Age-based funds

Funds-Age-based funds are normally set up as mutual funds. Generally, the younger you are, the more risk your fund will take on, since you have time to make up for any significant losses. As you age, the fund takes on less risk in preparation for your pending retirement and your dependence on the funds for income.

Target-risk funds, or lifestyle funds, also rate assets based on risk over time, but instead of being based on age, they are based on whether you consider yourself to be a conservative investor or a risk-taker.

Both lifestyle- and age-based funds invest your money in stocks, bonds, and cash. But lifestyle funds focus more on a person’s risk tolerance, which could stay basically the same throughout a lifetime. Age-based funds automatically change as the person ages—Read more at Investopedia. Baldridge, Rebecca. “Using Age-Based Funds in Your 401(k).” 16 November 2019.