With these 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 when you retire, and with no long-term investment technique for asset management you could lose control of one’s retirement nest egg like an incredible number of other Americans have.
In a typical, traditional 401k plan asset management basically amounts to picking mutual funds to invest in. The process is known as 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 putting 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 individual best investment strategy or best investment mix (asset allocation) depends on what level of risk you are willing to accept. For most of the people most of the time, these middle-of-the-road strategy of asset management did well. Keep half your investment assets in stock funds with one 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 ought to be respectable.
The important thing is always to KEEP your money dedicated to this proportion over time scbam. Review your asset allocation or mix at least one time annually to keep on course 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 an average 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 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’d 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 pick 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 acquired once 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 receive 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 has 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.