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 no long-term investment strategy for asset management you can lose control of one’s retirement nest egg like an incredible number of other Americans have.
In a normal, traditional 401k plan asset management basically amounts to picking mutual funds to invest in. The process is named asset allocation and most of one’s investment options are either stocks funds, bond funds, or balanced funds which are a combination of both. An average plan includes “safe” options just like 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 those 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) will depend on 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 spent some time working well. Keep half your investment assets in stock funds with the other half evenly split between bond funds and a money market fund or stable account. This way your investment portfolio risk is moderate, and your long-term returns must be respectable.
The key would be to KEEP your cash committed to this proportion over time scbam. Review your asset allocation or mix at least once a year to remain on track 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 will happen because each investment category will perform differently. By doing this you are able to keep risk under control at an average level.
Now, what’s your best investment strategy in order to avoid premature taxes and penalties; and to keep your cash working when you change employers? Simply execute a direct rollover along with your 401k money going into a mutual fund IRA with an important no-load fund company like Fidelity or Vanguard… each time you leave an employer where you’d retirement assets. This way you are able to consolidate your retirement nest egg in one single place and simplify your future asset management task.
Other advantages include low-cost investing, a wide selection of funds to choose from, and good service at no charge. With a toll-free call a service rep will walk you through the procedure to help you set things up, and help can be obtained when you need it. This IRA will soon be your retirement nest egg where the best investment strategy and asset management discussed before can meet your needs throughout retirement. As you obtain older you just 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.