Planning for retirement is tough. There are so many things we can't know in advance. What will the market do? How should I invest and how long will my portfolio last? How much can I safely take out of my account so I don’t run out of money?
Too often people assume that the best answer to these questions is a complicated investment plan that takes a lot of time and attention, but a simple balanced fund may be just as effective.
With a balanced fund, you’ll own stocks and bonds in one fund purchase. You don’t have to spend your time managing separate stock and bond portfolios, and you don’t have to agonize over how to change your investments over time. You also don’t have to worry about rebalancing your allocation along the way. This is all done for you.
Just as importantly, a balanced fund can be an effective way to invest through both the accumulation and the distribution phases of retirement. In both phases, you’ll want ample exposure to stocks for growth plus bonds to help buffer stock market declines.
RELAX into retirement investing
Our balanced fund, the FundX Conservative Upgrader Fund (RELAX), has a classic mix of 60% in core diversified stock funds and 40% in our Flexible Income model, which is primarily in bond funds. RELAX has helped investors build wealth and fund their life in retirement for the last 15 years, as you can see in the chart below.
If you’d invested your $1 million retirement account in RELAX back in 2002, you’d have $3 million by September 30, 2017—tripling your original investment and potentially putting you in good shape for your eventual retirement.
If you’d happened to retire in 2002 with a $1 million investment in RELAX, you were able to withdraw an initial 4% per year ($40,000 in year one) to live on. You also increased your withdrawals to keep up with inflation during this time period without running out of money. In fact, you made money by investing in RELAX: your account grew to more than $1.8 million by September 30, 2017, even after taking $760,696, in cumulative withdrawals—more than two-thirds of your initial investment.
This wasn’t an easy time to be invested. You started investing in the midst of the 2002 bear market, and in 2008-2009, you faced the worst market decline in recent history. You saw interest rates go to zero and thenstart to rise. But staying invested in RELAX paid off: you were able to pay yourself a steady income stream, keep up with inflation, and grow your portfolio—even during some of the most challenging market years ever.
Taking Withdrawals from FundX Conservative Upgrader Fund (RELAX)
15 Years: September 30, 2002 – September 30, 2017
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the fund may be lower or higher than the performance quoted. Performance data current to the most recent month-end may be obtained by calling 866-455-3863 or by clicking here. The chart illustrates the performance of a hypothetical investment. The chart assumes reinvestment of dividends and capital gains. Withdrawals adjusted for 3% inflation. Click here for current performance of the FundX Conservative Upgrader.
Publication Date: Upgrader Quarterly: Autumn 2017