With the following 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 before you retire, and with out a long-term investment technique for asset management you could lose control of your retirement nest egg like millions of other Americans have.
In a normal, traditional 401k plan asset management basically amounts to picking mutual funds to invest in. The procedure is named asset allocation and most of your investment choices are either stocks funds, bond funds, or balanced funds which are a combination of both. A normal plan includes “safe” options like a money market fund or stable account that simply pays interest as well. In piecing together an investment strategy the best 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 individual best investment strategy or best investment mix (asset allocation) is determined by what level of risk you’re prepared to accept. For all the people all the time, the following middle-of-the-road strategy of asset management spent some time working well. Keep half 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 main element would be to KEEP your money dedicated to this proportion over time scbam. Review your asset allocation or mix one or more times a year 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. As a result you are able to keep risk in check at a reasonable level.
Now, what’s your best investment strategy to prevent premature taxes and penalties; and to help keep your money working once 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… every time you leave an employer where you had 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 selection of funds to pick from, and good service at no charge. With a toll-free call a site rep will walk you through the process to assist you set things up, and help can be acquired when you need it. This IRA will undoubtedly be your retirement nest egg where the best investment strategy and asset management discussed before can do the job throughout retirement. As you receive older you merely 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 comes with an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly together helping them to attain their financial goals.