Not sure how to build a portfolio? Target‑date funds do it for you – automatically becoming more conservative as you near retirement. Learn why they're the default choice in many 401(k)s and how to use them wisely.
A target‑date fund (also called a lifecycle fund) is a mutual fund that automatically rebalances its asset allocation – the mix of stocks, bonds, and cash – to become more conservative as you approach a specified retirement year. You pick the fund with the year closest to when you plan to retire, and the fund manager handles the rest.
The fund gradually shifts from growth-oriented stocks to income-focused bonds, reducing risk as you get closer to retirement.
Most target‑date funds have low initial investment requirements, making them accessible for beginners.
You get exposure to thousands of stocks and bonds globally in a single fund – instant diversification.
Not all target‑date funds are equal. Expense ratios can vary significantly; lower fees mean more money in your pocket.
Move the slider to see how a typical target‑date fund's allocation changes as you approach retirement.
This is a simplified illustration. Actual glide paths vary by fund family (e.g., Vanguard, Fidelity, T. Rowe Price).
Many target‑date funds continue to adjust even after retirement (through the "to" vs. "through" distinction). Always check the fund's prospectus.