3 Simple Ways to Invest All of Your Money After You Retire

You've probably heard of a target date

retire

ment mutual fund. It is a unique fund that you can

invest

in to save for

retire

ment. You choose it based on the year you think you will retire. In fact, they will even put the year in the name of the fund so you know which one to choose and that's it, they make it a little more conservative as you get closer and closer to retirement by switching some of the

invest

ments from stocks to bonds, they do for you and you can just save into that fund and continue doing so until you're ready to retire, but what happens now that you're retired?

Are there any single mutual funds or ETFs that you can use to invest all of

your

retirement assets once you retire well? That's what we're going to cover in this video. I'm going to give you some ideas of some funds to consider and types of funds you could use in retirement. Just One Fund to manage all

your

money

and that's true whether you have 100,000 per million or 10 million, so that's what we're going to do in today's video, so let's get started. The first one I want to show you, this actually comes from Vanguard, now we need to make sure we understand the terminology. right Vanguard calls these life strategy funds the term life strategy is just a branding or marketing term that Vanguard came up with to describe these mutual funds that I'm going to show you in the industry, these would be called investment allocation funds. assets and the idea What's behind them is that they are going to invest in both stocks and bonds with a certain allocation, that is, a certain percentage of each, depending on how conservative you would like to be or how aggressive you want be, and companies fund companies that offer these asset allocations.

Funds typically offer four or five different allocations that you can choose from. In the case of life strategy funds, we can go down here, we see four of them and you can see the allocation here, so for this life strategy income fund, if you can put all your

money

in this F fund or each dollar you put here. Vanguard will split it up, put 20% in stocks and 80% in bonds and of course if you say "well that's too conservative." You can move on to the next one, they call it conservative growth life strategy fund, you get 40% in stocks, 60% in bonds and then they have a moderate growth which is 60% in stocks, 40% in bonds, which could be very popular.

For people in retirement and life strategy growth fund, this is the most aggressive, they get 80% stocks, 20% bonds. Now what I want to point out is that these funds are not designed specifically for retired people, someone who is saving for retirement or maybe saving. for something else over a long period of time you could also use these funds, but I think if they have the target allocation you're looking for or at least something close to it, these would be ideal funds to consider once you're retired. Now keep in mind that unlike a target date retirement fund, the asset allocation here - the split between how much goes into stocks and how much goes into bonds - doesn't change over time, it stays the same, so if you invest, for example, in this moderate growth fund. it will be 60% stocks, 40% bonds today tomorrow and in 10 years we can take a look at a specific example and I will use the moderate growth fund as an example, we can see that it is only 13 basis points, that is 0.13% very economical, you need a minimum investment of $3,000 and we can actually narrow down the portfolio composition and you can see what Vanguard does: if you invest in this fund, they take your money and divide it between four of their other funds, the market of Vanguard Total securities.

The index fund gets 35.8% and your total bond fund gets about 28%. They have a total international stock fund that's around 24% and they put some in international bonds 12 around 12.5 percent and now the expense ratio is Allin. They don't charge you separately for the expense ratios of these funds, it's 13 basis points in total and therefore it's a great low cost fund. I will point out one thing you don't invest in is tips, so yes tips are a big deal. For you, I guess as an example, you could put maybe most of your money in this fund and then a certain amount in a tip fund if you wanted to, but the idea behind a fund as a life strategy is that you're getting An A.

Good fund, you are simplifying your investments, what you are giving up is some level of control, so this is a 6040 stock allocation with these specific funds used to implement the investment strategy and that is your choice. I have no options, you can't say well, I want 65% stocks and 35% bonds, so you are giving up some level of control in exchange for Simplicity and, by the way, that is true with all the funds that we are going to look at and that's true, in general there's a kind of, you know, simplicity and control, you can't have both, so you know it's something you're going to have to decide for yourself.

