Simple Portfolios for Your Retirement Goals with Mutual Funds


Triston Martin

Dec 04, 2023

You know the importance of retirement planning and the common practice of investing to achieve that goal. Choosing where to put your money is a difficult subject. You can pick from literally thousands of different mutual funds regarding retirement savings.

Investing through a 401(k) or similar employment retirement plan restricts your options. That again, if you don't consider yourself a stock market expert, all those options may seem overwhelming. Now for some good news: things need to be clarified. To prepare adequately for retirement, several mutual funds can be used to establish a diverse and wise investment portfolio.

Here's why you may get by with fewer mutual funds in your golden years

Making sure your investments are spread out over several types of assets is a crucial step toward financial security. It would be best if you diversified your portfolio by investing in a wide range of companies operating in various global markets. In this approach, if the fortunes of one company or sector begin to decline, those of others will be cushioned to some degree. What about the random bouts of widespread stock market volatility? You may count on the bond element of your investment portfolio to keep you afloat during those times.

Common funds put their money into corporations.

They allow ordinary people to pool their money into a single vehicle and have access to the stock of numerous corporations. This means you can build a robust retirement portfolio consisting of just a handful of mutual funds.

Using model portfolios simplifies the process of selecting investments.

You've decided to diversify your retirement savings by investing in mutual funds, but now you need to figure out which funds are right. Several financial experts have developed least-effort investment strategies, or "lazy portfolios," for long-term investors. These portfolios are easily replicable in a 401(k), IRA, or other retirement savings account. You can even spread your lazy portfolio across your numerous accounts by investing in one mutual fund in one account, another in another, and so on.

The great thing about these portfolios is that they may be constructed out of mutual funds that are very similar but offered by different organizations.

Splitting your investments across two funds

A portfolio with 60% in overseas ETFs and 40% in bond market ETFs could yield less than a portfolio invested only in a stock fund. Still, it would leave you more vulnerable to a stomach-churning roller coaster during a financial crisis.

The more diversified, two-fund portfolio might drop in a financial crisis, too, and that's not exactly fun, either. It's less likely to make you sell out right when you must be patient and wait for the market to rise.

Possibilities both more sophisticated and more simple

Real estate and Treasury inflation-protected securities, or TIPS, are two more asset classes that investors can add to their portfolios for further diversification.

Let's say you've decided to allocate 60% of your savings to equities and 40% to bonds. A mutual fund that invests in the entire bond market may account for 30% of your portfolio, while a fund that invests only in Treasury inflation-protected securities could account for 10%. The global stock market could account for 45 percent of your portfolio, while a real estate investment trust could take up 15 percent.

Holdings In Various Markets

Keep things extremely easy by putting all your money into a single fund. In most cases, this means investing in a balanced index fund or a target-date retirement fund, which will automatically build and rebalance a diversified portfolio for you.

Keep in mind that there will be costs.

However, fees are something to keep in mind while choosing a fund. Choosing low-cost mutual funds is crucial in building a solid investment portfolio.

Can you define "cheap" for me?

An expensive mutual fund has an expense ratio of 1% or higher. Various funds provide lower fees.

After you've set up your lazy portfolio, you can kick back, relax, and focus on everything besides your finances. Alternatively, if maintaining even a "lazy" portfolio is overwhelming, Robo-advisors provide a low-cost alternative that can lead to a diverse and stable investment portfolio. If you're looking for the best robot advisors, read about the ones we recommend.


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