Target-Date Fund

Things change as you get older. More trips to the bathroom. Earlier dinner times. Fewer real teeth.

Investment goals change as well. When you're 25 years old, you have a lot of time to go until retirement. You can take some risks. Put some money in that high-flying tech stock, or dabble in exotic markets.

When you're nearing retirement, you just want to lock in that nest egg. You don't want to suffer a 20% loss the day you leave work for good. You just want investments that are safe and solid.

A target-date fund takes all that into account automatically. You send in your contributions throughout your career. Meanwhile, the fund automatically changes the risk profile and asset mix over time, focusing on more growth opportunities early on and switching toward stable, safe investments as time unfolds.

The "target date" for these funds is usually retirement. But theoretically, you could target other things: your kid's college years, that dream cruise around the world, etc.