A target-date fund is a single investment that automatically adjusts its mix of stocks and bonds based on when you plan to retire. The fund starts with a higher percentage of stocks when you are far from retirement, then gradually shifts to more bonds as your target retirement date approaches. This removes the need for you to rebalance manually.
You choose a target-date fund that aims for retirement in 2050. Today, it holds 85% stocks and 15% bonds because you have many years to invest. As you get closer to 2050, the fund automatically becomes more conservative, shifting to 60% stocks and 40% bonds in 2045, and eventually 40% stocks and 60% bonds near 2050.
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