How do target date funds work?

Target-date funds are designed to help manage investment risk. You pick a fund with a target year that is closest to the year you anticipate retiring, say a “2050 Fund.” As you move toward your retirement “target date,” the fund gradually reduces risk by changing the investments within the fund.

How does the fund adjust its portfolio as it gets closer to the target retirement date?

A target-date fund is a diversified investment mix based on your age and the year you expect to retire. As you get closer to the target retirement date, the fund automatically gets more conservative, shifting away from stocks and more heavily into bonds.

Does Vanguard have a target date ETF?

Vanguard offers target-date retirement funds to suit the needs of investors of various ages. A target-date fund is a mutual fund that automatically adjusts the asset mix and allocation over a time period that’s based on your age and when you want to retire. The information in this article is current as of July 3, 2021.

Are Target Retirement Funds mutual funds?

Target date funds are mutual funds designed to simplify retirement investing. By purchasing a single fund, you get a diversified portfolio of domestic and international stocks and bonds. Furthermore, target date funds adjust their asset allocation from mostly stocks to mostly bonds as the investor nears retirement.

Do Vanguard target date funds pay dividends?

Vanguard ETFs are noted in the industry for their lower-than-average expense ratios. Most of Vanguard’s ETF products pay quarterly dividends; some pay annual dividends; and a few pay monthly dividends.

What happens to a target date fund when the target date is reached?

Nothing special happens with a Target Retirement Fund when it reaches its target date. The fund doesn’t stop investing, and you don’t need to take your money out of the fund. The gradual move from stocks to bonds simply continues.