A random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing

A Specific Index-Fund Portfolio
The table below presents specific index-fund selections
that investors can use to build their portfolios. The table
shows the recommended percentages for those in their mid-
fifties—the group I call the “aging boomers.” Those who are
not in their mid-fifties can use exactly the same selections and
simply change the weights to those appropriate for their
specific age group. Remember also that you may want to alter
the percentages somewhat depending on your personal
capacity for and attitude toward risk. Those willing to accept
somewhat more risk in the hope of greater reward could cut
back on the proportion in bonds. Those who need a steady
income for living expenses could increase their holdings of real
estate equities, because they provide somewhat larger current
income.

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A SPECIFIC INDEX-FUND PORTFOLIO FOR AGING
BABY BOOMERS
Cash (5%)
*
Fidelity Money Market Fund (FORXX), or
Vanguard Prime Money Market Fund
(VMMXX)
Bonds
(27½%)
†
Vanguard Total Bond Market Index Fund
(VBMFX)
Real Estate
Equities
(12½%)
Vanguard REIT Index Fund (VGSIX)
Stocks
(55%)
U.S. Stocks (27%)
Fidelity Spartan (FSTMX), T. Rowe Price
(POMIX), or Vanguard (VTSMX) Total
Stock Market Index Fund
Developed International Markets (14%)
Fidelity Spartan (VSIIX), or Vanguard
(VDMIX) International Index Fund

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Emerging International Markets (14%)
Vanguard Emerging Markets Index Fund
(VEIEX)
Remember also that I am assuming here that you hold
most, if not all, of your securities in tax-advantaged
retirement plans. Certainly all bonds should be held in such
accounts. If bonds are held outside of retirement accounts,
you may well prefer tax-exempt bonds rather than the taxable
securities. Moreover, if your common stocks will be held in
taxable accounts, you may want to consider the tax-managed
index funds discussed in the next section. Finally, note that I
have given you a choice of index funds from different mutual-
fund complexes. Because of my long association with the
Vanguard Group, I wanted also to suggest a number of non-
Vanguard funds. All the funds listed have moderate expense
ratios and are no-load. More information on these funds,
including telephone numbers and Web sites, is listed in the
Random Walker’s Address Book, which follows this chapter.