22 KIPLINGER’S PERSONAL FINANCE^ 02/2020INVESTING
programs suggested a 60% stock
and 40% bond portfolio. Ally Invest’s
Managed Portfolios recommended a
56% stake in stocks, 14% in bonds and
a hefty 30% in cash.
A static 30% cash position is stan-
dard in Ally’s zero-fee robo portfolios.
(Investors who want to be fully in-
vested can opt in to a product that
charges 0.30% of assets per year.) The
decision to stash so much in cash came
after the firm conducted a survey of its
Managed Portfolio customers, says
Ally Invest’s Demmissie, and learned
that the average respondent held a
28% cash position. “An overwhelming
number of our customers
wanted a cash buffer,” she
says. The cash helps people
to stay invested and may
deter them from selling low
whenever the stock market
turns down, she adds. But
this cash-heavy portfolio is
best for only the most ner-
vous of investors who are
worried about the market.
Bear in mind that investors
with such conservatively
positioned portfolios may
need to compensate by sav-
ing more in order to reach
their goals.
If you’re already retired,
some firms offer portfolios
geared toward capital pres-
ervation and income. Bet-
terment offers four Black-
Rock Income portfolios
that are invested 100%
in bonds, tiered by risk level. They’re
filled with bond ETFs that invest in
U.S. Treasuries, mortgage-backed
securities, and investment-grade and
high-yield corporate debt, as well as
emerging-markets bonds. The income
portfolios are designed to preserve
capital and provide steady income.
The most conservative fund tilts to-
ward high-quality short-term bonds
and currently yields 2.05%. The most
aggressive one, which is heavily in-
vested in high-yield and f loating-rate
corporate bonds, yields 4.00%.the lowest-cost funds available in
your plan. Over time, it monitors, re-
balances and shifts your holdings to
an appropriate mix of stocks and
bonds as you near retirement.
Of course, Blooom’s algorithm fo-
cuses on the lowest-cost funds, which
means it may overlook some standout
actively managed funds your plan
might offer (see “The Best Funds for
Your 401(k),” Dec.). Still, says Costello,
fees are “the one thing you can control
when it comes your investments.”
Blooom plans to unveil a tiered pricing
system that depends on the level of
services you require, but 401(k) ac-counts with less than $10,000 will pay
just $40 a year. Note that a good, low-
cost target-date fund already in your
plan might do the job as well.Conservative
Investors
We answered, where possible, the
online questionnaire at more than
a dozen firms, responding as a 50-
something investor with a moderate
risk tolerance, 12 years to go before re-
tirement and $10,000 to invest. Manya minimum to open an account, either.
But you will pay an annual manage-
ment fee based on the amount of
money you have in your account.
Betterment Digital charges 0.25%
a year; Fidelity, 0.35%.Retired Investors
Making Withdrawals
Most robos are focused on accumu-
lating wealth, but some help retired
investors sort out their required
minimum distributions from tax-
advantaged accounts. Personal Capital,
which calls for a $100,000 minimum
to open an account, will
set up paycheck-like with-
drawals from your IRA
to your bank account and
withhold federal and state
income taxes, too. Personal
Capital gets extra credit
for its Smart Withdrawal
tool. It allows customers
to explore how different
withdrawals from tax-
advantaged and taxable
accounts might affect
their assets over time.
Betterment’s retired clients
can set up regular distri-
butions as well, but only
federal income tax is with-
held (you’re on your own
for state tax withholding).
Finally, Merrill Edge’s Guided
Investing and T. Rowe Price’s
ActivePlus Portfolios can
arrange one-time distribu-
tions from an IRA. Both firms say a
feature that allows regular automated
withdrawals is coming.Savers Who
Want 401(k) Help
Blooom, quirky spelling and all, can
take the reins of your 401(k) account
and manage it for you. It connects to
your employer-sponsored retirement
account—403(b)s and federal Thrift
Savings Plans are eligible, too—and
builds a well-diversified portfolio of