Target date funds, also known as life cycle funds, are an investment option for saving for retirement. They’re mutual funds or exchange-traded funds that are often a default investment option inside of 401(k) plans. Target date funds can help investors who aren’t sure how to start investing for retirement or struggle with investing strategies. How Target Date Funds Work Target date funds invest in multiple securities such as stocks, bonds, and others to create a diversified mix of assets. They’re often used as a retirement savings tool to help individuals stay invested during their working years. In terms of how they work, investors choose a target date fund based on the date or age they plan to retire. The target date fund also rebalances and optimizes asset allocation so the investor doesn’t have to worry about doing it. With target date funds, the goal is usually to have a mix of assets that align with an investor’s time horizon. For instance, if a working professional has 40 years until retirement, their initial portfolio mix would likely comprise heavily of stocks. As the individual nears retirement,