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For people on the cusp of retirement, a common dilemma is to know how to time the markets. Now, a seasoned investor would always tell you that it isn’t possible to time the markets but what certainly can be done is to control your portfolio’s exposure to risk. Furthermore, people about to retire also mull over postponing retirement in order to save up and go all cash.
At the same time, it is important to note that for people about to retire in five or so years, any unforeseen market fluctuations make it impossible to recover losses. Furthermore, for those having a 401(k) plan with their employer should contribute at least enough so that it matches the company’s contribution.
This apart, reducing the equity proportion in the current balance and adding low-risk investments as well as income generating mutual funds within one’s 401(k) is a great option for people about to retire.
It goes without saying that lower the risk near retirement, the better it is. This implies investing in assets that not only protect the principal amount, but also generate reliable and steady income. While hedging against inflation by parking one’s money in stocks is one way to go about it, it makes more sense to hold certain funds which might shield a portfolio in case of a market rout.
Moreover, adding bonds to your retirement portfolio not only adds income and diversification, it lowers volatility. For senior citizens, it is important to allocate a portion of their assets in an investment that continues to grow and act as a hedge against inflation.
Mutual funds that invest in well-known dividend paying stocks can help accomplish this goal. What one should be looking for are mutual funds that invest in stocks that are included in the S&P 500 or the Dow.
4 Best Choices
We have, thus, selected four mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are great for a retirement portfolio. Moreover, these funds have encouraging one and three-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their 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 Fund Investor Shares (VWINX - Free Report) is an income-oriented balanced fund and offers significant exposure to stocks as well as investment-grade bonds. The fund typically allocates about one-third of its total assets to stocks and two-thirds to bonds. VWINX’s stock holdings comprise of companies that have historically paid higher-than-average dividends.
This Zacks 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.
VWINX has a Zacks Mutual Fund Rank#1 and an annual expense ratio of 0.23%, which is below the category average of 0.79%. The fund has one and three-year returns of 8.4% and 5.7%, respectively.
Fidelity Advisor Series Growth Opportunities Fund (FAOFX - Free Report) seeks growth of capital by investing primarily in common stocks. The fund invests in securities of only those companies which the Fidelity Management & Research Company (FMR) believes have above-average growth potential. FAOFX also invests in securities of both U.S. as well as non-U.S. based companies.
This Sector- Large Cap Growth 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.
FAOFXhas a Zacks Mutual Fund Rank#1 and an annual expense ratio of 0.01%, which is below the category average of 1.07%. The fund has one and three-year returns of 24.8% and 26.8%, respectively.
American Funds Tax-Advantaged Growth and Income Portfolio (TAIAX - Free Report) aims for current income, a portion of which is exempted from regular federal income tax. The fund also seeks to grow capital over a long period of time. TAIAX invests in a mix of American Funds in different combinations and weightings. The underlying American Funds aim to generate income from their investments and may consist of growth-and-income, equity-income, balanced and bond funds.
This Sector – Muni-Bonds product has a history of positive total returns for over 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
TAIAXhas a Zacks Mutual Fund Rank#2 and an annual expense ratio of 0.72%, which is below the category average of 0.80%. The fund has one and three-year returns of 5.5% and 6.4%, respectively.
Janus Global Technology T (JAGTX - Free Report) fund invests a huge portion of its assets in equity securities of those companies that are expected to gain from improvements or advancements in technology. JAGTX seeks capital appreciation for the long run and invests in both domestic and foreign companies with stable growth potential. It generally invests in companies from different nations including the United States.
This Sector - Tech product has a history of positive total returns for over 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
JAGTX has a Zacks Mutual Fund Rank#1 and an annual expense ratio of 0.92%, which is below the category average of 1.29%. The fund has one and three-year returns of 8.8% and 22.2%, respectively.
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4 Best Mutual Funds for Retirement
For people on the cusp of retirement, a common dilemma is to know how to time the markets. Now, a seasoned investor would always tell you that it isn’t possible to time the markets but what certainly can be done is to control your portfolio’s exposure to risk. Furthermore, people about to retire also mull over postponing retirement in order to save up and go all cash.
At the same time, it is important to note that for people about to retire in five or so years, any unforeseen market fluctuations make it impossible to recover losses. Furthermore, for those having a 401(k) plan with their employer should contribute at least enough so that it matches the company’s contribution.
This apart, reducing the equity proportion in the current balance and adding low-risk investments as well as income generating mutual funds within one’s 401(k) is a great option for people about to retire.
It goes without saying that lower the risk near retirement, the better it is. This implies investing in assets that not only protect the principal amount, but also generate reliable and steady income. While hedging against inflation by parking one’s money in stocks is one way to go about it, it makes more sense to hold certain funds which might shield a portfolio in case of a market rout.
Moreover, adding bonds to your retirement portfolio not only adds income and diversification, it lowers volatility. For senior citizens, it is important to allocate a portion of their assets in an investment that continues to grow and act as a hedge against inflation.
Mutual funds that invest in well-known dividend paying stocks can help accomplish this goal. What one should be looking for are mutual funds that invest in stocks that are included in the S&P 500 or the Dow.
4 Best Choices
We have, thus, selected four mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are great for a retirement portfolio. Moreover, these funds have encouraging one and three-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their 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 Fund Investor Shares (VWINX - Free Report) is an income-oriented balanced fund and offers significant exposure to stocks as well as investment-grade bonds. The fund typically allocates about one-third of its total assets to stocks and two-thirds to bonds. VWINX’s stock holdings comprise of companies that have historically paid higher-than-average dividends.
This Zacks 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.
VWINX has a Zacks Mutual Fund Rank#1 and an annual expense ratio of 0.23%, which is below the category average of 0.79%. The fund has one and three-year returns of 8.4% and 5.7%, respectively.
Fidelity Advisor Series Growth Opportunities Fund (FAOFX - Free Report) seeks growth of capital by investing primarily in common stocks. The fund invests in securities of only those companies which the Fidelity Management & Research Company (FMR) believes have above-average growth potential. FAOFX also invests in securities of both U.S. as well as non-U.S. based companies.
This Sector- Large Cap Growth 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.
FAOFXhas a Zacks Mutual Fund Rank#1 and an annual expense ratio of 0.01%, which is below the category average of 1.07%. The fund has one and three-year returns of 24.8% and 26.8%, respectively.
American Funds Tax-Advantaged Growth and Income Portfolio (TAIAX - Free Report) aims for current income, a portion of which is exempted from regular federal income tax. The fund also seeks to grow capital over a long period of time. TAIAX invests in a mix of American Funds in different combinations and weightings. The underlying American Funds aim to generate income from their investments and may consist of growth-and-income, equity-income, balanced and bond funds.
This Sector – Muni-Bonds product has a history of positive total returns for over 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
TAIAXhas a Zacks Mutual Fund Rank#2 and an annual expense ratio of 0.72%, which is below the category average of 0.80%. The fund has one and three-year returns of 5.5% and 6.4%, respectively.
Janus Global Technology T (JAGTX - Free Report) fund invests a huge portion of its assets in equity securities of those companies that are expected to gain from improvements or advancements in technology. JAGTX seeks capital appreciation for the long run and invests in both domestic and foreign companies with stable growth potential. It generally invests in companies from different nations including the United States.
This Sector - Tech product has a history of positive total returns for over 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
JAGTX has a Zacks Mutual Fund Rank#1 and an annual expense ratio of 0.92%, which is below the category average of 1.29%. The fund has one and three-year returns of 8.8% and 22.2%, respectively.
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 >>