The Neo-Classical Retirement Portfolio

NEW YORK (TheStreet) -- Last week I wrote about how investors need to rethink how they track investment performance, with the focus more on cash flow of investments verses total account value.

I received lots of feedback from TheStreet.com readers, with many suggesting it was an "A-ha" moment.

So with this in mind, let's talk about how someone with an IRA or 401(k) and other retirement savings should be positioning their investments.

As a prefacing remark, it's worth noting that the Federal Reserve's radical quantitative easing policy has made the world an uncomfortable and risky place for most retirees or near-retirees.

The Fed's approach of manipulating the markets, coupled with excessively low interest rates, is forcing this demographic group to be treated differently when it comes to investing.

As a result the group as a whole is risking that dollars needed for future expenditures will be spent today. I think in the back of their minds, many investors fear they will be destitute or living with their children.

Here's why: Investors have been trained to rely on a conservative basket of investments that I call traditional retirement investments. These include U.S. Treasuries, U.S. bond funds, certificate of deposits, high-yielding money market mutual funds, index growth funds, and fixed annuities.

Based on the Fed's new radical approach to monetary policy, this mix has more embedded risk to those near or new to retirement.

In today's environment, for many this is not going to work anymore. Here's what I believe is the neo-classical retirement portfolio:

Cash: FDIC bank accounts

Gold

Fixed Income: foreign bonds, corporate bonds, bank loan funds, mortgage-backed securities

Equities

Dividend-paying stocks

Here are some, but clearly not all, funds that investors could consider to fill out the fixed-income portion of the neo classical retirement or pre-retirement portfolio.

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