Through Fund

AAA

DEFINITION of 'Through Fund'

A type of target-date retirement fund whose asset allocation includes higher risk and potentially higher return investments "through" the fund’s target date and beyond. A "through" fund might make sense for individuals who only need to sell a small percentage of their investments each year to meet their retirement living expenses and who want to continue investing during their retirement years. 

INVESTOPEDIA EXPLAINS 'Through Fund'

The farther away a fund’s target date is, the more stocks it will usually hold relative to bonds. A "through" fund takes more risk, for longer, than a "to" fund. Both reach conservative positions at the target date, but through funds invest less conservatively. This gives them the potential for greater returns – and also greater losses – from the beginning. In addition, their strategy means that a through fund will contain assets that can grow beyond the target date, enabling you to continue to build assets during your retirement. By doing this, a through fund also lowers the risk of outliving your retirement savings.

Before choosing a specific target-date fund for your retirement savings, research its glide path (how it progressively becomes more conservative) to learn how the fund’s asset allocation will change over time. Also determine whether it is a "through" fund or a "to" fund.

A through target-date 2045 fund might have a glide path that results in an asset allocation of 60% stocks and 40% bonds and short-term funds in 2045. The percentage of stocks would decrease gradually during your retirement years, while the percentage of bonds and short-term funds would increase. But even at the target date, there would be both stocks and bonds/short-term funds in your through fund and this pattern would continue during retirement.

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

 

 

RELATED TERMS
  1. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  2. Variable Annuitization

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

    Definition of Gold IRA
  4. Pension Risk Transfer

    When a defined benefit pension provider offloads some or all ...
  5. Death Master File (DMF)

    Also known as Social Security Death Index. A list of people whose ...
  6. To Fund

    A type of target-date retirement fund whose asset allocation ...
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. This pre-packaged retirement investment option could be the perfect fit for some investors, and a downfall for others. Which are you?
    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. Target date mutual funds can be an alternative to bonds and CDs for investors who do not wish to actively manage their savings.
    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. Budgeting

    Pay For A College Education With Retirement Funds

    These savings vehicles may be better than college saving funds for some families.
  8. 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.
  9. Forex

    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 unable to do so, as their systems are not programmed to perform the ...
  10. Is an online adviser right for you? As with most questions in financial planning, the answer is 'it depends.' Here are a few thoughts to consider.
    Professionals

    Is An Online Financial Advisor Right For You?

    Is an online adviser right for you? As with most questions in financial planning, the answer is 'it depends.' Here are a few thoughts to consider.

You May Also Like

Hot Definitions
  1. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  2. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  3. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  4. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  5. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  6. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
Trading Center