Retirees seeking a moderate risk in their exchange traded fund investment portfolios will want to lean more toward the safety of bonds but still hold enough equities to provide some level of capital appreciation, according to Morningstar.
The moderate portfolio for retirees and pre-retirees is “appropriate for retirees with a time horizon (estimated life expectancy) of 15-20 years,” writes Christine Benz, director of personal finance at Moringstar. The portfolio tries to provide stable and modest growth.
ETFs are low cost, tax efficient and easy to use investments that allows individuals to take control of their investments.
The moderate ETF portfolio holds less than half of its assets in equities and the rest in cash, Treasury Inflation-Protected Securities and other bonds. Bonds provide some level of stability for any portfolio and also generate some returns over the long-run.
The portfolio holds separate bond holdings, including iShares iBoxx $ Investment Grade Corporate Bond (NYSEArca: LQD) at 13.5% and mortgage-backed iShares Barclays MBS Bond (NYSEArca: MBB) at 8%.