Selecting Dependable Retirement Investments

Christine Benz: Hi, I'm Christine Benz for Morningstar.com. Managing your retirement portfolio shouldn't be a full-time--or even a part-time--job. That's why when it comes to selecting investments for your retirement portfolio, I strongly believe that less is more.

I'm a big fan of mutual funds and exchange-traded funds that provide broad diversification at a very low cost and require very little in the way of ongoing oversight. From that standpoint, it's hard to beat a portfolio that’s anchored in total market index funds: a total U.S. market index fund, a total foreign-stock index fund, and a total bond market fund. Retirees might also consider adding an inflation-protected bond fund, since those bonds don't appear in total bond market index funds.

Well-managed active funds can serve a valuable role in retiree portfolios, too, especially if the manager pays attention to limiting downside volatility. Some of Morningstar analysts' favorite funds of that type include Vanguard Wellington and Wellesley Income, FPA Crescent, and Dodge & Cox Balanced. As always, if you're buying an active fund, be sure to keep a close eye on costs, as high expenses will have a direct negative effect on your returns.

Thanks for watching. I’m Christine Benz for Morningstar.com.