Smart401k Blog

With the end of April quickly approaching, many of you have already taken part in your own version of spring cleaning. Whether it’s finally reorganizing that garage, getting the yard work done or just freshening up the house, this time of year represents a time of rejuvenation and fresh beginnings. What better time than now to discuss the often-overlooked importance of cleaning and reorganizing your 401(k) investments?

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This post is part of Smart401k CEO Scott Holsopple’s contribution to the U.S. News & World Report Smarter Investor blog series. To view the original article, click here. Original post date March 13, 2012.

You’ve heard you shouldn’t put all your eggs in one basket. But are you really well diversified? Let’s step back to investing basics.

Diversification means investing in varied assets so that if one asset drops significantly in value, other parts of your portfolio could still be in decent shape. If much of your retirement savings are invested in one stock, and that stock loses lots of value, your net worth could plummet—which infamously happened to many former Enron employees. The same goes for asset classes. You don’t want to get stuck holding the bag on just oneasset class.

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This post is part of Smart401k CEO Scott Hollsopple’s contribution to the U.S. News & World Report Smarter Investor blog series. To view the original article, click here. Original post date January 17, 2012.

Maintaining an outdated allocation is akin to playing the same 11 football players, play after play and game after game. Different situations simply call for different combinations of assets for your 401(k) investments.

Reallocation allows you to maintain a portfolio that’s tailored to your needs and reflects prevailing market conditions. That might sound a little too much like gobbledygook, so let’s break it down.

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Volatile times in the market can be a cause of concern and questions for investors. But if market slides are causing a rise in your blood pressure and a decline in your sleep, it may be time to reassess what kind of investor you are. One important step for any investor is to find their comfort zone. That way, when the market enters an unstable time, you can rest easy knowing you have planned your investments to match your attitude toward the market.

To find your comfort zone, there are two important terms to know:  risk tolerance and asset allocation. Having an understanding of these two investing concepts can go a long ways in determining what kind of investor you.

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We don’t like to see retirement investors jump from one investment to the next to the next. It’s not a good practice for retirement investing because (1) it increases risk and (2) there could be fees associated with frequent trading in retirement accounts. On the other hand, there are times that it’s OK to say ‘farewell’ to an investment.

There’s a term from the world of finance and investing called the sunk cost fallacy. Lots of us will deal with it at some point.  (more…)

What can shopping for pants teach us about retirement investing? While this may sound like a silly question, it can teach us more than you might think. Allow me to explain.

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We’ve heard from an increasing number of people who are asking ‘what’s the deal with target-date funds?’

This newer category of mutual funds has popped up as a popular topic in the news and the blogosphere during the past couple years. (They’re also called lifecycle funds and retirement date funds.)

Are you wondering whether target-date funds are right for you? (more…)

A common concern I’ve been hearing from investors lately is the fear that bond funds will decline in value when interest rates rise. While this concern is consistent with the basic concept of the relationship between bond values and interest rates, there are other factors advisers and fund managers consider as they build a portfolio. 

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As a sports enthusiast, one of the best parts of my college experience was playing intramural dodge ball – there’s just something special about blowing off a little steam and throwing rubber balls at other people. My friends and I managed to build an outstanding team. We played together all four years and played for the championship each year, but we never did walk away with the coveted championship t-shirt.

Little did I know that intramural dodge ball team management would closely parallel the way retirement investors create a sound long-term investment strategy. (more…)

If you’ve spent any time reading the Smart401k Blog or our educational material over the past few years, you know we are passionate about setting up a proper asset allocation to help reach retirement goals. We’ve spent countless hours explaining the benefits of understanding your risk tolerance and your investment time horizon; then we’ve taken more time explaining how to use that information to build a portfolio using the asset class categories suited to your needs.

Then there is re-balancing. (more…)