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 when you retire, and with out a long-term investment technique for asset management you may 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 process is known as asset allocation and most of one’s investment choices are either stocks funds, bond funds, or balanced funds which are a combination of both. An average plan includes “safe” options like a money market fund or stable account that simply pays interest as well. In putting together an investment strategy the best investment portfolio will include all three of these 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’re ready to accept. For a lot of the people a lot of the time, the following middle-of-the-road strategy of asset management has worked well. Keep 50% of 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 must certanly be respectable.
The important thing 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 stay on the right track with 50% in stock funds and 25% in each of the other two. Move money around to rebalance to these levels when the numbers get out of line. This can happen because each investment category will perform differently. As a result you can keep risk in order at an average level.
Now, what’s your absolute best investment strategy to avoid premature taxes and penalties; and to keep your money working whenever you change employers? Simply do a direct rollover along with your 401k money going straight into a mutual fund IRA with a significant no-load fund company like Fidelity or Vanguard… everytime you leave an employer where you’d retirement assets. In this way you can consolidate your retirement nest egg in one place and simplify your future asset management task.
Other advantages include low-cost investing, a broad selection of funds to pick from, and good service at no charge. With a toll-free call something rep will walk you through the procedure to assist you set things up, and help can be obtained once you need it. This IRA will soon be your retirement nest egg where the best investment strategy and asset management discussed before can work for you 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 with them helping them to achieve their financial goals.