Model Portfolios

By starting early, you can save toward retirement with only a small percentage of your annual income. This is important when there are children to support and college educations to fund. With time on your side, you can build a healthy retirement portfolio and benefit from compounding interest, dividend reinvestment and capital growth. You also can afford to be quite aggressive, since a shorter-term downturn should make little difference when you invest for a period of up to 20 years. We suggest a combination of funds that seek rapid growth and some combination of growth and income. Begin an automatic investment plan. Invest in your company-sponsored retirement plan and contribute annually to an IRA. As retirement approaches, you'll want to maintain an aggressive element to your portfolio (there's still time for some substantial capital appreciation) while gradually repositioning some of your money in less risky income and capital preservation oriented funds. Maximize contributions to your company retirement plan and IRA. Continue an automatic investment plan. Once you are near or in retirement, you want to protect what you've accumulated with more moderate and conservative investments. You also want to position your money so that is can begin to provide income on a regular basis. However, you'll need to maintain some investments for long-term growth, just in case retirement turns out to be more expensive than you ever suspected or inflation heats up. Continue contributions to your retirement plan until age 70 1/2. Ask your tax adviser how much to begin withdrawing from your savings and retirement plans.

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