the guesswork out of saving. 

If you are worried about saving enough on your own, you can also save by investing your money in the stock market. The stock market is a lot more volatile than a RRSP, so you need to understand the risks involved.

There’s so much that can happen between now and when we actually retire, and it can be easy to lose sight of the goal. What’s important is to take baby steps toward saving money for retirement. It doesn’t have to be a huge amount of money, and it doesn’t have to happen all at once. Even saving just $25 a month will make a difference in the long run because it’s compounded. The more money that you save into your retirement account, the more interest you will earn and the more money you’ll have once you retire. 

Overview

Target-date mutual funds are funds with a stated retirement date. This is a mutual fund or an exchange-traded fund that automatically rebalances its holdings over time to match the retirement date. This can help investors reduce their risk, reduce their time, and save on taxes.

If you’re already familiar with the target-date mutual fund family of investment products the blog post below will provide you with a great head start on understanding what they are and how they work.

What is a target-date fund?

Target-date mutual funds are mutual funds that invest in a variety of asset types, usually with an asset allocation target date – and it is popular particularly for Canadians. Their objective is to provide investors with the portfolio of assets that is best suited for the time frame in which they are investing. As the target date nears, the funds will gradually decrease. Unlike a traditional mutual fund, the target-date fund does not have a well-defined portfolio, but instead will have a diverse portfolio of assets for some people. 

Moreover, target-date funds can also be called as “2040 Target-Date Fund,” “2055 Target-Date Fund,” “2050 Target-Date Fund,” and so on – depending on when you prefer to spend it or when you are going to retire. Now, remember that if you have a 2060 target-date fund, this is preferably for younger investors. 

Importance of having a target-date fund

A target-date fund is a good way to invest for the longer term in a tax-advantaged manner. It is a mutual fund that invests in a mix of bonds and stocks, relying on its portfolio manager’s judgment to make long-term investments based on your age and date of birth. It is important to have a target-date fund because it allows you to save for the future without any risk of losing money.

Is having a target-date fund a good investment?

Yes, having a target-date fund is definitely a good investment. An individual’s retirement savings are the most important investment that he or she will ever make. Financial security is a top priority when you’re trying to plan for your future, so it’s important to find a good investment vehicle to help you achieve your goals. The target-date fund is a great way to get started toward your retirement savings goals because it has a fixed goal date. This fund also offers a low-cost investment option in an otherwise complicated market.

Some factors to consider when deciding if a target-date fund is a good investment include your time horizon, risk tolerance, and financial goals.

The Best Target-Date Mutual Fund or Exchange-Traded Fund (ETF) in Canada

These days, everyone is looking for a low-cost investment option. One option is to invest in a target-date mutual fund or exchange-traded fund (ETF). A target-date mutual fund or ETF generally has an initial investment that is lower than an index fund and a fee that is lower than most actively managed funds. And to help you get on the right foot, here are The Best Target-Date Mutual Fund or Exchange-Traded Fund (ETF) in Canada!

1. Evermore Retirement ETFs

The funds offered by Evermore Retirement ETFs are one of the best target-date mutual funds or exchange-traded funds in Canada because they are well-rounded, low-cost and offer a wide range of investment options.

In addition, the fund has a range of target-date funds for different types of investors. The fund is also available for investors who have a short time frame, as it has a 5 to 10-year track record.

However, you have to keep in mind that Evermore Retirement ETFs keeps their MER at 0.45%. This is substantially low if you compare it to other ETFs available in the country. 

2. Fidelity ClearPath Retirement Portfolios

Fidelity ClearPath Retirement Portfolios is a Canadian mutual fund that offers a wide variety of investment options for retirement. The portfolio is run by Fidelity Investments Canada, a division of Fidelity Investments that specializes in providing financial advice to investors. The fund is designed to provide an investment strategy to Canadians of different ages based on their goals and risk tolerance.

Also, Fidelity has a very large asset and is known globally so it can offer a strong presence in the near future. The MER available in Fidelity is 1% – this percentage is considered high knowing that some MER in the country is within the average 0.5% bracket. 

ClearPath Retirement Portfolios is designed to help you reach your retirement goal by providing a consistent and reliable stream of income that is tailored to your risk tolerance level.

3. RBC Retirement Portfolios

RBC Retirement Portfolios is a Target-Date Mutual Fund that was introduced in Canada in 2013. It is a mutual fund or an ETF (Exchange-Traded Fund) that is designed to provide the investor with a well-balanced portfolio over time. This retirement portfolio is presented by RBC Global Asset Management which has over $560 billion worth and has almost 2,000 employees in countries like Canada, the United States, Europe, and Asia. 

With RBC Retirement Portfolios, you are able to diversify your portfolio with the benefits of a strategy that provides a phasing target date for your retirement and is flexible enough to accommodate the time when you retire. The MER is between 0.80% to 0.90% which is considered more than average. 

4. PH&N LifeTime Funds

When thinking about investing in a Target-Date Mutual Fund or Exchange-Traded Fund (ETF), it’s important to know that there are no clear-cut rules. The best ETFs are those that meet your long-term needs with a reasonable risk profile. Some of the best ETFs in Canada include PH&N LifeTime Funds. PH&N LifeTime Funds has a reasonable risk profile, and the portfolio is designed to grow with the investor over time.

The MER available with PH&N LifeTime Funds is between 0.80% to 1.2% – making it one of the highest MER in the country. As a result, investors can expect predictable exposure to risk over time. The fund is also designed for investors who are looking for a long-term investment that provides stability and safety, but also flexibility.

Final thoughts

Target-date funds are a great option for Canadian investors who want to avoid tracking individual stocks and making investing mistakes. These funds allow investors to own a diversified group of stocks that automatically rebalance their portfolio and offers a degree of risk management.

Target-date funds provide an innovative way of investing and help you to achieve your financial goals by following a rule-based approach. We hope you enjoyed our post on target-date funds in Canada. We have some general information on how they work, as well as some great tips on how to use them!