Target-Date Fund (Investing)
Financial term in the Investing category
Definition
An investment fund designed for a specific retirement year that automatically rebalances from stocks to bonds as the target date approaches. Offers a simple, diversified, hands-off investing strategy. Expense ratios vary significantly between providers.
Related Terms
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.
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.
Mutual Fund
An investment vehicle that pools money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities, professionally managed by a fund manager.
Frequently Asked Questions
What is Target-Date Fund (Investing)?
An investment fund designed for a specific retirement year that automatically rebalances from stocks to bonds as the target date approaches. Offers a simple, diversified, hands-off investing strategy. Expense ratios vary significantly between providers.
Why is Target-Date Fund (Investing) important in personal finance?
Target-Date Fund (Investing) is an important investing concept that helps individuals make better financial decisions. Understanding Target-Date Fund (Investing) can improve your financial planning and help you achieve your money goals.
How does Target-Date Fund (Investing) relate to Asset Allocation?
Target-Date Fund (Investing) and Asset Allocation are related financial concepts. 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.
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