Morningstar's 2020 Portfolio Makeover Week
Christine Benz helps investors check their progress, assess allocations, target holes and overlap, and upgrade their holdings.
Monday, Nov. 9 | Paul and Julia | Is a 70/30 Portfolio Right for These 70-Somethings?
Paul, a 75-year-old retired environmental engineer, and his wife, Julia, a 77-year-old former teacher, have been thoroughly enjoying their retirement: making multiple trips to Europe, pursuing hobbies, and spending time with their children who live close by. Their $1.4 million portfolio looks ample, especially because Julia’s pension provides a good share of their modest living expenses.
But their 40-year-old daughter has learning disabilities; while she’s able to work in a grocery store and lives on her own, Paul and Julia know that she won’t ever be able to fully support herself. Paul wrote seeking a check on their portfolio’s viability and allocations given that it will need to last not just for their lifetimes, but for their daughter as well.
Tuesday, Nov. 10 | Seth and Jill | Career Changer Plays Catch-Up on Retirement Savings
Seth, a 37-year-old a medical researcher, earns a comfortable salary in the low six figures. He and his wife, Jill, preside over a busy and rapidly growing family. But Seth is also feeling a bit of pressure to make up for lost time. He completed his bachelor's degree at the age of 30 and is only just beginning to get serious about investing.
“With my career and retirement saving starting a little late, I occasionally feel the need to catch-up on my retirement balance and college saving,” he wrote. And as is the case for many in Seth’s age band, retirement and college funding aren’t the only priorities for the household. He and Jill would like to make some renovations to their home to accommodate their growing family. They’re also charitably inclined, and as all parents know, raising kids is expensive in and of itself. Seth wrote for help in determining how best to allocate their portfolio and to manage their competing financial priorities.
Wednesday, Nov. 11 | Jeff and Debra | Getting a Second Opinion on a Stock-Heavy Portfolio
Jeff, a 59-year-old journalist, and Debra, a 61-year-old caterer and baker, are pleasantly surprised to see that their portfolio has swelled to $1.15 million of late. That owes to the fact that they actively ramped up their savings rate over the past decade, maintained an aggressive allocation to equities, and didn’t panic in the bear market from 2007-09.
But with retirement on the horizon, Jeff wrote to see if his and Debra’s portfolio is on track to support them beginning when he’s age 67. He’d also like another check on their asset allocation. While a stock-heavy portfolio has gotten them where they are, does such an aggressive mix make sense for what lies ahead?
Thursday, Nov. 12 | Christopher and Kate | 50-Year-Old Asks: Is It Time for More Bonds?
Christopher started investing in his 20s, thanks to a first job as a customer support representative for a financial-services firm. Nearly 30 years, two kids, and several career and locational changes later, Christopher and his wife, Kate, still have most of their nearly $800,000 retirement portfolio in stocks, mainly index funds.
But now that they’re 50, they’re wondering if it’s time to take some chips off the table. “I’ve been modeling retirement since 2005,” Christopher wrote, “but I might need some help moving into bonds.” He wrote seeking another check on their portfolio’s allocations.
Friday, Nov. 13 | Grace and Doug | Retired DIY Investor: Is It Time to Delegate?
Grace, a 66-year-old retired attorney, actively oversees a $2.3 million portfolio for herself and her husband Doug, 71, a retired executive in the pharmaceutical industry. Their portfolio consists mainly of individual stocks--nearly 100 holdings in all--and Grace loves selecting and monitoring them.
But she is also realistic about the fact that she may not be able to continue doing so indefinitely. “I am still of sound mind and body but am able to understand that this ‘sound mind’ won't last forever,” she said. Grace wrote seeking advice on how to balance those two sets of considerations: her love of investing her own money with her desire to ensure a smooth transition if she were unable to continue to manage their assets.
Note: Names and other potentially identifying details in the following makeovers have been changed to protect the investors' privacy. Makeovers are not intended to be individualized investment advice, but rather to illustrate possible portfolio strategies that investors should consider in the full context of their own financial situations.