Note: This article is courtesy of Iris.xyz
By Mary Beth Storjohann
To the layperson, investors are usually seen as a knowledgeable and busy bunch. They’re not wrong. The best investors are active, managing their portfolios regularly and making small improvements as they go along.
But investing can be for everyone – not just stock market gurus and Wall Street fanatics. So how can more casual investors put their money towards good use without spending all of their time as well as finances?
That’s where target date funds come in handy. Designed for the hands-off investor, they’re a great way to invest your money without investing your time.
What are Target Date Funds?
Target date funds are a basket of funds designed for investors who want an easy retirement option. Like their name, these funds are organized by date. Investors can choose which fund they want based on the corresponding year in which they hope to retire.
For example, a 25 year-old may choose a 2055 target-date fund, when they’ll be 65 years old.
So how exactly do the funds change over time? Like with most investment strategies, it’s all about intelligently handling market risk.