Diversifying Your Golden Years: Two Vanguard ETFs for a Balanced Retirement
As we navigate the various stages of life, our investment strategies must adapt to meet our changing needs. What works for a 20-something investor may not be suitable for a retiree in their 60s, 70s, or 80s. Similarly, not all retirees share the same goals or risk tolerance. While some prioritize income generation, others may require a more aggressive mix of income and growth.
For retirees seeking a balanced approach, two Vanguard exchange-traded funds (ETFs) stand out for their unique blend of income and growth potential.
First, the Vanguard Real Estate ETF (NYSEMKT: VNQ) offers a cost-effective way to tap into the real estate market without directly owning physical properties. This fund invests in real estate investment trusts (REITs), which are companies that own, finance, or operate properties that generate income. With a diverse portfolio of REITs, including Public Storage and VICI Properties, this fund provides retirees with exposure to the real estate market while mitigating the risks and costs associated with direct property ownership. The fund boasts a 3.6% dividend yield and a low expense ratio of 0.12%, with a 10-year compound annual growth rate (CAGR) of 7.2%.
Next, the Vanguard Utilities ETF (NYSEMKT: VPU) focuses on a often-overlooked sector that is critical to the American economy. As the world demands more power, utility providers are adapting by opening new facilities or reopening shuttered power plants. This fund invests in large regional utilities, such as Duke Energy, Southern Company, and Dominion Energy, among others. With a low expense ratio of 0.10% and a 2.8% dividend yield, this fund offers retirees a reliable source of income. Its 10-year CAGR of 10.1% is a testament to its growth potential.
Both of these ETFs offer retirees a balanced approach to investing, combining income generation with growth opportunities. By incorporating these funds into their portfolios, retirees can create a more sustainable and diversified investment strategy for their golden years.
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