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Why Index Funds and ETFs Add Value to Your Retirement Toolkit

Morningstar Stocks Forum 2011

2011 Stocks Forum and Investor Workshops
October 13-14, Morningstar Global Headquarters, Chicago


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August 06, 2011 - Why Index Funds and ETFs Add Value to Your Retirement Toolkit - by Morningstar Investment Research

Simplifying your portfolio during retirement is on your mind, if the thread on Morningstar.com's Investing During Retirement forum is any guide. Several posters noted that they'd taken steps toward simplifying by hiring advisors and created backup plans. Should they become disabled or pre-decease their noninvesting spouses, their investment plans wouldn't founder. For other posters in or nearing retirement, simplifying their investing lives has revolved around streamlining their once-sprawling lists of holdings: Consolidating investments with a single provider and opting for sturdy funds that span multiple asset classes were two frequently cited techniques for building an uncomplicated, set-it-and-forget-it retirement portfolio. Morningstar's director of personal finance Christine Benz explains why even die-hard prop onents of active management should consider using index funds or exchange-traded funds when seeking dividend income, tight asset allocation control, and tax efficiency.

How to Safeguard Against Identity Theft

I've been hearing a lot about cases of identity theft. How can I protect myself? Is this something I can do on my own, or is it better to use a paid service of some kind?

Morningstar assistant site editor Esther Pak answers this question, emphasizing that consumers have a few options to ward against identity theft, ranging from free fraud alerts to paid credit-monitoring and identity-protection services. Choosing the right level of protection for you depends on your risk of identity theft and how much time you have.

Among the other topics we addressed this week:

Why Are Health-Care Costs Rising? New technology, greater insurance coverage, and consumer demand is pushing health-care spending to a ever-greater proportion of GDP.

ETFs Enable Options Exchange-traded funds offer some desirable passive option strategies as well as liquid option markets.

Fairholme Doubles Down on AIG Amid Continued Outflows Manager exits at Columbia and John Hancock could signal more change for funds.

Where Does "To vs. Through" Fit in a Portfolio? There is no easy answer.

Worthy Funds That Are Finding Value in Growth A recent growth tilt has helped set these value-oriented offerings apart from the pack.

Buckle Up for a Bumpy Ride With Foreign Dividend Funds Look out for greater volatility and additional tax issues.

The Search for Creative Destruction Wasatch's Sam Stewart looks for companies that do things so differently that they can change an industry forever.

Don't Let the Boiling IPO Market Burn You Investors should look past the IPO hype and focus on company fundamentals.

Declining Dollar Forces Funds to Make Tough Choices Some managers decide the greenback can't keep falling forever.

Minding Miners' Beta and Leverage Gold miners or bullion given uncertain U.S. debt circumstances.

CEF Spotlight: A 5-Star Leveraged High-Yield Bond CEF Year in and year out, this fund has successfully navigated the credit cycle.

Flight to High-Quality Corporate Bonds It's hard to argue against owning Microsoft bonds at a spread over Treasuries.

Van Eck Files for Permission to Launch a Dim Sum Bond ETF Global X files for five global infrastructure ETFs, including a rail ETF. Plus, the week's best- and worst-performing ETFs.

Four Tiny but Potent Mutual Funds Let's get really contrarian.

Steering Clear of Government Bonds? Some users have been dumping Treasuries and GNMAs, while others argue against taking drastic action.

Mixed Economic Data, Again As the effects from Japan fade, earnings misses and budget crises take center stage.

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