Johnson & Johnson (JNJ), PepsiCo, Inc. (PEP): Investments for the Rest of Your Life

Over age 55 – A Slow Dock into Port
As you edge closer to retirement and eventually leave the working world behind, less-risky investments should play a bigger role in your portfolio. Stocks should still be a supporting player to fuel growth, but you’ll want to boost your exposure to volatility-reducing bonds to protect your hard-earned assets. Within your remaining equity allocation, dividend-producers and high-quality companies should take top priority.

Fund Pick: T. Rowe Price Capital Appreciation (PRWCX)
This hybrid fund invests in a mix of stocks and bonds in a roughly 60%/40% mix. Manager David Giroux favors high-quality large-caps on the equity side, and corporate and convertible bonds on the fixed-income side. Thanks to its bond holdings, this fund will have a lower risk profile than other stock funds, but losses aren’t unheard of here. Capital Appreciation did fall 27.2% in 2008’s bear market, but that was significantly less than the S&P 500’s 37% drop. In general, the fund has produced steady, peer-beating performance, ranking in the top quartile of its peer group in eight of the past 10 years. With an annualized 9.5% showing over the past decade, this reduced-risk portfolio is a solid option for more conservative investor types.

ETF Pick: Vanguard High Dividend Yield ETF (NYSEARCA:VYM)
This fund tracks the FTSE High Dividend Yield Index, which follow the performance of stocks paying higher-than-average dividends. It sports a 3% 12-month trailing yield, which should help give income-starved investors a boost. This fund should be offset with significant bond exposure elsewhere in a retiree’s portfolio, but it’s a great, inexpensive choice for both income and capital growth.

The article Investments for the Rest of Your Life originally appeared on Fool.com and is written by Amanda Kish.

Amanda Kish is the Fool’s resident fund advisor for the Rule Your Retirement investment newsletter. Amanda owns shares of Vanguard Dividend Appreciation ETF. The Motley Fool recommends Johnson & Johnson and PepsiCo. The Motley Fool owns shares of Johnson & Johnson and PepsiCo.

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