Glide Path
Financial term in the Retirement category
Definition
The gradual shift in a portfolio's asset allocation from aggressive (more stocks) to conservative (more bonds) as the investor approaches retirement. Target-date funds use predetermined glide paths to automatically adjust risk over time.
Related Terms
Target-Date Fund
A mutual fund that automatically adjusts its asset allocation from aggressive to conservative as a target retirement year approaches. Often used as a simple, hands-off investment option in 401(k) plans.
Asset Allocation
An investment strategy that balances risk and reward by dividing investments among different asset categories, such as stocks, bonds, and cash, based on goals and risk tolerance.
Risk Tolerance
Your ability and willingness to lose some or all of your original investment in exchange for potentially greater returns. Depends on factors like age, income, and financial goals.
Frequently Asked Questions
What is Glide Path?
The gradual shift in a portfolio's asset allocation from aggressive (more stocks) to conservative (more bonds) as the investor approaches retirement. Target-date funds use predetermined glide paths to automatically adjust risk over time.
Why is Glide Path important in personal finance?
Glide Path is an important retirement concept that helps individuals make better financial decisions. Understanding Glide Path can improve your financial planning and help you achieve your money goals.
How does Glide Path relate to Target-Date Fund?
Glide Path and Target-Date Fund are related financial concepts. A mutual fund that automatically adjusts its asset allocation from aggressive to conservative as a target retirement year approaches. Often used as a simple, hands-off investment option in 401(k) plans.
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