Target-Date Fund (Investing)
InvestingGlossary term
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 AllocationAn 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 PathThe 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 FundAn 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.
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