Well, before we leave Vanguard, I want to show you two more. options that are similar to life strategy funds, the first is called Wellington and the second is called Welsley. These are two of the oldest mutual funds still in existence today from any mutual fund company. I will tell you that they are both actively managed, in fact, you can See it right here active management style, which means there are people behind the scenes who decide which stocks and bonds to invest in for these funds. That said, unlike most actively managed funds, these are incredibly cheap for an actively managed fund, this one is simply 17 basis points, these are Admiral shares, it requires a minimum investment of $50,000, this particular fund we can go down to a composition of about 65% stocks and 35% bonds and then Wellington is the complete opposite if we go back to the portfolio composition, it's about 35% stocks, 65% bonds or some short-term reserves.

I'm not normally someone who recommends actively managed funds or speaks highly of them. There are exceptions. These two are known to have performed extremely well over a very long period. period of time, which is why I mention them as options again, you will get Simplicity One Fund but you will give up some level of control, you will have to accept what they are investing in and the specific asset allocation they offer, which may or may not be what what you're looking for, but I think these are good funds to at least consider again. I'll link all of this below the video now I want to step away from Vanguard for a minute and I want to To get to Black Rock stock, now notice they call them Asset Allocation Solutions, which we talk about asset allocation funds and they offer them very similar to the life strategy funds we looked at at Vanguard and you can see them here and I have two different types, the one on the right set, they are ESG conscious so if that is something that is important to you you can look at the ones I'm going to focus on what they call central allocation funds here on the left and very similar to Vanguard, they offer four of them and these are the tickers now these are ETFs.

The vanguards are mutual funds as a practical matter. I think in particular we're talking about retirement accounts like an IRA. I don't see a significant importance. Difference, there may be some tax advantages for some ETFs over some mutual funds. I think in this case, particularly within an IRA, it's probably not a significant difference, but you'll notice that they're relatively inexpensive at 15 basis points and if we scroll down. we can see what here we go, we can see what the allocations are, so like Vanguard, for example, the AO ticker, they offer 60% stocks, 40% bonds, but of course you have other options, they have 8020, 4060 and 3070, and you can Come here and look specifically at what they're investing in now Vanguard used four funds, uh, stocks use seven, the blue and light blue are US stocks, the purple, pink and lavender type are stocks international and green are bonds, both.

International and us, so depending on the fund you choose, you will be able to see exactly what they are investing in. Very

simple

again, you will have to choose an asset allocation that they are offering and if it is something that is close to what you want. so it could be a consideration, but I want to point out that Vanguard is not the only company that offers asset allocation funds, Black Rock stock is another example now. Beyond asset allocation, funds, can we still consider a target date? retirement fund at first it may seem like well, no, Rob, we can't do that because we're retired now, you know, and the target date of retirement funds change their asset allocation, that's a good thing, well, there are two

ways

to at least consider the disadvantages. a target date retirement fund and let me show you which ones are first and I'm going to use them again.

I'll stick with Black Rock for a moment and, like I said, tie all of this together. uh just a two page summary of their target date ETFs and you can see here. I mentioned that in the names of these funds and this is true with Fidelity and Vanguard, etc., they put the years correctly, so if you want to retire in 2050, well, here's your fund. You could use that fund, but what about people who are already retired? Well, all the different target date retirement funds that are offered by the different big fund companies uh include one or more funds designed for once you're in retirement for stocks hey, they call it ishares life path retirement ETF and this is the symbol let me quickly show you the vanguards yeah Vanguard has something similar here it's Vanguard uh target retirement income fund now what we need to know though let me go.

Back to I-shares, not all of these funds are created equal, the asset allocation of, say, I-shares retirement fund can be very different than what is, say, Vanguard, so You should look at the asset allocation of these funds to see if it's what you want. now we can do that here let's see here's the I Share Life Path Retirement ETF and we can go down here and look let me find it here we go close maybe maybe not oh here we go so here's your we can see the geographical breakdown. but we want to look at the asset class and we can see that fixed income is 60% and stocks are 40, so it's 60, it's 60% bonds, 40% stocks, which may or may not be what you want.

I can tell you that I've looked at a lot of target date retirement funds, when you get to that retirement age and you have the retirement version of their target date retirement fund, they get very, very conservative, a lot of them get even more. conservative than this where the equity allocation is less than 40%, so you could say it is too conservative. Does that mean target date funds are okay? There isn't necessarily another strategy to consider, let me show you what it is if we go back. To see the actions and again, I'm just using this as an example.

