Retirement Investment Portfolio Types

Income Portfolio:

An Income Portfolio is one that is designed to provide you with an income now and into the future.  This type of portfolio is low risk (and thus provides low returns) and is best suited to those utilizing their investment portfolio for some or all of their income (generally in retirement).  A general portfolio of this type would have a diversification somewhere around the following (with stock funds in high dividend stocks if available):

% Mega Cap

% Large Cap

% Mid Cap

% Small Cap

55

40

5

0

% US stocks

% Foreign Stocks

% Bonds

% Cash (or equivalents)

20

5

70

5

Income and Growth Portfolio:

An Income and Growth Portfolio is one that is designed to protect wealth in an investment portfolio while still generating growth.  This type of portfolio has slightly higher risk than an Income Portfolio but tries to continue to grow wealth and is best suited for someone approaching retirement or someone who is very risk averse and willing to invest more to make-up for the lower risk and thus return. A general portfolio of this type would have a diversification somewhere around the following (with some of the stock funds in high dividend stocks if available):

% Mega Cap

% Large Cap

% Mid Cap

% Small Cap

45

35

20

1

% US stocks

% Foreign Stocks

% Bonds

% Cash (or equivalents)

50

5

40

5

Growth Portfolio:

A Growth Portfolio is one that is designed to generate wealth in an investment portfolio while still mitigating risk some.  This type of portfolio has higher risk than an Income and Growth Portfolio as it is focused on building wealth.  It is best suited for someone who is still quite a way from retirement or someone who is risk tolerant yet approaching retirement. A general portfolio of this type would have a diversification somewhere around the following:

% Mega Cap

% Large Cap

% Mid Cap

% Small Cap

45

35

20

1

% US stocks

% Foreign Stocks

% Bonds

% Cash (or equivalents)

70

10

15

5

Aggressive Growth Portfolio:

An Aggressive Growth Portfolio is one that is designed to generate wealth in an investment portfolio.  This type of portfolio has higher risk than a Growth Portfolio as it is solely focused on building wealth.  It is best suited for someone who is still quite a way from retirement and is not risk averse. A general portfolio of this type would have a diversification somewhere around the following:

% Mega Cap

% Large Cap

% Mid Cap

% Small Cap

35

30

25

15

% US stocks

% Foreign Stocks

% Bonds

% Cash (or equivalents)

75

20

5

0

Factors Affecting Portfolio Types:

The above examples are generic.  The ability to achieve your retirement goals are dependent upon three things: risk (and thus expected return), time available to invest, and how much you can invest.

If you start later, then you must either take on more risk or invest more to reach the same goal.

If you cannot, or are not comfortable, investing more then you must either start earlier or accept more risk in order to reach the same goal.

If you are not comfortable with higher risks, then you must start earlier or invest more to reach the same goal.

% US stocks

% Foreign Stocks

% Bonds

% Cash (or equivalents)

20

5

70

5

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