What kind of fund should I allocate my IRA money to?
I am trying to pick an allocation for my IRA that will permit RMD distributions to come out of the funds. I want this distribution to minimize any "loss" from a dipping or tumbling market. Would you recommend a "payout" fund, or would an all-in-one fund work?
Great question! A lot of the answer to your question depends on how much you have and how much you need to withdraw. I'm a big fan of all-in-one or asset allocation funds. Keep in mind that the expense ratios will be on the higher end for both, since they will both be very actively managed. A few other options to consider, again, depending on your over-all assets and risk tolerance, could be an annuity (make sure it's RMD friendly) or a managed account strategy. Good luck!
This a good question. I would imagine you are fairly conservative if you are making RMD distributions, so some kind of income generating payout fund would seem appropriate. But to be clear, the distribution itself is not going to "minimize any loss from a dipping or tumbling market." Of course, once the distribution amount leaves the fund, it's no longer in the market, therefore not subject to market reaction. So I agree with Shanna's response that understanding how much risk you are comfy with is important. This will help determine the appropriate fund you choose and the amount of risk it is subject to, which determines any loss or gain for the money that remains in the fund. I hope this helps,