This diversified investment option provides a straightforward approach to retirement planning. It offers a portfolio composed of a mix of underlying Vanguard funds covering various asset classes, including domestic and international stocks and bonds. The asset allocation is managed automatically and adjusts over time to become more conservative as the target retirement date of 2055 approaches. This “target-date” design aims to simplify investing for individuals planning for retirement around that year.
A key advantage of this type of investment strategy lies in its automated asset allocation and rebalancing. This removes the burden of constant monitoring and adjustment from the investor. The gradual shift from a more growth-oriented portfolio in the earlier years to a more income-focused portfolio as retirement nears is designed to manage investment risk throughout the savings period. Historically, this approach has offered individuals a simplified way to participate in the market while potentially mitigating some of the risks associated with market volatility.
