How To Use Lifecycle Funds To Help You Build Wealth

What are 'lifecycle' funds and how can they help me build wealth?

Lifecycle funds are the best thing since sliced bread. They are so cool and easy in what they do. A lifecycle fund is a mutual fund, so it contains a mixture of stocks and bonds, with various asset classes. By putting your money into a lifecycle fund, you are completely diversified: you have some cash, you have some stocks, you have some bonds, you have some international stocks, and some small-cap stocks. One investment gets you access to every asset class, and the other neat thing about it is that it becomes much more conservative the closer you get to your target. As an example, let's say you want to retire in 10 years. There's a lifecycle fund thats 10 years away from today that you can put your money in. Because there's such a long time horizon (10 years), it's going to be invested a lot more aggressively. There's going to be a lot more stocks and bonds, but as you get closer to reaching retirement, as you get closer to that tenth year, it's going to become more and more conservative. So, it shifts it's allocation from something that was risky into something that was a little bit more conservative. Again, you don't have to do anything - it does this automatically for you.