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Old 10-20-2015, 02:22 PM   #1
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Portfolio Help

I'm anywhere between 6 1/2 years to 9 1/2 years to retirement. I have a 401K through my company and there are various portfolio options to choose from:
1. Income
2. Balanced
3. Growth and Income
4. Growth
5. Aggressive

I've been using the Growth and Income portfolio for awhile now and wondering if I should re-allocate (current or past or currently & past) funds as I get closer to retiring. Any opinions?

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Old 10-20-2015, 02:41 PM   #2
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I stayed with Growth & Income until well into retirement, moved to Balanced in my mid 60s. Now in MRDs so have an Income focus in regular IRAs keeping Balanced/Growth and Income in Roths.

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Old 10-20-2015, 03:25 PM   #3
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From a very general view, I personally would chose growth and income now and long into my retirement. But that's me. Depending on the details of the various investments in those choices and your own risk tolerance, might suggest something different for you. Not enough detail to know.
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Old 10-21-2015, 12:00 AM   #4
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What matters is bond/stock allocation ratio.
Subtract your age from 120. That gives you a starting point for how much to allocate to stocks.
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Old 10-21-2015, 04:33 AM   #5
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I've to ask there are only managed funds? There is no s&p fund? If you accept that 95% of managed funds will not beat the market over time my suggestion is to:
1) Get in that s &p index if it exists..
2) if there are no index funds chose the broadest based equity fund.
3) study the management fees for all the options
4) some programs allow for transfer of a portion of your 401k to a self directed Ira option I'd jump at if my firm still allowed.

Going forward my suggestions would vary based where you are... For example if you could live on income of your pile plus social split it all into dividend paying equity funds IDV, DVY, EDOG, etc., which would yield over 4%...

The subtract your age from 120 can be a good general rule for some but not for all (e.g. touch principle or live off earnings and SS) For example if I know I need $90k a year at 65 and I have 3 years in cash and the rest in my dividend funds I'd feel fully confident I'd be fine even if we had another credit crisis...

I've seen (yeah I'm 62) this dividend equity strategy work to great effect... The trouble is you can't run to the Risk Free Retirement people every time the market takes a hit... As long as those dividends get paid you'll be just fine.

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Old 10-21-2015, 06:02 AM   #6
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You should coordinate it with your other retirement savings, target asset allocation and tax efficient placement.

For example, my overall AA is 60/40 but for tax efficiency reasons my 401k is more than 40% fixed income since I own tax efficient equities in my taxable accounts.

While AA depends on your risk appetite, most ERs are between 30/70 or 70/30.

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