BENZ: “THE BUCKET APPROACH” TO RETIREMENT

June 6, 2014

Christine Benz, Morningstar’s Director of Personal Finance is a huge fan of the “Bucket Approach” to retirement, a concept created by financial planning guru and another WEALTHTRACK guest, Harold Evensky. In order  to protect a retirement portfolio from the shock of significant market fluctuations, they recommend separating your money into three investment buckets.  Bucket one is completely liquid and safe to cover near term expenses. Bucket two is intermediate term, high quality bond and balanced funds for peace of mind.  Bucket three is for long-term appreciation. We asked Benz to give us specific recommendations for each bucket. Here are some of her core recommendations.

Watch the related WEALTHTRACK episode.

BUCKET I 

  • CASH

BUCKET II

A) High Quality Short-term Bond Funds plus Inflation Protection

Name of Fund Symbol
T. Rowe Price Short-Term Bond PRWBX
Vanguard Short-Term Bond Index Inv VBISX
Vanguard Inflation-Protected Secs Inv VIPSX

B) Intermediate-term Bond Funds plus Inflation Protection

Name of Fund Symbol
Metropolitan West Total Re Bd Admin Cl MWTNX
Dodge & Cox Income DODIX
Vanguard Inflation-Protected Secs Inv VIPSX
Harbor Unconstrained Bond Institutional HAUBX

C) Balanced Funds – Equity Exposure with Peace of Mind

Name of Fund Symbol
Dodge & Cox Balanced DODBX
Vanguard Wellington™ Inv VWELX
Vanguard Wellesley® Income Inv VWINX

BUCKET III – Stock Exposure for Long-term Growth

A) Low Maintenance Approach

Name of Fund Symbol
Vanguard Total Stock Mkt Idx Inv VTSMX
Vanguard Total Intl Stock Index Inv VGTSX

C) Balanced Funds – Equity Exposure with Peace of Mind

Name of Fund Symbol
Vanguard Dividend Growth Inv VDIGX
Dodge & Cox Stock DODGX
Fidelity® Contrafund® FCNTX


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