Retirees have unique needs when it comes to their investment portfolios. Here I’ve assembled what I think are the best ETFs for retirement portfolios in 2024.
► Sample retirement portfolio: optimizedportfolio.com/go/sam...
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// TIMESTAMPS:
00:00 - Intro - What Retirees Need
02:10 - VT
02:34 - AVUV
03:22 - AVDV
03:40 - GOVT
04:57 - FUTY
05:50 - FSTA
06:16 - STIP
07:05 - SCHH
07:57 - VNQI
08:24 - GLDM
08:59 - Sample Retirement Portfolio
11:01 - Outro
// SUMMARY:
Many ETFs are perfectly suitable for both the young investor at age 20 and the retiree at age 60. But the latter has fundamentally different needs. If you’re already using a target date fund, you probably don’t need anything from this list.
Diversification and de-risking of the portfolio become more important when entering retirement. Provided they’ve accumulated enough to cover expenses in retirement, the retiree should almost certainly be sacrificing some returns to lower the portfolio’s volatility and risk. This is due to what’s called sequence risk, which refers to the risk that the retiree encounters a bad “sequence” of returns in their first few years, which can derail their entire plan. Since the retiree is withdrawing from the portfolio every year, they don’t have time to recover from protracted bear markets.
So how exactly does that translate into ETFs to use in retirement? We’re specifically looking for:
- Maximum diversification (particularly, assets that offer a demonstrable diversification benefit) in order to mitigate volatility and risk.
- High credit quality bonds, so U.S. treasury bonds. No room for the credit risk, liquidity risk, and default risk of corporate bonds. I explained this here. Even target date funds tend to miss the bullseye here.
- “Defensive” stocks.
- Low fees.
- Direct inflation protection from TIPS. Young investors probably don’t need this.
- “Income” funds, maybe. This one hinges on whether the retiree simply wants to sell shares as needed (my preferred method) or use funds with a high dividend/distribution yield to generate “income.” Aside from bond interest, this could be in the form of dividend stocks, REITs, CEFs, covered call option premiums, etc. Thankfully, the ETFs below should satisfy both audiences.
I’ve assembled the list of retirement ETFs below based on the specific needs I listed above:
VT
AVUV
AVDV
GOVT
FUTY
FSTA
STIP
SCHH
VNQI
GLDM
► Sample retirement portfolio: optimizedportfolio.com/go/sam...
► Simplified sample retirement portfolio: optimizedportfolio.com/go/sim...
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#retirement #retirementsavings #retirementplanning
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Disclaimer: This is not financial advice, investing advice, or tax advice. The information presented is for informational, educational, and entertainment purposes only. Investment products discussed are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here: www.optimizedportfolio.com/te...
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25 июл 2024
