New Year, New Investments?
It’s almost 2009, do you know where your 401(k) is?
Dear, dear 2009,
Now that 2008 is ending, I am, as many of us are, hoping that you will be a much kinder year – especially with respect to our finances! The topsy-turvy stock market action of the past year has been enough to make anyone’s stomach churn, not to mention watching out retirement funds slowwwwwwly disintegrating into nearly nothing. Some of us lost more than 25 percent of our retirement in one week! Seriously? We have to do better than this.
While you are pondering that, I’m taking some action on my own – and reviewing my 401(k) to see if it might be time to shuffle things around for better odds this coming year. So here’s what I’m looking at, while you are working on your end of the bargain:
1. My risk strategy. Early on in my career, I was more than happy to place most of my 401(k) into higher-risk funds and stocks. Now, as I see things growing more and more unstable, I’m seriously considering moving at least half of them to much lower-risk funds. This way, I help staunch the flow of money out of my account, while still being able to grow at a cautious rate.
2. My benchmarks. I have specific goals for each of my investments – so, if I see that they are not meeting the benchmarks I’ve set, this is the perfect time to look at adjusting – perhaps expanding my investment mix, redistributing my percentages, or changing funds altogether.
3. My time horizon. Similar to my benchmarks, I like to revisit my timelines, and the goals I have for certain timeframes. If I want to retire when I’m 45, then I need to make sure that my accounts are still on track to allow me to do so.
4. The cost of shifting. My 401(k) plan allows me to go online and shift things around almost as much as I want with no fees involved. Other plans may only allow it once a year, so I always check to see what the rules are – sometimes the fees to reallocate are not worth the return.
So, 2009, the situation is still dicey with the markets and retirement funds across the board. I have full faith that you are working to rectify the situation, but until then, I’m following my own advice – and telling all my fellow Bettys to do the same!