Best Retirement Portfolio – Successful Long Term Investing

When it comes to a retirement portfolio, there’s no such thing as the “perfect” solution. Sure, you can create a balanced portfolio by making sure all market sectors are represented, but that only works when the investor has a long enough runway on their retirement investments. 

Younger people have decades to build their retirement savings. They can afford to take on riskier investments. Older people need to be more cautious. The slightest misstep when getting close to retirement age could result in shortfalls during their golden years.

All investing involves risk including the delicate balance between gains, interest rates, and inflation. Retirement planning, in particular, should incorporate an analysis of these numbers. Investors have to weigh the benefits of “safe” investments against future value. So, what does a solid retirement portfolio look like? We’ve got all the information. Let’s jump in so we can discuss the best retirement portfolio and how you can successfully invest!

Investment Portfolio

Building a Retirement Investment Portfolio

Retirement portfolios expand and contract based on decisions made by the fund manager. Their investment selections are determined by risk tolerance and include mutual funds, stocks, bond funds, real estate investment trusts (REITs), and other financial products.

Equity holdings in a retirement portfolio are typically where the largest gains come from. The stock market, despite market volatility, has averaged a 10% annual return for decades. Fixed income funds, like bonds and CDs, have smaller return numbers, but also lower risk.


Financial advisors make a living combining all of these elements together, weighing risk versus return, and setting specific retirement savings goals for their clients. They can also help investors assess how much social security retirement income should be available to them. 

Growth Investments vs. Income Portfolios

With an extended bull market over the past several years stopped only by a global pandemic, most investors are familiar with the concept of growth stocks. They are companies expected to generate better than average cash flow, but typically on a short-term basis.

Retirement planners may invest in growth stocks as a short-term strategy to bring more money into an investment portfolio. This move is often seen when retirement funds turn into retirement income, aka retirees start withdrawing money for living expenses.

An income portfolio is made of dividend paying stocks, not growth stocks. Growth is simply capital appreciation. Regular dividend payments can be taken as income or reinvested so they can compound and increase the value of the retirement portfolio.  

As part of an income portfolio, an investment firm will usually buy fixed-income funds (bonds) for the risk averse. The risk factor of dividend stocks is lower than most growth stocks, but there’s always the possibility of losses in the stock market. Advisors allocate to offset that.

Miniature House

Mutual Funds, ETFs, and Total Market Funds

Unless your investment advisor is stuck in the 1980s, they won’t be using strictly stocks and bonds to try to beat the S&P 500. Mutual funds and ETFs are a way to get exposure to an index or market sector without having to buy individual stocks. Total funds are even more targeted. 

Financial advisors open brokerage accounts for their clients so they can buy a mutual fund or total market fund when needed. ETFs can be bought on the open market. Retail investors don’t need a broker to purchase one. For retirement savings, these vehicles help balance a portfolio.

Think of it like this. There are eleven market sectors, some of which an investor will have heavy exposure to and others that may be represented by an index fund. There are indexes for each of the sectors, so it’s a one-shot deal to add balance in that area. 

Index funds and ETFs are passively managed, so they move how the market moves. Mutual funds are actively managed, so investors are putting that portion of their retirement savings in the hands of a financial professional. Most retirement planners look for a mix of the two.

Mutual Funds and ETFs

Annuities and Life Insurance Policies    

Annuities are fixed income investments that are offered by an insurance company. An investment advisor needs to be licensed to sell them, or the investor can buy them from an insurance agent. They work by taking in money now and then paying it out during retirement. 

There are two primary types of annuities. Fixed annuities pay out a guaranteed fixed amount at regular intervals. Variable annuities can pay out greater amounts, but they also carry more risk because the underlying investments could underperform.

Life insurance also comes in multiple forms. Retirees looking to protect family members from having to draw on money from their bank account or savings in the event of their demise can buy term life insurance. With that, funeral and burial costs should be covered. 

Younger investors just starting out should look at whole or universal life insurance, both of which build cash value as you pay into them. That value becomes part of the retirement nest egg that can be cashed out or borrowed against if the need arises.

Life Insurance

Risk Tolerance and Historic Return Rates

Ready to invest for retirement? The best investment strategy is one where the investor never loses money, so why not just stick with fixed income investments? That may seem like sound investment advice, but retirees will run out of cash quickly if an advisor tries that with clients.

There’s always an element of risk with retirement portfolios, so there needs to be an in-depth conversation about risk tolerance. Minimal risk results in fewer rewards. Maximum risk is dangerous, but it pays off big if the investor makes the right decisions.

One recent example of this is Bitcoin. Once viewed as a “fad” or even a “fraud,” the popular cryptocurrency produced a market return of over 900% last year. It’s now earned institutional backing from major Wall Street banks and companies like Tesla and Paypal.

Those who took a chance on Bitcoin reaped the rewards. It’s now being used in retirement portfolios, hedged by fixed income investments and equity holdings. That balance could lead to a nice payoff when investors from this era retire in a few decades.   

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Kevin Flynn

Kevin D. Flynn is a former financial professional with over ten years of experience in the financial industry. He has consulted for financial advisors, online sales reps, and fintech startups. Kevin holds a degree in accounting and finance and continues to expand his knowledge by attending classes and seminars. He commits several hours a day to market research so he can stay on top of the latest news and trends in the financial industry. Kevin's experience in the industry has fueled his successful writing career, which he now focuses on full-time. He currently resides in Leominster, Massachusetts with his wife Evelyn, two cats, and nine wonderful grandchildren.

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