The best and most popular news-posts at able2pay.com are being updated and moved. To see what's available, click on Retirement or on the Goals, Investing, or Portfolios menus at the top of this page. Included under Portfolios is an article on Basic Portfolios that amplifies the post immediately below.

Do you want guidance on funds to buy in your 401(k), 403(b) or IRA, college-savings, or investment account? Here's an easy method from able2pay.com.
Step 1. Set a target percentage for stock funds.
When do you expect to spend most or all of the investments in this account?
Step 2. Allocate to suitable stock and bond funds.
Use your target to find the matching row in the table below. Then use the percentages in your row to invest in the funds shown by the column headings. Most 401(k), 403(b), IRA, college-savings, and investment accounts will offer these funds or equivalents. Below the table are descriptions that will help you find the right ones for your account.
- Answer two questions to set targets for stocks and bonds, suitable for your goals and preferences.
- Allocate to three basic funds, which any firm will offer.
Step 1. Set a target percentage for stock funds.
When do you expect to spend most or all of the investments in this account?
- All in the next year or two: Set final target = 0% and stop (skip the next question).
- Most or all within five years: Set preliminary target = 30% and continue.
- Six or more years from now: Set preliminary target = 60% and continue.
- Maximize gains: Add 15% to your target.
- Minimize losses: Subtract 15% from your target.
- Do both: Keep your preliminary target (no change).
Step 2. Allocate to suitable stock and bond funds.
Use your target to find the matching row in the table below. Then use the percentages in your row to invest in the funds shown by the column headings. Most 401(k), 403(b), IRA, college-savings, and investment accounts will offer these funds or equivalents. Below the table are descriptions that will help you find the right ones for your account.
Target | US Stocks | International Stocks | Intermediate Bonds | Short-Term Bonds |
---|---|---|---|---|
75 % | 50 % | 25 % | 25 % | 0 % |
60 % | 40 % | 20 % | 40 % | 0 % |
45 % | 30 % | 15 % | 55 % | 0 % |
30 % | 30 % | 0 % | 40 % | 30 % |
15 % | 15 % | 0 % | 25 % | 60 % |
0 % | 0 % | 0 % | 0 % | 100 % |
- U.S. Stocks: Use an index fund that invests in the total U.S. stock market. If not available, use an index fund of large-cap U.S. stocks or the S&P 500. Avoid anything that's not indexed or that's more specific.
- International Stocks: Use an index fund that invests in all non-U.S. stock markets. If not available, use an index fund of EAFE stocks (developed countries outside the U.S.). Avoid anything that's not indexed or that's more specific.
- Intermediate Bonds: Use a bond fund that invests primarily in a broad mix of U.S. treasury and corporate bonds. Avoid funds with a limited focus on TIPS or on inflation-linked, international, high-yield, or short-term bonds. In a 401(k), 403(b), or IRA account, you should also avoid municipal bonds.
- Short-Term Bonds: Use a fund of U.S. treasury bonds with maturities less than five years. If not available, use instead a short-term bond index fund or a money-market fund.
Optional Step for IRA and Taxable Accounts
The following options are good improvements for an IRA or taxable account, but are unlikely to be available for your 401(k), 403(b), or college-savings plan:
- Invest at Betterment, and simply use the target from Step 1. Betterment's automated service will invest in a well-designed set of U.S. and international stocks and bonds.
- Invest at Vanguard, using the alternate table below and these funds: Global Minimum Volatility; either Mid-Cap Value Index or Strategic Equity; Intermediate-Term Bond Index; and Short-Term Treasury.
- Invest in a low-fee brokerage account such as Fidelity or TD Ameritrade, using the alternate table below and these Exchange-Traded Funds (ETFs): iShares MSCI All-Country World Minimum Volatility (ACWV), Vanguard Mid-Cap Value (VOE) or equivalent; Vanguard Intermediate-Term Bond (BIV) or equivalent; Vanguard Short-Term Government Bond (VGSH) or equivalent.
Target | Global Low Volatility | Mid & Small Value | Intermediate Bonds | Short-Term Treasury |
---|---|---|---|---|
75 % | 50 % | 25 % | 25 % | 0 % |
60 % | 40 % | 20 % | 40 % | 0 % |
45 % | 30 % | 15 % | 55 % | 0 % |
30 % | 30 % | 0 % | 40 % | 30 % |
15 % | 15 % | 0 % | 25 % | 60 % |
0 % | 0 % | 0 % | 0 % | 100 % |