{"id":7258,"date":"2013-12-18T09:14:44","date_gmt":"2013-12-18T17:14:44","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=7258"},"modified":"2016-12-21T07:28:16","modified_gmt":"2016-12-21T15:28:16","slug":"etf-funds-near-retirees","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/etf-funds-near-retirees\/","title":{"rendered":"ETF Funds For Near Retirees"},"content":{"rendered":"

Heading into your early 60s can be a stressful time as a\u00a0retirement investor<\/a>. Hopefully, your prudence has paid off and you are sitting on a reasonable nest egg for retirement.<\/p>\n

Most financial advisors now would steer you away from the stock market toward a heavy fixed-income portfolio. For many years, this was solid advice.<\/p>\n

The stock market does have an unfortunate tendency to fall in dramatic fashion just before major life changes, such as retiring or taking out money to pay for your kids’ educations.<\/p>\n

\"ETF<\/p>\n

If you are a\u00a0buy and hold investor<\/a>, it only gets harder to hold individual stocks as important dates near. You find yourself poring over the finance news, looking for information on the prospects of your key holdings.<\/p>\n

If you haven’t been investing using index funds or\u00a0index ETF funds<\/a>\u00a0all along, now might be a good time to consider a switch. Here are the reasons why:<\/p>\n

1. Reduced concentration risk<\/strong><\/p>\n

Owning the whole\u00a0stock market<\/a>\u00a0through ETF funds such as the SPDR S&P 500 ETF Trust (SPY) gives you exposure to equities without the emotional risk of having all of your eggs in two or three single-stock “baskets.” An entire sector can collapse and it really won’t harm your position so dramatically that you feel like selling. It’s like insurance against overreacting.<\/p>\n

2. Easier, more precise rebalancing<\/strong><\/p>\n

If you run a balanced portfolio, using ETF funds\u00a0gives you a a simple way to sell off gains while buying back into investments that are temporarily out of favor, that is,\u00a0rebalancing<\/a>. You can do that with individual stocks and bonds, but your personal attachment to them can be a roadblock.<\/p>\n

3. Less tax complexity<\/strong><\/p>\n

If you own your investments in an IRA, this is less of an issue, but taxable accounts should use ETF funds\u00a0for the tax advantages they offer. Within each sector they track, these funds can stay\u00a0balanced across a given index<\/a>\u00a0without creating taxable gains you must then track.<\/p>\n

4. Higher liquidity<\/strong><\/p>\n

If you own only giant blue chips, selling when you need to sell is less of a problem. But if you own small caps or foreign stocks, the gap between the price at which you want to sell and the price at which buyers want to buy can be quite wide. Fix this by sticking to broadly held ETF funds, such as the\u00a0iShares Russell 3000 Index (IWV),\u00a0Vanguard Emerging\u00a0Markets\u00a0Stock ETF (VWO)<\/a>\u00a0and Vanguard\u00a0Total\u00a0Bond Market ETF (BND).<\/p>\n

5. Low costs<\/strong><\/p>\n

What else do widely held ETF funds\u00a0have in common? They are typically very inexpensive to own, featuring very low management fees and, depending on your broker, low or zero commission rates for trades.<\/p>\n

Keeping costs down matters a lot, even for near retirees. Chances are, you’ll live 20 years or more in retirement, so\u00a0minimizing investment costs<\/a>\u00a0helps you to maintain the value of your portfolio over time.<\/p>\n","protected":false},"excerpt":{"rendered":"

Heading into your early 60s can be a stressful time as a\u00a0retirement investor. Hopefully, your prudence has paid off and you are sitting on a reasonable nest egg for retirement. … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":7260,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[7],"tags":[],"yoast_head":"\nETF Funds For Near Retirees | MarketRiders<\/title>\n<meta name=\"description\" content=\"If you haven't been investing using index funds or index ETF funds all along, now might be a good time to consider a switch. 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