When I first wrote about this topic three years ago ("Seeking Stability," April 2008), I had no way of knowing that 2008 would become a watershed event that would test the mettle of investors and their portfolios. Now, exactly three years later, let's revisit one of the most compelling issues in financial planning-building a distribution portfolio that both protects and prudently grows a retirement account for the duration of a retiree's lifetime.

I discussed the basics of distribution portfolios last month ("Nest Egg Survival," March 2011). This article builds on those ideas by demonstrating how incremental increases in a retirement portfolio's level of diversification enhance the risk/return equation over the long term.

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