With the following 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 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 process is called asset allocation and most of your investment choices are either stocks funds, bond funds, or balanced funds which are a mix of both. A typical 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 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 own personal best investment strategy or best investment mix (asset allocation) is determined by what degree of risk you are prepared to accept. For all the people all the time, the following middle-of-the-road strategy of asset management did well. Keep 1 / 2 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 would be to KEEP your money committed to this proportion over time scbam. Review your asset allocation or mix one or more times a year to stay on course with 50% in stock funds and 25% in each of the other two. Move money around to rebalance to these levels once the numbers get free from line. This may happen because each investment category will perform differently. By doing this you are able to keep risk in check at a moderate level.
Now, what’s your best investment strategy to avoid premature taxes and penalties; and to help keep your money working once you change employers? Simply do a direct rollover with your 401k money going directly into a mutual fund IRA with a major no-load fund company like Fidelity or Vanguard… everytime 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 selection of funds to pick from, and good service at no charge. With a toll-free call a service rep will walk you through the procedure to assist you set things up, and help is available when you need it. This IRA will soon be your retirement nest egg where the best investment strategy and asset management discussed before can do the job throughout retirement. As you obtain older you only 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 reach their financial goals.