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Get the Right Amount of Investment Advice

By August 31, 2019 No Comments

Putting together your plan doesn’t have to mean going it alone

You’ve decided to save for retirement by signing up for your company retirement plan. After you’ve settled on the investment profile that best suits your style of investing (say, conservative, aggressive, or somewhere in between), the next most important decision you can make is how to match your style to your plan’s investment options. This part of investing is called asset allocation.

Selecting the right mix of investments for your plan requires some discipline to monitor your funds — at least annually, many experts say — to make sure your portfolio is on track to help you pursue your goals. Before you do that, you might want to think about how involved you want to be in managing your 401(k) account.

  • Are you interested in learning about the investment markets, and have confidence in your ability to make your own choices (a “Do It Yourself Investor”)?
  • Are you someone who likes to have access to some advice, but ultimately wants to make investment decisions on your own (a “Help Me Do It Investor”)?
  • Would you rather focus on interests and hobbies outside of investing, and prefer more of a hands-off relationship with your money (a “Do It for Me Investor”)?

 

Depending on your company’s retirement plan, you may be able to match your level of interest in managing your investments with the asset allocation options available to you under the plan.

 

Do It Yourself Help Me Do It Do It for Me
  •  Mix and match from the plan’s investment menu based on your own knowledge of investing and criteria.
  • You may also consider an asset allocation fund that invests according to your comfort with risk, from conservative to moderate to aggressive.
  • A target-date fund (TDF) might also be a sensible option.* TDFs invest according to your time horizon to retirement, getting more conservative as you approach and move past that date.
  • You can use various resources — websites, calculators, help desk, and other tools and resources available online or by your employer — to construct the right asset allocation model for your situation.
  • As your life’s circumstances change, you will need to stay active in managing your account. This includes rebalancing your asset allocation, combining eligible accounts from prior employers, and keeping track of life changes that affect your family finances.
  • For a cost, a professional management firm will select the funds for your retirement plan account and manage your asset allocation for you.
  • You essentially “hire” an investment professional to make decisions about how your retirement plan will be managed, taking into account your individual needs and outside assets.

 

To learn more about these options, contact your retirement plan administrator or financial advisor.

* Please note the principal value invested in these funds is not guaranteed at any time, including at the specified target date.