What is the typical investment horizon for investors in target-date funds?

The typical investment horizon for investors in target-date funds is aligned with a future retirement date. These funds are designed to automatically adjust their asset allocation over time, becoming more conservative as the target date approaches, usually when investors plan to retire or start accessing their savings.

This strategy fits well with the needs of retirement planning, where individuals often have a specific time frame based on their expected retirement age. The gradual adjustment of the fund's risk profile helps to manage investment risk as the investor gets closer to the target date, making it a suitable choice for long-term investment objectives.

Options that suggest shorter time frames, such as less than one year or one to three years, do not align with the fundamental purpose of target-date funds, which are inherently aimed at long-term growth and capital preservation as retirement approaches. Furthermore, an indefinite time frame does not correspond with the structured nature of target-date funds, which specifically target a defined timeline. Thus, the clarity of a future retirement date as the typical investment horizon is crucial to the design and function of target-date funds.