By Christine Benz, ( Morningstar)
CHICAGO ( Morningstar) -- At first blush, Scott's goal of an early retirement appears to be out of reach. At age 48, this former military serviceman would like to find a way to retire in 10 years, having done several tours of duty in the Middle East. He has begun to save at an aggressive rate, and to date he has amassed $173,000. That's not small change, but it's not enough to fully fund a retirement that could last three decades or more.
|A former military serviceman is fast on his way to being able to retire in 10 years.|
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Scott's portfolio features a fairly conservative asset-allocation mix: 42% in stocks, 28% in bonds and 27% in cash. Another 2% of the portfolio, largely convertible bonds, lands in the "other" bucket. He holds his assets in a few different silos, such as a Roth IRA, a taxable brokerage account and the government TSP. His Roth and taxable accounts amount to about three-fourths of his total assets, with the remainder in the TSP. Scott noted that he's a fan of my colleague, Morningstar's (MORN - Get Report) resident dividend guru Josh Peters, and his fondness for income comes through loud and clear when I asked Scott to describe his investment philosophy. "My intent is to patiently build a dividend-growth portfolio and a quality-fund portfolio that will grow to provide the principal needed to generate the income I would like to have to maintain my family's quality of life," he wrote. Not surprisingly, his taxable and Roth portfolios contain individual dividend-paying stocks, such as Abbott Laboratories (ABT - Get Report) and food distributor Sysco (SYY - Get Report) as well as income-focused stock/bond and hybrid funds. Templeton Global Bond (TGBAX) and BlackRock Muni Holdings Investment Quality (MFL), a leveraged closed-end fund, are among Scott's largest individual holdings. Within the TSP, where the only options are plain-vanilla index funds with very low costs, Scott can't help but keep it simple. His largest position is in the G fund, which provides a compelling risk/reward profile unavailable in the realm of retail funds -- a yield in line with long-term Treasuries along with guaranteed stability of principal. He also has smaller positions in an S&P 500 index tracker (the C fund), an extended market index fund (the S fund), and an international index fund (the I fund). (I wrote about the government's Thrift Savings Plan last year.)