Retirement portfolio makeover?

Many people close to retirement and some people in retirement are calling up – and their portfolios suck! Portfolios have the classic mistake of either being too aggressive or being too defensive with a lot of long term debt.

In most cases I find a slew of mutual funds – opportunities funds, foreign investments, small cap fund – the full range of funds. When many of these IPOs hit the market, I used to wonder who would invest in these schemes, now I know!

In almost all mutual fund houses the flagship scheme has done far, far better than their esoteric offerrings. However thanks to the fund advisor most people have invested in 11- 15 funds. The benefits of portfolio diversification are almost NIL! Or there is too much concentration of securities because of a poor fund selection.

Most of them need a makeover. I believe all you need is a simple index fund, a term insurance, a savings bank account and a card that allows you to make electronic payment (debit or credit)….anything else is an excess!

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One Response to “Retirement portfolio makeover?”

  1. Indeed simplicity is the best option, considering the ridiculous bouquet of plans & options that create what Dilbert would call “Confusopoly”, while ignoring the common retail invester.
    I should add some caveats –
    index fund with expense ratio below 1% & tracking error below 1% (unfortunately we don’t have any options line Vanguard to give expense ratio below 0.2% & tracking error below 0.1%),
    term insurance (preferably single premium, if you can put up the lump-sum cash) with lowest premium from a solvent insurer,
    savings bank account with minimum AQB and online access,
    debit card with real fraud protection (not the ones who take responsibility only after report of loss is registered).

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