Target Funds That Don't Double-Dip

So-called target funds, used to save for retirement, are made up of collections of other funds. Aren't the fund companies double-dipping on fees -- charging you for the target fund and the funds they invest in, too?

Target-date funds are great for busy investors. These funds operate on autopilot, spreading assets among stocks, bonds and cash (typically using other funds to do so) and adjusting the mix to become more conservative as retirement approaches. A few fund families still layer two fees into their target funds, but such double-dippers as the American funds and American Century aren't all that expensive, anyway.

Regardless of how the fees add up (check the prospectus for details), you shouldn't pay more than 1% or so, all told. Still, the target funds we like best don't charge twice: T. Rowe Price Retirement series, with expenses ranging from 0.56% of assets to 0.74% (depending on the target year); Vanguard Target Retirement funds (0.20% to 0.21%); and Fidelity Freedom funds (0.51% to 0.76%).

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Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage, authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.