I am not a financial consultant, but some general guidelines for retirement investing that anyone can follow with minimal effort. This is only applicable if you believe that the world economic growth rate in publicly traded markets is growing at a rate greater than the safest investments (close to nothing as of late):
- Invest first in employer-matching 401K. Even if the fund choices aren't 100% ideal, they're almost never awful, and you're getting free money. Invest second in IRA/Roth IRA, the choice won't make a huge deal of difference to most people, but do your own research to see what's best for your situation. If your employer doesn't match for 401K, fill that up after your IRA. The reason for all of this: tax benefits. If you still have money left over after these limits for your retirement plan, it probably is time to consult a financial professional.
- If you're using your employers' 401K, and the options are limited, choose the one that reaches the most diversity (type of asset, all types of market caps of companies, and definitely with global reach). I'd stay away from money market funds (with such a small rate of return, I feel it's a waste of your tax-haven dollars), and focus on equity, real estate, and a smaller amount of government bonds. The reason for diversifying is that the more types of asset categories you are in, and the more diverse the assets inside of each of those categories, the less unnecessary risk you take on.
- If you're choosing assets for your IRA, follow the same sort of guidelines. The easiest way to do this is to use ETFs, which track various markets. A very simple example ETF IRA portfolio might look something like this: 30% in a NYSE tracking ETF, 20% in a NASDAQ tracking ETF, 40% in a "non-us market" tracking ETF, 10% in a real-estate ETF. If you want to diversify with precious metal assets or bond assets, feel free to mix in whatever share you like, or make those investments outside of the IRA (if you've filled your IRA quota already).
This is a simple guide that anyone can set up in a couple of hours, and maintain with a half hour or so per month. It's less risky and more financially sound than "picking stocks", and will very likely not be a loser by the time you retire unless the worldwide economy is, overall, a loser between now and the time you retire.
The content of this post is for general information purposes only and does not constitute any investment advice.
- Invest first in employer-matching 401K. Even if the fund choices aren't 100% ideal, they're almost never awful, and you're getting free money. Invest second in IRA/Roth IRA, the choice won't make a huge deal of difference to most people, but do your own research to see what's best for your situation. If your employer doesn't match for 401K, fill that up after your IRA. The reason for all of this: tax benefits. If you still have money left over after these limits for your retirement plan, it probably is time to consult a financial professional.
- If you're using your employers' 401K, and the options are limited, choose the one that reaches the most diversity (type of asset, all types of market caps of companies, and definitely with global reach). I'd stay away from money market funds (with such a small rate of return, I feel it's a waste of your tax-haven dollars), and focus on equity, real estate, and a smaller amount of government bonds. The reason for diversifying is that the more types of asset categories you are in, and the more diverse the assets inside of each of those categories, the less unnecessary risk you take on.
- If you're choosing assets for your IRA, follow the same sort of guidelines. The easiest way to do this is to use ETFs, which track various markets. A very simple example ETF IRA portfolio might look something like this: 30% in a NYSE tracking ETF, 20% in a NASDAQ tracking ETF, 40% in a "non-us market" tracking ETF, 10% in a real-estate ETF. If you want to diversify with precious metal assets or bond assets, feel free to mix in whatever share you like, or make those investments outside of the IRA (if you've filled your IRA quota already).
This is a simple guide that anyone can set up in a couple of hours, and maintain with a half hour or so per month. It's less risky and more financially sound than "picking stocks", and will very likely not be a loser by the time you retire unless the worldwide economy is, overall, a loser between now and the time you retire.
The content of this post is for general information purposes only and does not constitute any investment advice.