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4 Great Mutual Funds for Your Retirement Portfolio
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With increasing life expectancy, financial planning for post-retirement years is a prerequisite. Leaving a constant source of income as one’s career comes to an end is highly likely to affect finances and related decisions. Therefore, one must consider investments that have the potential to provide great returns after retirement.
Usually, the nature of investing and savings changes after retirement, when one could end up withdrawing more than saving. So, mutual funds which offer regular payouts in a precise manner are a great option for one’s golden years.
Post-Retirement Savings Objectives for Funds
Retirement strategies could vary depending on factors such as life expectancy, income requirements and other sources of income (a part-time job or pension etc). Therefore investment objectives meant to be capitalized on after retirement must be consistent with these.
Capital preservation is crucial for retired investors, hence investing in conservative mutual funds that have lower exposure to risks is ideal for the purpose. But simply preserving capital isn’t enough.
The portfolio needs to have wide exposure to funds that have potential for high dividend payouts and income. Funds that offer significant income and regular dividend yields are necessary to sustain everyday life expenditures.
Mutual funds that are capable of providing high growth over the years are necessary too as they could be helpful in combating rising inflation and higher consumption on an investor’s part over the years.
4 Funds to Build a Great Retirement Portfolio
We have selected a couple of mutual funds you could consider investing for your retirement plans. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5,000.
We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Vanguard Wellesley Income Investor (VWINX - Free Report) aims for long-term income growth, high sustainable current income and moderate capital appreciation over a longer period. VWINX invests about 60-65% of its net assets in investment-grade fixed income securities. Rest of the fund’s assets is invested in common stocks of corporates that provide above-average dividend yields and expect a hike in dividend.
About two-thirds of the fund’s portfolio is allocated to bonds and one-third is allocated to stocks, indicating that the fund is more inclined toward income than growth. In addition, the fund’s long-term returns are higher than moderately allocated best-balanced funds.
Vanguard Wellesley Income Investor’s top three holdings are JPMorgan, Verizon Communications and Pfizer with asset allocations of 1.64%, 1.46% and 1.37%, respectively.
This Sector – Allocation Balanced product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
VWINXhas an annual expense ratio of 0.23%, which is below the category average of 0.79%. The fund has three and five-year returns of 6.3% and 5.6%, respectively.The minimum initial investment for VWINXis $3000.
Dodge & Cox Balanced (DODBX - Free Report) seeks to provide regular income, principal preservation and a chance to grow principal and income over a long period. The mutual fund invests in a diversified portfolio of debt and equity securities. Usually, the fund invests up to 75% and at least 25% of its net assets in equity securities. The fund may invest no more than 20% of its assets in U.S. dollar-denominated equity or debt securities of foreign issuers that are traded in the United States and not included on the S&P 500 index.
Comcast, Wells Fargo and Microsoft are DODBX’s top three holdings, with asset allocations of 2.65%, 2.35% and 2.10%, respectively.
This Sector – Allocation Balanced product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
DODBXhas an annual expense ratio of 0.53%, which is below the category average of 0.83%. The fund has three and five-year returns of 11.6% and 7.4%, respectively.The minimum initial investment for DODBXis $2500.
Fidelity Real Estate Investment Port (FRESX - Free Report) aims for long-term capital appreciation and above-average income that is consistent with reasonable investment risk. The non-diversified fund mostly invests in common stocks. FRESX invests the majority of its assets (up to 80%) in securities of companies that are engaged in the real estate industry and other investments related to real estate. The fund may invest in both U.S. and non-U.S. companies.
Fidelity Real Estate Investment Port’s top three holdings are Simon Property Group, Prologis and UDR with asset allocation of 9.79%, 9.05% and 5.62%, respectively.
This Sector – Real Estate product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FRESXhas an annual expense ratio of 0.75%, which is below the category average of 1.23%. The fund has three and five-year returns of 7.5% and 9.9%, respectively.The minimum initial investment for FRESXis $0.
Vanguard High Dividend Yield Index Investor aims to track the performance of the FTSE High Dividend Yield Index that measures the investment returns of common stocks of companies with high dividend yields. VHDYX opts for an indexing investment approach. The fund’s adviser attempts to imitate the target index by investing its assets in stocks that are part of the index, usually in the same proportion as each stock’s weighting in the index.
An impressive characteristic of this fund is that the assets allocation across sectors is even. This diversification is a great cushion against risks as time goes by. The FTSE High Dividend Yield Index is made of domestic companies such as Johnson & Johnson, JPMorgan and Exxon Mobil, which make up for the fund’s top three holdings, with assets allocations of 3.66%, 3.51% and 3.18%, respectively.
This Sector – Large Cap Value product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
VHDYXhas an annual expense ratio of 0.14%, which is below the category average of 1.00%. The fund has three and five-year returns of 11.8% and 9.9%, respectively.The minimum initial investment for VHDYXis $3000.
