Understanding Investing

Understanding Target Date Funds: Diversification

By investing across a wide range of asset classes, geographies and sectors, target-date funds are designed to weather the ups and downs of the market.

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Voice over: Planning for retirement can seem overwhelming, but it doesn’t have to be.

A target-date fund can help simplify your retirement investing.

Here’s how they work.

Invest in the target-date fund closest to the year in which you think you’ll retire.

Unlike individual investments such as stocks and bonds where you may need to invest across several funds to achieve a diversified portfolio, a target-date fund seeks to provide broad market diversification in a single fund.

A target-date fund manager will balance the fund to a level of risk based on your age.

Typically, a target-date fund will be weighted toward stocks when you are younger in order to maximize growth then that balance will shift towards bonds as you approach retirement in order to help lower your investment risk.

In addition to balancing stocks and bonds, target-date fund managers use a technique called diversification to help make sure your portfolio can better withstand in economic environments.

By investing across a wide range of asset classes, geographies and sectors, target date-funds are designed to weather the ups and downs of the market to help you stay invested and on track through retirement.

A target-date fund is a convenient, comprehensive investment strategy that can help you on your path to your retirement goals.

Text on screen: It is possible to lose money investing in a target-date fund. Be sure to fully evaluate the target-date funds available in your investment plan prior to investing.

Log on to your plan website to learn more about how target-date funds may be right for you.

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