4 Best Mutual Funds for Retirees in 2024
Written by
Martin Dasko
Edited by
Amber Barkley
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As you head into retirement, you’ll likely consider switching up your investing strategy, since you won’t have a steady paycheck from your employer. You may have been more aggressive with your investments when you were younger, with time on your side. You’ll want to look into more reliable investments in your golden years.
This is why GOBankingRates looked into the best mutual funds for retirees. With expert managers who track the market, mutual funds can be a reliable investment as you focus on enjoying your life.
Choosing the Right Mutual Funds in Retirement
“When choosing your mutual fund, think of it like shopping for a new car,” said Shawn Carpenter, chairman and CEO of StockAlarm. “You’ll want to check under the hood. How much are the running costs (expense ratio)? Who’s driving (fund manager’s experience and track record)? Does it match your journey plan (investment strategy and income needs)? And, how has it performed on similar trips (performance history)?”
As you exit the workforce, you’ll want your life savings to work for you so that you can enjoy your golden years instead of stressing about your bank account balance and how you’ll be paying the bills. You’ll also want to seek funds that provide consistent returns without the volatility of the market.
Best Mutual Funds for Retirees in 2024
GOBankingRates contacted a few experts who shared recommendations for retirees looking for reliable funds to invest in.
Vanguard LifeStrategy Conservative Growth Fund (VSCGX)
“The way the Vanguard LifeStrategy funds match your investment amount according to your time horizon is particularly helpful,” said Nav Dharan, head of operations at LoansHub. “I believe this encourages greater strategic goals and risk-taking on the part of new investors. The Vanguard LifeStrategy funds don’t change over time; instead, their fixed-asset allocation is based on four pre-established models.”
Investors about to retire could find VSCGX a worthwhile investment with the potential to earn some income and share in price growth.
Dharan added, “With global diversity, this portfolio is allocated 40% to equities and 60% to bonds. VSCGX is going to rebalance its portfolio back to this proportion periodically. The fund has a minimum investment requirement of $3,000 and an expense ratio of 0.12%.”
Vanguard Wellington Fund (VWELX)
“About two-thirds of VWELX’s assets are allocated to equities, and the other third is made up of bonds,” said Dharan. “The bonds in VWELX are primarily intermediate-duration investment-grade corporate bonds with a small amount of government bonds. The large- and mid-cap stocks in the index are chosen for their solid fundamentals, low valuations and above-average dividend yields.”
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Dharan added, “With a greater percentage of equities than bonds, VWELX is a moderately aggressive fund that would be suitable for someone looking to take on more price volatility risk in the hopes of potentially seeing higher total return growth from their retirement fund. Its 0.25% expense ratio is likewise comparatively modest for a fund that is actively managed.”
Vanguard Long-Term Treasury Fund (VUSTX)
“A bond fund like the Vanguard Long-Term Treasury Fund invests primarily in U.S. Treasury bonds with maturities typically ranging from 10 to 30 years, offering a balance of safety and a steady income stream,” said Carpenter.
It’s crucial to look over safer options for your money as you start to focus on enjoying your retirement, and, Carpenter said, bonds are “generally steadier than stock funds.”
He added, “Keep an eye on interest rates and inflation, as they can affect your returns. If you’re the type who likes to play it safer, bond funds might be up your alley. They lend your money to governments or companies and pay you back with interest.”
Vanguard Dividend Growth Fund (VDIGX)
“Dividend funds are like steady, reliable friends who regularly chip in for dinner,” said Carpenter. “They invest in companies that pay good dividends, offering a regular income.”
The Vanguard Dividend Growth Fund invests in stocks that currently offer dividends, which are often high-quality companies. These are also large-cap companies that are relatively undervalued and have the potential for increasing dividends.
Carpenter explained, “They tend to wobble less when the market gets rocky, though they might not be the life of the party during a booming market. And remember, Uncle Sam is interested in those dividends, too, so consider the tax impact.”
Closing Thoughts
If you’re already retired or close to leaving the workforce, these are four mutual funds that you’ll want to look into to provide you with consistent and reliable returns.
Carpenter concluded, “Investing in retirement is all about balancing earning some income, keeping your nest egg safe and growing it to keep up with the cost of living. Mutual funds can be a great companion on this journey, offering variety and expert care. But choosing the right ones is a personal journey that involves understanding your financial personality, goals and needs. And hey, it never hurts to ask for directions — a financial advisor can confidently help you navigate this road.”
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