Target-Date Fund
A target-date fund is a diversified fund that automatically shifts from stocks toward bonds and cash as a chosen retirement year approaches.
Target-date funds carry a year in their name, such as 2050 or 2065, which roughly matches when the investor expects to retire. Far from that date, the fund holds mostly stocks for growth. As the date nears, it gradually moves into bonds and cash to reduce volatility. This planned shift is called the glide path.
These funds are the default option in many 401(k) plans because they offer an all-in-one portfolio that rebalances itself. Investors only need to pick the fund that matches their time horizon.
Not all target-date funds are alike. Glide paths differ: some stay more aggressive at the target date and keep adjusting for years afterward ('through' funds), while others reach their most conservative mix at the target date ('to' funds). Fees also vary between index-based and actively managed versions.
Example: a 30-year-old planning to retire around 2060 might choose a 2060 fund that currently holds roughly 90% stocks and will become more conservative over time.