Conservative Auto-Pilot Investments

I've been doing 401(k) enrollment meetings most of the month, and one of the recommendations I make to participants in their fifties (even sixties) is to go the conservative route and hang on to the stash.

In the TAG 40I(K) Plan, that boils down to three funds.

There is Mass Mutual's fixed interest fund known as SAGIC -- currently paying 3.7%.

There is PIMCO Total Return -- which is an actively-managed intermediate bond fund run by bond wizard Bill Gross.

And there is Vanguard Target Retirement Income Fund -- the lowest priced offering the Plan has to offer. (This is a fund of funds. ...)

For my dough, the best bet of the above selection is the Vanguard fund because it's

Broadly diversified with international stocks, domestic stocks and thousands of bonds.

Has a slug of Treasury Inflation Protected Securities.

Has returned from 5% to 9.6% over the past five years.

There is, of course, no perfect portfolio or optimum asset allocation ... except in retrospect. Most savvy financial advisers will tell you that almost any asset allocation needs at least 25% in stocks to boost returns and smooth out the ups and downs. (This might be counter-intuitive, but bonds can lose value when interest rates rise.)

So, out of choices in the TAG 401(k) Plan, for conservative investors Vanguard Target Income has my vote.

TAG 401(k) PLAN Enrollment Meetings

Tues. Aug 28th -- 3 p.m. -- Fox TV Animation -- Main confrnce rm.

Wed. Aug 29th -- 1 p.m. -- Cartoon Network -- Main confrnce rm.