In finance, nondiscretionary refers to investments that are managed according to a predetermined set of rules or guidelines, with little or no human intervention. This is in contrast to discretionary investments, where the investment manager has more freedom to make decisions about how to invest the money.
Nondiscretionary investments are often used by investors who want to minimize their risk or who do not have the time or expertise to manage their own investments. They can also be used as part of a retirement savings plan, as they can help investors to stay on track with their savings goals.
There are a number of different types of nondiscretionary investments, including:
* Index funds: These funds track a particular stock market index, such as the S&P 500 or the Dow Jones Industrial Average.
* Exchange-traded funds (ETFs): These are similar to index funds, but they are traded on stock exchanges like individual stocks.
* Target-date funds: These funds are designed to invest for a specific retirement date, and they automatically adjust their asset allocation as the investor gets closer to retirement.
* Robo-advisors: These online investment platforms use algorithms to create and manage investment portfolios for investors.
Nondiscretionary investments can be a good option for investors who are looking for a simple and affordable way to invest. However, it is important to do your research before investing in any nondiscretionary investment, to make sure that it is appropriate for your investment goals and risk tolerance.