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Private investment tips to boost your retirement fund

Posted by : Premraj | Posted on : Thursday, April 21, 2016


If you’re in a good job with a 401(k) plan and an employer who matches your contribution every month, then you may think you’ve got your retirement covered. After all, you’re already ahead of 68% of Americans, who according to a 2015 survey were not participating in any kind of employer-sponsored retirement plan at all.

Unfortunately, however, a simple 401(k) or IRA may not be enough to ensure that you have enough savings to guarantee you the retirement lifestyle for which you’re hoping. In order to reach that point, you may be best off taking your investment decisions into your own hands and building up a diverse portfolio of assets that will bring in a healthy return up to your retirement date and beyond.

Building security

Taking charge of your investments may seem like a daunting prospect, but it’s the best way to build up long-term security for later life. Using your initiative and taking control of your own destiny puts you in the best position to cope with an uncertain economic situation on your own terms, making the choices that are right for you before they’re made for you.

However, there’s no denying that such a move can be intimidating for beginners. Most of us know very little about how financial markets work, and from the outside, they can seem like a complicated, high-risk game where the rules are complex, obscure, and only known to a chosen few. In fact, however, all you really need is some basic financial literacy, strong nerves, and a level head. Do your research, proceed with a certain amount of caution, and seek out expert advice when needed.

There are many specialist financial firms that are happy to offer advice or to take on the retirement accounts of individual investors. Fisher Investments is globally recognized in portfolio management, with a wide range of clients, including some of the world’s leading businesses. A certain amount of advice from financial experts is essential, and although there are many online tools to help the DIY investor, using a portfolio manager can take away a lot of the day-to-day pressures and anxieties of investing, and will ensure that your financial pot is in safe hands.

Managing risks

There are still some decisions that you will need to make for yourself, however, such as deciding your personal risk tolerance. A high-risk asset is one that has a high level of volatility; its value may rise and fall dramatically. Such assets are generally in the form of stocks or shares in unpredictable companies. These will give you a chance of higher returns on your initial stake, but also a strong chance that at some point, they’ll be worth far less than you initially paid for them.

If you’re playing the long game, you should be able to ride out the slumps in your asset price and sell when they’re at their highest, but this isn’t always the case. You may find that your assets don’t recover by the time you need them, and in any case, you’ll need nerves of steel to hold out and avoid selling at a disadvantage when all seems lost.

Low-risk assets are those that are less likely to alter their value over time; there’s less chance of you losing money, but you won’t stand to gain as much either. Again, which you should go for depends very much on your personal preference, the length of your investment time, and how much you hope to have at the end of it. However, experts generally recommend a mixture of high, medium, and low-risk assets to make up a healthy, balanced portfolio.

Most retirement investments tend to be too heavily weighted towards stocks and equities. While these can often provide the best return over a long period, a financial downturn could potentially wipe out their value overnight. Too conservative an allocation can also be a mistake, however, as cash savings also lose value in real terms as time goes by. 60% stocks to 30% bonds and 10% cash is a good starting balance, with the stock divided between 55% major domestic firms, 15% smaller domestic firms, and 30% from the international market. This can be adjusted according to the criteria mentioned above.

Stay on course

Finally, it’s important that once you’ve chosen a strategy, you stick to it. Experts recommend rebalancing your portfolio once a quarter at most. Don’t keep switching around, buying and selling every time the market fluctuates, as you’re sure to come out a loser. Stick to your decided course and you’ll eventually ride out the turbulence and reach the sunny shores of a stable, prosperous retirement ahead.

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