To Fund

AAA

DEFINITION of 'To Fund'

A type of target-date retirement fund whose asset allocation becomes most conservative at the fund’s target date. A "to" fund might make sense for someone who expects to cash out his/her investment when the fund reaches the target date in order to purchase a different type of asset or investment.

INVESTOPEDIA EXPLAINS 'To Fund'

Target-date funds typically have a greater percentage of stocks relative to bonds the farther away the target date is. A "to" fund takes less risk than a "through" fund, and it may achieve lower returns as a result. The other big risk of using a to fund is that, if you hold it past the target date, its lack of investment risk means your nest egg will not continue to grow and you could outlive your retirement savings.

Before investing in any target-date fund, investors should examine its glide path (how it progressively becomes more conservative) to determine how the fund’s asset allocation changes over time and whether it is a "to" fund or a "through" fund.

A “to” target-date 2045 fund might have a glide path that results in an asset allocation of 0% stocks and 100% bonds and short-term funds in 2045, whereas a “through” 2045 target-date fund might still be invested 60% in stocks with the remaining 40% in bonds and short-term funds. The "through" fund’s percentage of stocks would continue to decrease gradually after the target date so that, during retirement, the percentage of bonds and cash equivalents would continue to increase. The “to” fund’s asset allocation would not change after reaching the target date. 

"Through" funds are meant to be held past their target dates, while "to" funds are likely to work best if they are cashed out and/or reinvested at their target date.

RELATED TERMS
  1. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...
  2. Self Invested Personal Pension ...

    A tax-efficient retirement savings account available in Great ...
  3. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...
  4. Variable Annuitization

    An annuity option in which the amount of income payments received ...
  5. Gold IRA

    Definition of Gold IRA
  6. Pension Risk Transfer

    When a defined benefit pension provider offloads some or all ...
RELATED FAQS
  1. Can I hold non-dollar currencies in my retirement fund?

    Yes. You would need to find a financial institution that can facilitate these currencies in a retirement account. Many are ... Read Full Answer >>
  2. How can I get a "pensionado" visa to retire in Costa Rica?

    In order to receive a pensionado visa and retire in Costa Rica, a retiree needs to fill out a list of key documents from ... Read Full Answer >>
  3. What are the financial benefits of retiring in Panama?

    Reasons to retire overseas include a lower cost of living, a favorable exchange rate or simply the chance to experience a ... Read Full Answer >>
  4. What are the financial benefits of retiring in the Philippines?

    Of those countries considered friendly to the United States, the Philippines has one of the lowest standards of living and ... Read Full Answer >>
  5. How can I get a 'pensionado' visa to retire in Costa Rica?

    The first and primary criteria necessary to obtain a pensionado visa in Costa Rica is that you must have a pension or pension-like ... Read Full Answer >>
  6. Do I need to file an income tax return every year?

    Contrary to popular belief, there are indeed situations where a person does not need to file a tax return every year. For ... Read Full Answer >>
Related Articles
  1. Retirement

    3 Ways To Make Your Retirement Funds Last

    These retirement income distribution methods are all viable; the one you choose will depend on your personal circumstances.
  2. Retirement

    Who Actually Benefits From Target Date Funds?

    This pre-packaged retirement investment option could be the perfect fit for some investors and a downfall for others. Which are you?
  3. Retirement

    An Introduction To Target Date Funds

    Target date mutual funds can be an alternative to bonds and CDs for investors who do not wish to actively manage their savings. The reason: These financial products periodically reallocate fund ...
  4. Budgeting

    How To Budget Your Retirement Funds And Still Have Fun

    Here are some tips to budget your remaining money when you are retired.
  5. Retirement

    6 Ways To Calculate How Fast You'll Run Out Of Retirement Funds

    One of the key aspects of retirement planning is determining the amount of time that it will take for you to exhaust your retirement savings.
  6. Home & Auto

    Tap Retirement Funds To Buy A Home?

    It's not ideal, but there are times when it can make sense to use your IRA or 401(k) for a down payment.
  7. Options & Futures

    Retirement Funds To Fund Startups

    Retired entrepreneurs who have "played it safe" and retirees who want to stretch their dollars are looking to invest here.
  8. Budgeting

    Pay For A College Education With Retirement Funds

    These savings vehicles may be better than college saving funds for some families.
  9. Retirement

    The Foreigner's Guide To Retiring In Japan

    While Japan is an easy country to visit, retiring there can be a challenge due to the high cost of living and lack of any formal retirement visa plan.
  10. Retirement

    Can You Retire In Malaysia With $200,000?

    A low cost of living, street food fit for foodies and unspoiled rainforest and beaches are just a few of the reasons Malaysia is worth looking at as a retirement destination.

You May Also Like

Hot Definitions
  1. Fracking

    A slang term for hydraulic fracturing. Fracking refers to the procedure of creating fractures in rocks and rock formations ...
  2. Mixed Economic System

    An economic system that features characteristics of both capitalism and socialism.
  3. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  4. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  5. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  6. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
Trading Center