We suggest this balanced strategy for managing your simple 401k allocations in an employer's plan. Our 401k advice is do NOT ignore your 401k options! Even though you are invested in your employer's 401k retirement plan you should manage your own account. Most 401k plans today allow you some control. Use this freedom to maximize your retirement returns. Remember that the general strategy to maximize the return of your investment is to move your money between stocks and cash depending on whether the market is going up or down. In general here are the easy steps you should take: - Learn what investment vehicles (usually mutual funds) are available and how to buy and sell them in your plan.
- Look specifically for ETF s in your employer's plan, otherwise use mutual funds.
- Identify those Mutual Funds or ETFs that are based on the indexes that TimingTruth monitors. Here is a list of all the indexes we monitor .
- Determine your general asset allocation based upon how many years until you plan to retire.
- Select your specific funds you will use in your 401k portfolio.
- Minimally you will want an S&P 500 fund and a bond fund.
- Ideally you will have foreign stock funds available to you as well.
- ETFs are usually more profitable than mutual funds because of the ETF's lower expenses.
- Setup your periodic purchase of shares.
- With a 401k plan you will purchase shares on a periodic basis, usually every pay period. Whether or not you purchase a particular fund's shares is determined by your instructions to the 401k plan manager.
- Instruct the plan to Buy shares when the TimingTruth signal is a BUY; sell and move to a Cash position when it is a SELL signal.
- Be patient. Your simple 401k retirement plan is a long term strategy by design.
This balanced strategy for simple 401k retirement plans is constructed to avoid the catastrophic losses many experienced in 2008 -9. Read our blog, Active versus Passive Retirement Investors , for more detail.
|
