Target-date funds diversify based on your age. This implies the funds will instantly change to be more conservative as you grow older. For example, if you wish to retire in thirty years, a good target-date fund would be the Vanguard Target Retirement 2050 Fund (VFIFX), because 2050 will be close to the year you'll retire.

This means it'll be greater risk however with the potential for higher returns. As the years pass and we inch closer to 2050, however, the fund will immediately adapt to invest in more conservative investments like bonds. Most target-date funds require a $1,000 to $3,000 preliminary investment. If you don't have enough to purchase among those, don't fret.

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