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Life-cycle funds eliminate _______.

The need to do retirement planning

The need to adjust asset allocation on your own

The need to do taxes

The need to adjust asset allocation on your own. These funds take care of that on their own.

Which is a disadvantage of life-cycle funds?

Many of the individual funds that comprise a life-cycle fund are likely to contain holdings in a number of the same companies.

Since they are much bigger than an ordinary mutual fund, investment risk is increased.

Life-cycle funds are so large that they become extremely difficult to manage effectively.

Many of the individual funds that comprise a life-cycle fund are likely to contain holdings in a number of the same companies. Therefore, the diversification you might be aiming for is not really there.

Once you have chosen a life-cycle fund for your retirement, _______.

You are required to stay with it until retirement

You can switch to a different life-cycle fund if it meets your needs better

You can switch to a different life-cycle fund if it meets your needs better. You can roll your fund over to a different one.

Life-cycle funds eliminate risk by investing in a broad universe of diversified mutual funds.

True

False

False. Nothing can eliminate investment risk. Life-cycle funds aim to minimize it.

A life-cycle fund is ___________.

A fund "basket" composed of other mutual funds

A mutual fund that owns shares in virtually all publicly traded companies

A marketing term used to describe an extremely large mutual fund

A fund "basket" composed of other mutual funds. The mix of funds is designed to be suited to the retirement target date you have chosen.