April 10, 2014
When reviewing your investment options in your 401k/TSP/403b/457, what should you be focused on? Why?
When reviewing your investment options in your 401k/TSP/403b/457, what should you be focused on? Why?
You need to pay atention to the amount of the fees, you should try and find an Index fund that has the lowest fees in the accounts you have to pick from. The you need to make sure that the risk in your portfolio fits you well. You may want a Total stock index and a Total Bond Index. When you first start your 401k it will likely be in a very low market risk account that you would not want to keep it in, you would want to move it to something that will give you the return that you need. In the end fees are one of the most important issues with any investment, if you have high fees your return will get eaten up before you reach retirement age. The market allocation is also important and you need to make sure that your 401k fits in with the rest of your investment and asset allocation.
Right again, Garrett. Let’s review.
When you get a new job, review the options you have in your company retirement plan carefully. Look for broadly diversified index mutual funds (identify words like total market and index). This will help you keep your fees (expense ratio) low and in return, your money will compound at a greater rate. Next up, feed those index funds consistently over time as you dollar cost average into them on a monthly, yearly, and decade long basis. Take control!