I am not an investment expert, but I know the basics and I know where to seek help. I know that having the appropriate mix of investments is important and that the desirable mix changes over time and with circumstances. I also know it pays to obtain the expert advice you need.
When you are young your goal is probably growth and as you get nearer and into retirement you want less risk, to preserve your assets, income, but also growth to at least keep up with inflation.
That means you need a mix of investments to give you the best chance of meeting your goals. I say best chance because there are no guarantees, you do the best you can.
I am 75 and have been retired since January 2010. Following is the allocation of investments in my 401k plan. As you can see, the plan record keeper (a major investment firm) says I’m on target. That’s nice to know, but there is more to the story.
This type of guidance is available through most 401k plans, but sadly it’s questionable how much it is used by participants.
Also, there are drawbacks with this information. It may, as in my case, exclude the total investment picture. Over the years I accumulated my employer stock and remain invested in the dividend reinvestment plan, an income stream. I have also invested in various mutual funds, including municipal bond funds (another income stream) so my total mix of investments is quite different from just my 401k.
But the good news is that many 401k record keepers and others offer more than the limited picture. They provide a total retirement planner. These tools allow you to enter all your investments and obtain the total picture of how you are doing with your growth, income and risk objectives. With this information you can then adjust you 401k and/or other investments and also maintain the appropriate mix over time.
It is very important to use a total view your retirement investment goals including qualified plans such as 401ks, and IRAs, non-qualified investments, cash savings and income streams such as Social Security and even a pension.
You cannot meet your retirement objectives without considering the big picture.
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