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By Christine Benz | 01-18-2018 02:00 PM

Building a Portfolio That's Right for You

Christine Benz explains how investors can use her model portfolios to develop their asset allocations and help with security selection.

Christine Benz: Hi, I'm Christine Benz for Morningstar.com. I've created a number of model portfolios that are available to Morningstar.com readers. One subset is geared toward investors who are accumulating assets for retirement, and the other subset is designed for investors who are already retired. I've used Morningstar's Lifetime Allocation Indexes to set their asset class exposures, and I've leaned on Morningstar's analyst research to make specific fund and exchange-traded fund picks. 

I've generally used funds that received medalist ratings from our analyst team. These portfolios are for educational purposes, and Morningstar doesn't have a vested interest in whether investors model their own portfolios along these same lines.

You can use the portfolios in a few ways. You can model your own portfolio after them, but you can also use them as another check on whether your asset allocation and security selections are on track.

My Model Bucket Portfolios, which are geared toward people who are already retired, can also be instructive by demonstrating how retirees can generate cash flows from their portfolios without having to stretch for yield.

The portfolios all include a cash component that can regularly be refilled with a combination of dividend and income distributions as well as rebalancing proceeds by selling appreciated positions. I regularly provide illustrations of how the mechanics of cash flow generation would work on an annual basis.

If you have a well diversified portfolio, chances are you already have the key ingredients to employ the bucket strategy.

Thanks for watching. I'm Christine Benz for Morningstar.com.

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