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 |
