Common Sense Investing

Simplified Investing with Target Date Funds

Common Wealth automatically puts plan members’ money to work in a professionally managed BlackRock LifePath® target date fund. These funds provide a diversified investment that balances between growing plan members’ investments and protecting against risk by becoming more conservative as retirement age nears.

BlackRock is the world’s largest asset manager guiding individuals, financial professionals, and institutions in building better financial futures. Its purpose is to help more and more people experience financial well-being.

Why Target Date Funds

At Common Wealth Retirement, we’ve chosen an approach to investments that supports both employers and plan members:

  • Use target date funds. Target date funds are an all-in-one, simple investment solution. They are tailor-made for retirement, and automatically do those things that help plan members get the fundamentals of investing for retirement right: broad diversification, rebalancing, and appropriate asset allocation that automatically becomes more conservative with age. Recent research from the Wharton School found that plan members who use low-cost target date funds could enhance retirement wealth by as much as 50% over 30 years.
  • Use smart defaults. Plan members are given a default target date fund that is appropriate to their age and desired retirement date. The vast majority of members choose the default, which means that investment choice rarely becomes a barrier to people participating in the plan.
  • Employers don’t have to choose. We remove the burden of investment lineup choice from the employer. We have found that most employers — particularly small and medium ones — have little interest in becoming investment experts, and some are concerned about the potential liability and risk associated with having to make investment choices.
  • Favour indexing. Our target date offerings use an index-based approach, rather than using active management which tries to beat the market. Extensive evidence shows that active management tends to underperform, and that if you give people a choice among a variety of funds, they will often pick the funds with the best recent performance (if these are actively managed funds, that often means they are the most likely to underperform in the future).
  • Partner with world-class providers. Rather than trying to create a fund supermarket to rival those of the legacy providers, we have worked with a select group of investment managers and annuity providers, including BlackRock and Brookfield, who are global leaders in what they do.

It’s important to remember the real problem workplace retirement plans are meant to solve: helping people secure the best possible retirement outcomes for themselves and their families. When investment choice becomes the measure of success, this focus gets distorted and employers can unwittingly undermine their efforts to build their employees’ financial health, costing their employees tens or even hundreds of thousands of dollars.

Read more about our investment choices.

Common Wealth

Common Wealth

Common Wealth is on a mission to make it possible for every Canadian to have a financially secure retirement. We provide a quick and easy retirement planning and saving experience, powered by a turnkey digital platform.

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