With the next best investment strategy managing your 401k or IRA investment assets may be greatly simplified both now and in the future. You’ll likely change jobs before you retire, and with out a long-term investment strategy for asset management you can lose control of one’s retirement nest egg like millions of other Americans have.
In a typical, traditional 401k plan asset management basically amounts to picking mutual funds to invest in. The process is named asset allocation and most of one’s investment options are either stocks funds, bond funds, or balanced funds which are a variety of both. A normal plan includes “safe” options such as for instance a money market fund or stable account that only pays interest as well. In piecing together an investment strategy the very best investment portfolio will include all three of those asset classes or fund types: stock funds for growth, bond funds for higher income, and a money market or stable fund for interest income and safety.
Your individual best investment strategy or best investment mix (asset allocation) is determined by what level of risk you’re willing to accept. For the majority of the people the majority of the time, the next middle-of-the-road strategy of asset management spent some time working well. Keep half of your investment assets in stock funds with the other half evenly split between bond funds and a money market fund or stable account. In this way your investment portfolio risk is moderate, and your long-term returns should be respectable.
The key is to KEEP your hard earned money committed to this proportion over time scbam. Review your asset allocation or mix one or more times annually to keep on track with 50% in stock funds and 25% in each of the other two. Move money around to rebalance to these levels when the numbers escape line. This will happen because each investment category will perform differently. By doing this you are able to keep risk in order at an average level.
Now, what’s your absolute best investment strategy to avoid premature taxes and penalties; and to help keep your hard earned money working whenever you change employers? Simply do a direct rollover with your 401k money going directly into a mutual fund IRA with a significant no-load fund company like Fidelity or Vanguard… each time you leave an employer where you’d retirement assets. In this way you are able to consolidate your retirement nest egg in one place and simplify your future asset management task.
Other advantages include low-cost investing, a wide collection of funds to select from, and good service at no charge. With a toll-free call a service rep will walk you through the procedure to help you set things up, and help can be acquired if you need it. This IRA is going to be your retirement nest egg where the very best investment strategy and asset management discussed before can do the job throughout retirement. As you receive older you just change your investment mix to favor bond funds and money market funds vs. stock funds for less risk and more income in retirement.
A retired financial planner, James Leitz posseses an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly together helping them to achieve their financial goals.