Definition
Target-date funds automatically adjust their asset allocation as the target year approaches. Early years emphasize stocks for growth; approaching retirement, the fund shifts toward bonds for stability. They're popular in 401(k) plans as all-in-one retirement solutions requiring no rebalancing from investors.
Example
A 2050 target-date fund for someone retiring around 2050 might hold 90% stocks today, gradually shifting to 40% stocks by 2050.
FAQ
What is Target-Date Fund?
A fund that automatically adjusts asset allocation based on a target retirement year.
Why is Target-Date Fund important?
Target-Date Fund helps investors evaluate fund types and make more informed decisions.