Best Practices for Managing Your Retirement Plan

Best Practices for Managing Your Retirement Plan

It can be confusing to manage the assets in your retirement plan without any guidance, especially in times of financial uncertainty.

When it comes to investing, stocks have historically outperformed other investments over the long term, making them attractive for staying ahead of inflation. However, the stock market has the potential to be extremely volatile. So, are stocks a safe place for your retirement money? Or should you shift more into a money market fund offering a stable but lower return?

If you’re participating in an employer-sponsored retirement plan, you probably have the option of shifting the money in your plan from one fund to another. Here are a few guidelines to help you decide where your might look to place your investment:

Consider Keeping a Portion in Stocks
In spite of its volatility, the stock market may still be an appropriate place for your investment dollars, especially in long-term retirement planning. Since most retirement plans are funded by automatic payroll deductions, they achieve a concept known as dollar-cost averaging. Dollar-cost averaging is an investment strategy where the total amount to be invested is split across periodic purchases. Essentially, dollar-cost averaging can be an effective way for investors to accumulate shares to help meet long-term goals.

Diversify Your Investments
Diversification is a basic principle of investing. Spreading your holdings among several different investments (stocks, bonds, etc.) may lessen your potential loss in any one investment. When it comes to your retirement plan, you should diversify. But, keep in mind that diversification does not guarantee a profit or protect against investment loss; it is a method used to help manage investment risk.

Investigate Guaranteed Interest Contracts
A guaranteed interest contract offers a set rate of return for a specific period of time, and it is typically backed by an insurance company. Generally, these contracts are very safe, but they still depend on the security of the company that issues them.

Periodically Review Your Plan’s Performance
With your plan, it is likely that you have the ability to shift assets from one fund to another. Use these opportunities to review your plan’s performance, especially when the market or your life situation changes.

When it comes to managing your retirement plan, there is a lot to consider. The good news is you don’t have to manage it alone. Contact your local Vesta office in Fond du Lac, Sheboygan, and Plymouth for help with your retirement investments.

-Written by Eric E. Gurholt, CPA/PFS, CFP® | Financial Advisor


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