Worried About Retirement? Do This
Monday, we told you the importance of saving in your 401(k). It’s only common sense when you crunch the numbers.
If you missed Monday’s issue, you’ll want to read up on how you’re missing out on free money if you aren’t contributing to your 401(k).
As market sentiment changes and money rotates into different asset classes or sectors, the retirement savings in your 401(k) are directly impacted.
Today, I will show you exactly how to re-balance your 401(k) to give you the maximized return, as well as giving you a full set of tools to stay on top of any market conditions.
Let’s get started…
Understanding Your 401(k)
401(k) plans invest your contributions into market assets such as mutual funds, stocks, bonds and precious metals.
Not all 401(k) plans are governed the same way. Your employer may or may not match your contributions. Additionally, different 401(k) plans offer different options to invest in.
Whatever the unique terms of your 401(k) plan are, you most likely can still make changes to how your money is allocated.
A simple tweak here or there could make a big difference in how much money you retire with.
Simple Tips for Rebalancing Your 401(k)
Rebalancing your 401(k) allows you to choose the mix of assets you think will best help you achieve your retirement goals.
The key is knowing your goals and deciding what will work best to achieve them.
Most plans offer tools on their websites to help you determine the best mix. Fidelity, for example, has these tools, among others:
Once you have your goals set, the next step is to determine your preferred asset mix.
Asset mixes can range from stable, slow-growth plans with less risk to aggressive, high-growth, high-risk plans. The general rule to follow is this…
Younger professionals with newer 401(k)s are advised to focus on more aggressive asset mixes that may include things like small-cap funds or emerging-market funds.
For those with maturing 401(k)s, it’s advisable to allocate more stable assets like gold funds or Treasuries.
Your Final Steps
Go online and open up your 401(k) account dashboard.
Here you can view your current asset mix, gains or losses and other plan info. Each site is different, but all are required to have this info available for you.
From here you should have an option to rebalance your assets, like on Fidelity’s site below:
You should be able to find basic information about each investment option you have right through your 401(k) plan. This information should include what assets (stocks, bonds, metals, etc.) make up the fund and past performance.
Take a close look at each — this way you can ensure that your goals and the fund’s investment strategy are in line.
Once you decide on the specific mix of investments that works best for you, you can choose how much money you want to put into each fund.
This could be 3% or 30%, or up to 100%. Guided by the information you gathered from reviewing each option, you’ll be able to determine the right size allocation to meet your retirement goals.
Continue to do this until all your funds are allocated. Click “save” or “submit” and boom, your 401(k) is fully rebalanced.
Now sit back and watch your retirement savings grow.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch