How T Rowe Price Retirement Funds Work
T. Rowe Price Retirement Funds, a Target Date asset allocation option, are designed to take you through retirement.
The asset mix of each Portfolio is based on a target date. This is the expected year in which participants in a Portfolio plan to retire and no longer make contributions. A team of asset allocation professionals adjusts each Portfolios make-up over time to ensure a noticeable and steady shift from equities to fixed income in the years leading to retirement.
The T. Rowe Price Retirement Funds are composed of actively managed funds and are managed to help retain your potential for growth, and aim to preserve the value of your assets at and after retirement.
As each Portfolio glides over time, its asset mix is adjusted. Looking at the image below:
- Greater emphasis on aiming to provide an income stream in your retirement years
- Actively managed T. Rowe Price funds with broad diversification
- The Funds invest in a mix of equities and bonds that gradually becomes more conservative as the target Retirement Date nears
- At the target Retirement Date, the Funds allocation to stocks is anticipated to be approximately 55% of its assets
- The Funds exposure to stocks will continue to decline until approximately 30 years after its target Retirement Date, at which its allocation to stocks will remain at approximately 20% and the remainder will be invested in bonds
Two Evenly Matched Brokerages Built On Their Own Funds
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T. Rowe Price and Vanguard are similar in that they both focus on long-term investing through their own funds. In addition to their funds, however, you can also have a linked brokerage account. Because of this focus on their own financial products, neither brokerage platform is particularly strong compared to some of the leading online brokers, but they do provide the ability to trade stocks, ETFs, mutual funds, and fixed income. Well look at some of the key differences between these brokers to help you determine which one is the right fit for your investment needs.
- Account Minimum: $2,500
- Fees: No commission online or by mobile app, accounts with smaller balances pay more for options and broker assisted trades
- Best for: Those looking for full-service wealth management
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T Rowe Price Blue Chip Growth: Hold
- Expense ratio: 0.68%
- Rank among the top 401 funds: #20
- Best for: Long-term growth, but a new manager has us pushing the pause button
T. Rowe Price Blue Chip Growth has long been one of the best T. Rowe Price funds widely available in 401 plans, but a recent change gives us at least momentary pause.
Larry Puglia retired in October as longtime manager of this blockbuster fund after nearly 30 years. Since he launched TRBCX in June 1993 , it has delivered a 12.4% annualized return, which handily beats the S& P 500 return of 10.6% over the same period.
Puglia’s departure is the main reason we have a Hold on the fund.
New manager Paul Greene started at T. Rowe Price as an analyst in 2006 and was a manager of T. Rowe Price Communications & Technology ) from May 2013 to April 2020. During that time, the fund returned 13.8% annualized, beating the typical communications fund as well as the average tech fund and the S& P 500.
That’s some evidence that Greene has the chops to run Blue Chip Growth. But the transition between managers can be tricky. Even though Greene will manage to TRBCX’s objective to invest in stocks of large, established companies with above-average growth potential his buying and selling decisions will vary from Puglia’s, for better or for worse. He might want to shift the portfolio he inherited a bit, too.
Also, this is his first stint as sole manager of a diversified U.S. stock fund one with a whopping $101 billion in assets.
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Why Consider This Fund
- You want the opportunity to remain in the same portfolio after the target date is reached
- You want one-step diversification with exposure to domestic stocks, international stocks and fixed-income securities
- Youve considered your risk tolerance and want your asset allocation to become more conservative over time, but still provide growth after your retirement date to protect against longevity risk
- You want an actively managed asset allocation portfolio investing in actively managed underlying funds
Account And Research Amenities
With their focus on long-term investing, neither Vanguard nor T. Rowe Price has strong account amenities. That said, T. Rowe Price customers do gain access to T. Rowe Price research. Vanguard offers daily market reports and research as well. Both Vanguard and T. Rowe Price have stock screeners. Both platforms have ETF/mutual fund and fixed income screeners, and neither have an options screener.
Both Vanguard and T. Rowe Prices tools and calculators were sparse on the brokerage side, but there are a number of helpful tools on the mutual fund side, including calculators for retirement planning and college savings as well as risk profile questionnaires that recommend a model mutual fund portfolio.
While both platforms have charts, they are not impressive on either platform as they lack drawing tools. T. Rowe Price offers functional news and marketing information. Vanguard does not offer real-time streaming news, but does offer news articles.
Overall, T. Rowe Price has a small edge over Vanguard for their overall account and research amenities offerings.
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T Rowe Price Retirement Target
- Rank among the top 401 funds: #27 , 2030) #41 , 2040) #45 , 2025) #49 , 2020) #53 , 2035) #69 , 2045) #72 , 2050)
- Best for: Investors who want a managed, diversified approach to their retirement savings
Target-date funds take the worry out of investing your retirement savings because experts handle everything for you. They decide how much of your assets should hold stocks or bonds and when your portfolio needs rebalancing. They even work to make your money last throughout your retirement.
The key to a top-notch target-date fund is the asset-allocation plan behind it. And for the past decade, T. Rowe Price has had a winning one. The proof is in the long-term performance record of the funds in this target-date series, which is the third biggest in the country after Vanguard and Fidelity. Over the past three, five and 10 years, T. Rowe Price Retirement target-date funds have posted returns that rank among the top decile of their respective peer group.
The “Retirement” series is Price’s flagship target-date product. The firm has since launched other target-date products. One, called “Target,” is slightly more conservative than its older sibling Retirement. While Retirement holds 55% of its assets in stock at retirement, Target holds 42.5%. And earlier this year, Price introduced the “Retirement Blend” series, which relies on a mix of active and passive funds.
A Dozen T Rowe Price Mutual Funds Enjoy A Place Among The Nations Most Popular 401 Retirement Products Find Out Which Ones Are Worth Your Investment Dollars
T. Rowe Prices corporate symbol is the bighorn sheep: a sure-footed and agile climber, even in the roughest terrain. It was chosen to reflect investors ability to rely on the firms investment expertise to navigate all types of markets.
As far as the best T. Rowe Price funds are concerned, its an accurate representation.
In this, part of our annual review of popular workplace retirement funds, we put T. Rowe Prices most widely held 401 funds to the test. We analyze five of Prices funds, plus the target-date series T. Rowe Price Retirement, and rate them Buy, Sell or Hold. funds in the country with target years between 2020 and 2050 but we appraise the series as a whole.)
This story is meant to help savers make good choices among the funds available in their 401 plan. It is written with that perspective in mind. Look for our reviews of other big fund firms in the 401 world, which currently include Vanguard and Fidelity, and will soon include American Funds as well as Buy-rated funds among all the top 401 options.
Read on as we look at some of the best T. Rowe Price funds for your 401 plan .
- Rank among the top 401 funds: #20
- Best for: Long-term growth, but a new manager has us pushing the pause button
T. Rowe Price Blue Chip Growth has long been one of the best T. Rowe Price funds widely available in 401 plans, but a recent change gives us at least momentary pause.
Puglias departure is the main reason we have a Hold on the fund.
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The Best T Rowe Price Funds For 401 Retirement Savers
A dozen T. Rowe Price mutual funds enjoy a place among the nation’s most popular 401 retirement products. Find out which ones are worth your investment dollars.
T. Rowe Price’s corporate symbol is the bighorn sheep: a sure-footed and agile climber, even in the roughest terrain. It was chosen to reflect investors’ ability to rely on the firm’s investment expertise to navigate all types of markets.
As far as the best T. Rowe Price funds are concerned, it’s an accurate representation.
In this, part of our annual review of popular workplace retirement funds, we put T. Rowe Price’s most widely held 401 funds to the test. We analyze five of Price’s funds, plus the target-date series T. Rowe Price Retirement, and rate them Buy, Sell or Hold. funds in the country with target years between 2020 and 2050 but we appraise the series as a whole.)
This story is meant to help savers make good choices among the funds available in their 401 plan. It is written with that perspective in mind. Look for our reviews of other big fund firms in the 401 world, which currently include Vanguard and Fidelity, and will soon include American Funds as well as Buy-rated funds among all the top 401 options.
Read on as we look at some of the best T. Rowe Price funds for your 401 plan .
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