I opened their 2035 fund, one of the things I've said many times is that while this year is designed to help investors choose the right fund when they're saving for retirement, there's no rule that says you should want to Retire in 2035 to invest in this fund, anyone can invest in this fund, whether you want to retire in 2070 or have been retired for 10 years. You can still invest in this fund if you want and that opens up a lot of opportunities for us because we could go into the Target Date Fund in this case of I shares or you could choose Vanguard or you could choose Fidelity and say is?

There is a target date fund that they offer that has the specific asset allocation that I want, so if we look at this 2035 fund and scroll down and find the exposure, this turns out to be about 67 or 68% stocks and 31 or 32. Fixed Income % if that is close to the asset allocation you want or again you could choose the 2040 fund or the 2025 fund but if you find the fund and fund family where the fund has the asset allocation you want, Then you might consider a 2035 Fund, for example, even if you are retired now, there is a problem. These funds because they have a target date as time goes on they will become more conservative meaning they will move some of the investments from stocks to bonds so what that means is you will have to keep an eye on the asset allocation of this fund and can mean every two years, maybe every five years, depending on how much the fund changes its allocation and what your investment objectives are. take that money and put it in maybe the 20,240 fund in 5 years as an example to get the asset allocation you want, but you already know you have to do it once every few years, again we're talking about a retirement account, not a taxable account where you can make that change without tax consequences.

Sure maybe every two three five years you'll have to make that change, but if it allows you to get the asset allocation you want, it may be worth considering, so the last thing I want to mention is that I've looked atasset allocation funds as an option. We have analyzed the target date. I'll call them retirement funds or income funds, those funds that are at the end of the line where all your money ends up once you retire, uh, we've talked about that as an option, but again, they can be kind of conservative and then We've talked about just using a regular target date retirement fund of some year that matches the allocation you want, just keep in mind that you should keep an eye on the allocation because it does change.

I want to show you two other quick things or ideas. The first is that if you look at some target date retirement funds, you'll see them. This is Vanguard. You will notice that they have a target retirement. 2020 fund, wait a minute, that doesn't seem right, aren't we in 2023? And if you go to Fidelity, let's see this they have a Target I, if you can see it's a little small, they have a 2005 fund, a 10 fund and a 105 fund, it's like, shouldn't they update their websites not so fast like some? funds will continue to change asset allocation As you move into retirement and begin to live out your retirement years, in other words, some uh Target date, retirement funds once you reach retirement, they stop changing their allocation of assets.

I think that's how I share work. I think others will continue to shift their asset allocation towards retirement for a few years, think five, 10 or maybe even 15 years and then they will shift or stop the shift and have a retirement income pot to go into and not. It doesn't keep changing, so I want to point out that that's why we're seeing some fund families that will have something like a 2010 target date fund, even though we're back in 2023, those might be other options worth considering depending on asset allocation. what that fund offers and what they are looking for.

The second thing I want to mention is that there may be some of you who say Rob. I like the idea of ​​a single background, very

simple

, but I would really love it. I would like to have more assets because I really want some exposure to real estate or maybe I want to. I'm a big Paul Marman fan. I want a small cap value. Well, you can combine them. You could say that I'm going to put 90% of uh. my money in an asset allocation fund, but I'm going to take that other 10% and put it in a rate or 10% and put it in a small cap value.

Yes, it complicates your portfolio a little because now you have two funds. rather than one, but for some of you that might be what you need to get the exact exposure that you want, again, either towards reats or towards small caps or perhaps towards tips because of the asset allocation fund that they have chosen one. doesn't offer advice, by the way, some of the target date retirement funds do offer advice, in fact I'm pretty sure stocks do, although you'll want to confirm that, so you'll want to make sure you understand not just stocks. Bond allocation of these funds, but how they are investing their money within the stock allocation and again within the bond allocation.

I'll leave links to everything I've shown you below the video and of course if you have any questions leave them in the comments below I'll be happy to help you in any way I can until next time. Remember that the best thing money can buy is financial freedom.