With the next best investment strategy managing your 401k or IRA investment assets could be greatly simplified both now and in the future. You’ll likely change jobs when you retire, and with out a long-term investment technique for asset management you might lose control of one’s retirement nest egg like an incredible number of other Americans have.
In a typical, traditional 401k plan asset management basically amounts to picking mutual funds to invest in. The process is called asset allocation and most of one’s investment choices are either stocks funds, bond funds, or balanced funds which are a variety of both. A typical plan includes “safe” options just like a money market fund or stable account that simply pays interest as well. In piecing together an investment strategy the most effective investment portfolio will include all three of these 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 personal best investment strategy or best investment mix (asset allocation) will depend on what level of risk you’re willing to accept. For most of the people most of the time, the next middle-of-the-road strategy of asset management has worked well. Keep 50% of your investment assets in stock funds with another half evenly split between bond funds and a money market fund or stable account. In this manner your investment portfolio risk is moderate, and your long-term returns must certanly be respectable.
The important thing would be to KEEP your money invested in this proportion over time scbam. Review your asset allocation or mix at least once annually to stay on track with 50% in stock funds and 25% in all the other two. Move money around to rebalance to these levels once the numbers escape line. This can 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 best investment strategy in order to avoid premature taxes and penalties; and to help keep your money working when you change employers? Simply perform a direct rollover together with your 401k money going directly into a mutual fund IRA with a significant no-load fund company like Fidelity or Vanguard… everytime you leave an employer where you’d retirement assets. In this manner 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 pick from, and good service at no charge. With a toll-free call a site rep will walk you through the method to help you set things up, and help is available when you need it. This IRA is likely to be your retirement nest egg where the most effective investment strategy and asset management discussed before can do the job throughout retirement. As you get older you simply 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 using them helping them to attain their financial goals.