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4 Great Mutual Funds for Your Retirement Portfolio
With increasing life expectancy, financial planning for post-retirement years is a prerequisite. Leaving a constant source of income as one’s career comes to an end is highly likely to affect finances and related decisions. Therefore, one must consider investments that have the potential to provide great returns after retirement.
Usually, the nature of investing and savings changes after retirement, when one could end up withdrawing more than saving. So, mutual funds which offer regular payouts in a precise manner are a great option for one’s golden years.
Post-Retirement Savings Objectives for Funds
Retirement strategies could vary depending on factors such as life expectancy, income requirements and other sources of income (a part-time job or pension etc). Therefore investment objectives meant to be capitalized on after retirement must be consistent with these.
Capital preservation is crucial for retired investors, hence investing in conservative mutual funds that have lower exposure to risks is ideal for the purpose. But simply preserving capital isn’t enough.
The portfolio needs to have wide exposure to funds that have potential for high dividend payouts and income. Funds that offer significant income and regular dividend yields are necessary to sustain everyday life expenditures.
Mutual funds that are capable of providing high growth over the years are necessary too as they could be helpful in combating rising inflation and higher consumption on an investor’s part over the years.
4 Funds to Build a Great Retirement Portfolio
We have selected a couple of mutual funds you could consider investing for your retirement plans. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5,000.
We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Vanguard Wellesley Income Investor (VWINX - Free Report) aims for long-term income growth, high sustainable current income and moderate capital appreciation over a longer period. VWINX invests about 60-65% of its net assets in investment-grade fixed income securities. Rest of the fund’s assets is invested in common stocks of corporates that provide above-average dividend yields and expect a hike in dividend.
About two-thirds of the fund’s portfolio is allocated to bonds and one-third is allocated to stocks, indicating that the fund is more inclined toward income than growth. In addition, the fund’s long-term returns are higher than moderately allocated best-balanced funds.
Vanguard Wellesley Income Investor’s top three holdings are JPMorgan, Verizon Communications and Pfizer with asset allocations of 1.64%, 1.46% and 1.37%, respectively.
This Sector – Allocation Balanced product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
VWINXhas an annual expense ratio of 0.23%, which is below the category average of 0.79%. The fund has three and five-year returns of 6.3% and 5.6%, respectively.The minimum initial investment for VWINXis $3000.
Dodge & Cox Balanced (DODBX - Free Report) seeks to provide regular income, principal preservation and a chance to grow principal and income over a long period. The mutual fund invests in a diversified portfolio of debt and equity securities. Usually, the fund invests up to 75% and at least 25% of its net assets in equity securities. The fund may invest no more than 20% of its assets in U.S. dollar-denominated equity or debt securities of foreign issuers that are traded in the United States and not included on the S&P 500 index.
Comcast, Wells Fargo and Microsoft are DODBX’s top three holdings, with asset allocations of 2.65%, 2.35% and 2.10%, respectively.
This Sector – Allocation Balanced product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
DODBXhas an annual expense ratio of 0.53%, which is below the category average of 0.83%. The fund has three and five-year returns of 11.6% and 7.4%, respectively.The minimum initial investment for DODBXis $2500.
Fidelity Real Estate Investment Port (FRESX - Free Report) aims for long-term capital appreciation and above-average income that is consistent with reasonable investment risk. The non-diversified fund mostly invests in common stocks. FRESX invests the majority of its assets (up to 80%) in securities of companies that are engaged in the real estate industry and other investments related to real estate. The fund may invest in both U.S. and non-U.S. companies.
Fidelity Real Estate Investment Port’s top three holdings are Simon Property Group, Prologis and UDR with asset allocation of 9.79%, 9.05% and 5.62%, respectively.
This Sector – Real Estate product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FRESXhas an annual expense ratio of 0.75%, which is below the category average of 1.23%. The fund has three and five-year returns of 7.5% and 9.9%, respectively.The minimum initial investment for FRESXis $0.
Vanguard High Dividend Yield Index Investor aims to track the performance of the FTSE High Dividend Yield Index that measures the investment returns of common stocks of companies with high dividend yields. VHDYX opts for an indexing investment approach. The fund’s adviser attempts to imitate the target index by investing its assets in stocks that are part of the index, usually in the same proportion as each stock’s weighting in the index.
An impressive characteristic of this fund is that the assets allocation across sectors is even. This diversification is a great cushion against risks as time goes by. The FTSE High Dividend Yield Index is made of domestic companies such as Johnson & Johnson, JPMorgan and Exxon Mobil, which make up for the fund’s top three holdings, with assets allocations of 3.66%, 3.51% and 3.18%, respectively.
This Sector – Large Cap Value product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
VHDYXhas an annual expense ratio of 0.14%, which is below the category average of 1.00%. The fund has three and five-year returns of 11.8% and 9.9%, respectively.The minimum initial investment for VHDYXis $3000.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>