Investing your retirement plan (401(k), 403(b), etc.)
- Target date funds are managed with a focus on a specific retirement year. If you’re planning to retire in 30 or 35 years from 2023, for example, you could pick a fund with a target retirement date of 2055 or 2060. The target date fund that is aiming for the year closest to your expected retirement year will invest in a mix of investments appropriate for that time frame. As the targeted date nears, arrives and passes, the mix becomes more conservative—usually by dialing back the level of stock investments and increasing investments in bonds.
- Asset allocation funds provide a diversified portfolio of investments across the various asset classes (stocks, bonds, and short-term investments) that lines up with a set risk tolerance.