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3 Phases of Retirement Investing

How to invest when you're pre-retirement, close to retirement and in retirement

You invest in stocks for growth, but that growth comes at a price: volatility. You can turn to bonds because they’re less volatile, but the price for reduced volatility is the potential for less long-term growth.

When you’re investing your retirement accounts, you have to weigh your need for growth against your ability to withstand volatility, and your needs often change over time.

1. Pre-retirement

If you are pre-retirement, you should be primarily focused on accumulating enough money to fund your life after you stop working. Fortunately, you have time on your side and can be more focused on growth. Although your stock portfolio may be more volatile, you have time to recover from losses and the increased return potential of stocks should help you accumulate the amount that you will need in retirement.

2. Close to retirement

As you get closer to retiring, you probably have been making regular contributions to your retirement accounts for years and so you’ve accumulated more money. You should still be putting money aside and you still need growth, but because you’re also closer to the point when you will no longer be earning, you probably value capital preservation almost as much as additional growth.

3. In retirement

When you move into retirement, you’ll likely stop putting money into your retirement accounts and begin taking money out to meet expenses. Post-retirement, you’ll have less time to be invested and you’ll be more focused on income and capital preservation than on growth. The less volatile nature of bonds makes them a good fit for current income, and you should still maintain some exposure to stocks for growth and diversification.

How to Use the Upgrader Funds to Create a Portfolio 

Here are some ways that you can use the FundX Upgrader Funds to create a pre- or post-retirement account. For each of these examples, we used the FundX Upgrader Fund (FUNDX) for a diversified growth portfolio and the FundX Flexible Income Fund (INCMX) for the fixed income component. We adjusted the portfolio allocation by adjusting the allocation to these two funds.

Pre-retirement (under 55 years old)


The majority of the portfolio is in FUNDX, which seeks to build wealth. With many years until retirement, market downturns offer opportunities to buy stocks at lower prices.

A small allocation to INCMX (20%) may help buffer the volatility of a fully invested stock portfolio like FUNDX and help investors stay invested over the long term.

Rebalancing allows investors to buy more stocks into market dips and sell into market rallies.


Closer to Retirement (ages 55-70)

60% FUNDX 40% INCMXA balanced allocation to FUNDX and INCMX can help generate growth with the potential for less volatility.

Early retirees want to make sure their money will last, and FUNDX offers potential long-term growth.

Retirees want to preserve what they’ve accumulated for retirement, and an increased allocation to INCMX (40%) should help buffer some of the volatility of FUNDX.



In Retirement (over 70 years old)

60% INCMX 40% FUNDXINCMX aims to help control downside risk and provide long-term income, a priority for retirees who may not believe they have enough time to recover from stock market declines.

A modest allocation to FUNDX should continue to offer potential growth, since retirees need their retirement accounts to last.

Investors who sign up for an automatic withdrawal plan receive a regular cash payment from their mutual fund or brokerage accounts.

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About FundX

FundX Investment Group pioneered using noload mutual funds to manage client accounts in 1969. Today, the firm uses its evidence-based investment process to manage equity, sustainable and fixed income portfolios of funds for individuals, institutions and mutual funds.


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