How do Vanguard Target Retirement Funds differ from Vanguard LifeStrategy® Funds?
A. Both Target Retirement Funds and LifeStrategy Funds are suitable for retirement. Like Target Retirement Funds, LifeStrategy Funds invest in underlying Vanguard funds—largely index funds. The primary difference between the two sets of funds is that LifeStrategy Funds maintain generally consistent asset allocations over time, while each Target Retirement Fund automatically shifts from a more aggressive to a more conservative asset allocation as its target retirement date approaches. With LifeStrategy Funds you also assume more responsibility. You select one of the four LifeStrategy Funds based on your risk tolerance, investment goals, and investing time horizon. (Determine your risk tolerance by completing our Investor Questionnaire.) After choosing a LifeStrategy Fund, you need to make sure that the fund’s allocation remains suitable for your needs. You may want to switch periodically to a LifeStrategy Fund with a different allocation as your circumstances and risk tolerance change.
