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What should I use for my income/growth allocation slider?


An investment can have an income objective, such as a bond that pays coupons but does not grow in value, or a growth objective, such as a high-tech stock that pays no dividends but is expected to grow in value, or be a mix of the two, such as a utility stock that grows slowly but also pays dividends.  

Our benchmark portfolio is very simple -- it assumes a fixed mix of an income style investment, represented by AGG (Barclays US Aggregate Bond Index ETF), and a growth style investment represented by IWB (Russell 1000 US Large Cap Equity Index ETF). While simple, this is the same mix that many large institutions, such as pension funds and endowments, use as their benchmark. Being a benchmark does not imply a recommended portfolio. It’s simply meant as a guideline -- your actual portfolio might have other investments. But as institutional investors know, outperforming this simple benchmark over long periods of time is quite a challenge. And so, we think it is a good starting point for you to think about your investments as well.

This slider refers to an average mix of income and growth style investments in your portfolio. While we are not making a recommendation, the slider gives you a tool to adjust your investment allocation and see for yourself what impact it has on your retirement outcomes. We rank the allocations in broad terms, ranging from income oriented (mostly bonds), to growth oriented (mostly equities). You can adjust the allocation in steps of 0%, 25%, 50%, 75% and 100% between bonds and equities. We suggest that you start with your actual current allocation before tweaking it one way or another.


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