NEW YORK (MONEY Magazine) -
At each of the three stages of your life -- mid-career, pre-retirement and retirement -- you need to grasp four shifting factors:
As you draw closer to retirement, your investing aim will evolve gradually from building wealth as fast as possible to preserving what you have.
As your goals change, so will the risks you face. A market crash, for example, is a far more serious matter right before retirement than when you're young.
Traditional retirement investing advice tends to be too conservative for 21st-century realities. This guide corrects that.
Your investing tools
No investing style fits everyone. At each stage, then, this guide offers three different ways to fill your retirement portfolio:
- Index funds These low cost funds reliably perform better than the average fund. There's no risk they'll wildly underperform the market -- but they won't knock your socks off either.
- Actively managed funds If you want a shot at even better returns, go with the actively managed choices that we've culled from the MONEY 50, our list of recommended funds.
- Target-date funds If you don't want to pick funds, this choice makes sense. Each target fund is a fully diversified portfolio, continually reset at a risk level appropriate for someone planning to retire in a given year.
See the plans for every stage »»
For more on MONEY Magazine's special report, The Dream Retirement, click here.