A Target date fund is an investment fund that automatically rebalances its asset allocation mix over time, according to a predetermined schedule. The Target date is the year when the investor is expected to retire, and the fund’s asset allocation is designed to provide the optimal mix of growth and income for that time frame.
Target date funds are often used in 401(k) and other retirement plans, as they provide a simple way for investors to get a well-diversified portfolio that is automatically rebalanced over time.
The asset allocation of a Target date fund will change over time, becoming more conservative as the Target date approaches. For example, a Target date 2025 fund will have a more aggressive asset allocation than a Target date 2035 fund. This is because the 2025 fund is designed for investors who have a longer time horizon and can afford to take on more risk, while the 2035 fund is designed for investors who are closer to retirement and need to focus on preserving capital.
Investors should choose a Target date fund that matches their expected retirement date. For example, an investor who expects to retire in 2030 would choose a Target date 2030 fund. If an investor’s retirement date changes, they can always switch to a different Target date fund.
What is Target Date 2050 Fund?
A Target date 2050 fund is an investment fund that automatically rebalances its asset allocation mix over time, according to a predetermined schedule.
