Three Tips For Managing A Better Retirement Account
With all of the market volatility, it can be hard to watch our account balances fluctuate so much
. Very few products offer protection against the market's downside like indexed annuities and indexed universal life insurance policies.
Many of us are unsure whether we want to open our retirement account statements. Sure, the worst appears to be over, but it's still hard to tell if we're going to see a gain or a loss on any given statement.
Hiding our heads in the sand, though, is definitely not the best way to handle uncertainty. Today, we will look at three simple tips we can use to help us obtain a better retirement account.
Get more involved with the decision making
Reading a prospectus may be one of the most challenging tasks ever. Trying to understand all of the financial language can be complicated, especially when it seems that new terms and products are coming out all of the time.
That doesn't mean that we run away from the challenge. If there are better ways that we would rather spend our time, then we should delegate the job. We can work with a financial advisor who can review our options and summarize them for us. Then we can use the summaries to make an educated decision on what would work best for us.
Most employer plans have access to advisors. We should seek these advisors out. If one is not available, we have to find someone who can help.
If our account is held with an investment firm, we should have an advisor assigned to the account. That person should be available to help answer our questions. If they are too difficult to reach, we need to contact the main office to be reassigned to someone who will be available to help.
We don't have to know every answer. We just need to know how to find them.
Don't let emotions get in the way
We also have to be careful of letting our emotions stop us from making a smart move. Sometimes, we find ourselves hesitant to sell a stock or mutual fund because it has sentimental value. It may have been a family favorite. It may have been passed down to us from a parent or relative. We may be fixated on the "buy and hold" concept.
While some investments are able to make a comeback, more often than not, we hold on too long. There comes a time where we must decide whether it is time to let go and move on. In many cases, there are comparable investment choices available that are weathering the storm much better than the one we choose to hold.
We should not "marry" our investments. If the numbers tell us to switch, we have to be ready to let go.
Remember the time frame
The decisions we make with respect to our accounts really depend on how much time we have before retirement.
If retirement is close, we should be ready to act quickly on negative information. We must assess the level of volatility and be willing to become more conservative in an effort to protect our principal investment. Some of us do not have time to sit in a very aggressive portfolio waiting for it to come back. We may not have enough left to withstand another hard fall in the meantime.
If retirement is still a long way off, we may have a little more leniency in choosing more aggressive investments or portfolios. We can ride out the wave, and wait for the market to recover.
Saving for retirement is a critical task. We all have to be responsible for developing our own pool of money to supplement Social Security. If we get involved in the decision making, take the emotions out of our decisions, and remember the time frame that we are working with, we have a better chance of successfully building that nest egg.
by: Ozeme J Bonnette
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