Conservative Portfolios for People in or Approaching Retirement
For more conservative investors who have no interest in individual
stocks, I co-edit "The Retirement
Advisor"
where our most aggressive model portfolio is slightly less aggressive
then the "core conservative portfolio" in Kirk Lindstrom's Investment
Letter." For more explanation, see Kirk's
Two Investment Letters
A primary goal of The Retirement Advisor
is to help our subscribers achieve their financial or retirement goals
in a suitable time frame and reasonable fashion. Our Retirement
Advisor Model Portfolios were constructed with that goal and one other
important goal in mind: Simplicity. Studies have shown that the most
effective way to save and invest for retirement is to construct and
maintain a diversified portfolio of low-cost index funds
matched to one’s retirement needs and risk tolerances. There is no
need (and in fact, this may be detrimental to your financial health) to
invest in the hottest technology fund, or buy actively managed mutual
funds where annual expenses could be over five times as high as
low-cost index funds.
| The Retirement Advisor Portfolios | Dollar Value on 7/31/10 | Change |
| Model Portfolio 1 | $219,682 | 9.8% |
| Model Portfolio 2 | $231,512 | 15.8% |
| Model Portfolio 3 | $248,518 | 24.3% |
| DJIA 12,501.52 on 1/1/2007 | $10,466 | (16.3%) |
| S&P500 1,418.30 on 1/1/2007 | $1,101.60 | (22.3%) |
Each month, subscribers to The Retirement Advisor
will receive updates to three different Model Portfolios. These
updates will include any portfolio changes based on our latest outlook
of the economy, interest rates, and inflation, as well as portfolio
rebalancing as different asset classes deviate from target weightings.
In addition, the performance of individual funds will also be updated
on a monthly basis.
We
designed our three different model portfolios for individuals who are
in retirement or who are pondering retirement, taking into account 1)
their current stage in life, and 2) their risk tolerance (i.e. how much
risks they can incur without losing sleep at night). In presenting our
three different model portfolios, we have ordered them starting with
the most aggressive portfolio to the most conservative.
We designed our first model portfolio, the Aggressive Growth and Income Model Portfolio 1,
for someone approaching retirement who is interested in a “balanced”
approach to investing, which combines a mixture of stocks and bonds.
Its 50% stock market weighting gives it the potential to increase your
standard of living over time when rebalanced at key time points.
We designed our second model portfolio, the Moderate Growth and Income Model Portfolio 2,
for individuals in retirement who believe sleeping better at night with
less stock market volatility is worth giving up some of the potential
for gains in standard of living to get lower volatility.
We designed our third model portfolio, the Conservative Capital Preservation Model Portfolio 3, for investors who invest solely in fixed income securities without any stock market exposure.
We designed our third model portfolio, the Conservative Capital Preservation Model Portfolio 3, for investors who invest solely in fixed income securities without any stock market exposure.
| Portfolio Performance By Year Through July 31, 2010 | |||||
| Model Portfolio | 2010 YTD | 2009 | 2008 | 2007 | 2007 to Now |
| #1: Aggressive | 2.4% | 19.7% | (18.2%) | 9.5% | 9.8% |
| #2: Moderate Risk | 3.3% | 13.2% | (8.7%) | 8.5% | 15.8% |
| #3: Conservative | 4.8% | 5.5% | 3.7% | 8.3% | 24.3% |
Start Sleeping Well Tonight!
For more explanation, see Kirk's
Two Investment Letters
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