These investment vehicles offer a diversified portfolio designed to adjust risk automatically as the investor approaches retirement. A sample portfolio might include a mix of stocks, bonds, and other asset classes, with a higher percentage of stocks for investors further from retirement and a gradual shift towards bonds as retirement nears. This “glide path” aims to maximize growth potential in the early years and preserve capital closer to the target retirement date.
Automated portfolio management simplifies the investing process, requiring minimal ongoing attention from the investor. This approach can be particularly valuable for those lacking the time or expertise to manage their investments actively. Historically, this strategy has provided a convenient way to participate in market growth while mitigating some of the risks associated with market volatility, especially as retirement approaches. Its important to note that while past performance isn’t indicative of future results, this type of investment has generally proven effective for long-term retirement planning.
