In simple terms, target date funds are investment options for your retirement. You save your money in a fund of your choice which concentrates on a growth pattern in the initial years and gets rebalanced by shifting to conservative options as the retirement date approaches. Here are the top three reasons to invest in target-date funds:

• Simplification of management
  These funds are great options for investors who want to save for their retirement but do not want to undergo the hassle of finding the best opportunities to keep reinvesting as per the market condition. This kind of an investment adjusts as per your goals, and you would not need to open a portfolio with a variety of investments. These funds are goal-oriented and give you returns as well as savings for your retirement.

• Portfolio rebalancing as per age
  The primary fundamental of target date funds is that it takes into consideration your retirement year and adopts an aggressive approach in the initial years. Depending on the age of your retirement, the rebalancing of the portfolio is undertaken, and safer assets are added to the portfolio. While the returns are of higher risk in the initial years, the risk factor considerably reduces in the years advancing towards retirement.

• Avoids irrational decision making
  For somebody who does not understand investments very well, setting up a portfolio ends up being a one-time task. In fact, when an investor sees even a little growth in the funds, he decides to continue and not rebalance the portfolio. The risk factor is often ignored if the growth trends are constantly high which is something you cannot afford as you approach retirement. For such investors, target date funds are a great option.

Top options of target-date funds:

• Schwab MarketTrack All Equity Portfolio
• TIAA-CREF Lifecycle Retirement Income FD
• Vanguard Target Retirement Income
• MFS Lifetime Income Fund
• American Century One Choice in Retirement Portfolio

The options mentioned above are excellent choices for target date funds. They are trusted and have performed well in the past few fiscal years, giving reasonable returns as compared to other retirement options. Every investment requires some scrutiny from the investor. However, with these funds, you would not need to worry. Just set a reasonable retirement date for yourself wherein the manager gets enough time for managing your portfolio to give you good returns.