Investment Portfolio That Seeks to Tamp Down Risk

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Investment Portfolio That Seeks to Tamp Down Risk

For retirees who don't want to outlive their money
 55% Stocks |  32% Bonds |  5% Alternative |  8% Cash  


 Data through August 31, 2016

FUND NAME SYMBOL % OF
PORTFOLIO
YTD
RETURN
1-YR
RETURN
3-YR
RETURN
5-YR
RETURN
10-YR
RETURN
MAX LOAD EXPENSE RATIO
AlternativeArbitrage FundARBFX5%2.15%2.69%1.69%1.3%2.84%2.00%r1.47%
StockDodge & Cox International Stock**DODFX154.71-0.992.685.612.85none0.64
StockDodge & Cox StockDODGX118.268.4410.0314.615.7none0.52
BondDodge & Cox IncomeDODIX126.836.664.544.195.45none0.43
BondHarbor Bond InstlHABDX125.414.814.083.585.64none0.52
StockOakmark International Small Cap I**OAKEX53.25-0.242.076.363.72.00r1.35
StockT. Rowe Price Small Cap ValuePRSVX814.915.298.4412.337.681.00r0.8
BondT. Rowe Price International BondRPIBX812.811.641.5-0.123.432.00r0.83
StockT. Rowe Price Real EstateTRREX510.221.9815.9613.056.161.00r0.76
StockVanguard Dividend Growth Inv**VDIGX117.6814.3411.6313.958.76none0.33
CashCash8none
   1006.927.115.596.934.87 0.62
** Closed to new investors. # Closed to new investors; other share classes are available.
r Maximum redemption fee charged when you sell shares. s Front-end load; redemption fee may apply.
— Fund has not existed for the specified time. Source: Morningstar, Inc..

Once you retire, you need a balance of growth, income and stability.

Ted Jones intended to retire two years ago. But after the markets tanked, he decided to keep working to defer tapping his investments. Jones, 63, a former Army major who lives in Lorton, Va., retired from military life in 1992 but has stayed on with the Army as a civilian.

Now Jones is getting ready to retire again. To maintain the lifestyle that he and his wife, Chong, 64, are used to, he figures they need to draw 4% of their investments annually. He also hopes to be able to leave something to the couple's two sons and four grandchildren.

The Joneses should take a "bucket" approach to assembling an investing plan. This portfolio stashes two years of expenses in a cash bucket, invests the next eight years' worth of expenses in bonds, and puts the rest in stocks. Retirees need stocks to keep up with inflation. But if they run into another bear market, the Joneses know that they won't be tapping their stock bucket for another decade. This portfolio would have lost 32% over the bear market but gained 65% from the bottom.