Building Wealth Through 'Hands-Off' Investing

What are the advantages and disadvantages of the 'hands-off' investment strategy?

One of the biggest advantages with the hands-off strategy and using life-cycle funds is that it's hands-off. It's so simple. It's so easy. You put all your money into this one fund, it's diversified, it rebalances; it's very, very simple to do. The disadvantages are, and there really aren't that many, that potentially it's a little more expensive of a strategy than the involved or the consumed. And, also, it's not very tax-efficient. If you get into your investments and want to do tax-loss harvesting and more advanced strategies like that, you really can't do that with a life-cycle fund. But the advantages far exceed any disadvantage. So absolutely, life-cycle funds are a great tool for the hands-off investor.

What should a 'hands-off' investor look for in a lifecycle fund?

If, by definition, you're looking at lifecycle funds, you're probably a hands-off investor. And if you're a hands-off investor, you're probably not going to want to do a tremendous amount of research, so at the end of the day, just choose a lifecycle fund that matches your particular target date. There are some differences between each of the funds - each mutual fund company's lifecycle fund, but they're pretty insignificant, so I wouldn't even worry about it.