With these 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 without a long-term investment strategy for asset management you could lose control of one’s retirement nest egg like countless other Americans have.
In an average, traditional 401k plan asset management basically amounts to picking mutual funds to invest in. The procedure is named asset allocation and most of one’s investment options are either stocks funds, bond funds, or balanced funds which are a mix of both. A typical plan includes “safe” options such as a money market fund or stable account that simply pays interest as well. In assembling an investment strategy the best investment portfolio will include all three of the 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, these middle-of-the-road strategy of asset management did well. Keep half 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 way your investment portfolio risk is moderate, and your long-term returns should really be respectable.
The key would be to KEEP your money committed to this proportion over time scbam. Review your asset allocation or mix at least once per year to keep on the right track with 50% in stock funds and 25% in all the other two. Move money around to rebalance to these levels when the numbers get out of line. This will happen because each investment category will perform differently. Using this method you are able to keep risk under control at a moderate level.
Now, what’s your very best investment strategy in order to avoid premature taxes and penalties; and to keep your money working when you change employers? Simply do a direct rollover along with your 401k money going into a mutual fund IRA with a major no-load fund company like Fidelity or Vanguard… every time you leave an employer where you had retirement assets. In this way you are able to consolidate your retirement nest egg in a single place and simplify your future asset management task.
Other advantages include low-cost investing, a broad collection of funds to choose from, and good service at no charge. With a toll-free call something rep will walk you through the process to help you set things up, and help is available when you need it. This IRA will be your retirement nest egg where the best investment strategy and asset management discussed before can work for you 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 with them helping them to reach their financial goals.