Sunday, December 03, 2017
Should You Contribute To The TRS Balanced Fund?
Starting next month the TRS Bond Fund will be discontinued and replaced by the Balanced Fund. For educators who are still contributing to the Bond Fund, the same percentage will now be assigned to the Balanced Fund, umless you change your allocation. While the Balanced Fund is preferable to the Bond Fund the question is should an educator contribute to it?
Normally a balanced fund is an appropriate conservative investment that usually has an asset allocation of between 40% to 60% in stocks and the rest in fixed income investments like bonds, money market funds and government securities. However, when TRS offers a no fee 7% interest rate Fixed Fund, why bother? I, for one rather put any conservative investments into a guaranteed 7% return then gamble on the Balance Fund with its allocation of volatile stocks and in our present low interest environment, 2% fixed income investments.
I see the Balanced Fund appropriate for those educators who think stock equity funds.are too risky for their tastes but wants some inflation protection. Otherwise, the TRS Balanced Fund is not recommended by me at this time.