As the investor gets older, the fund automatically rebalances to become more conservative over time. The fund that a 25 year-old purchases will be allocated towards safer investments when that consumer is 40, and even safer when they’re 60.
Many investors who want to save for retirement are unable, uninterested or uncertain of their ability to choose their own funds. Creating a solid mix of funds can require hours of research, and staying on top of their allocation can be a chore even for the most seasoned financial professional. That’s why target-date funds are so popular; they already have the funds and investment strategy chosen for you.
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