Flexibility

Some employers enhance their retirement plans with a matching contribution. This means that your employer matches some percentage of the contributions you make to the plan. Though your company’s matching contribution isn’t really free money, it won’t cost you anything. Usually the company match is limited; it will stop when your contribution reaches a stipulated percentage of your salary. For example, if the company’s contribution limit is 6 percent, you will maximize your employer’s contribution on your behalf if you contribute the full 6 percent yourself. If you don’t contribute at least the 6 percent cited in this example, you are essentially leaving money on the table that can add up to a significant sum at retirement age.

Diversification is a hallmark of successful investing. You can diversify your retirement plan investments by dividing your assets among the different funds available (including stock and bond funds) or by choosing an appropriate model portfolio. Note: Diversification cannot ensure a profit or protect against a loss in a declining market.

If your investments include your employer’s stock and you have too much of it, you may expose yourself to excessive risk. Generally, no more than 10 percent of your total retirement portfolio should be invested in company stock. Many employers issue stock to their employees as part of a company match or profit-sharing arrangement as a way of letting employees share in the growth of the company. But company stock does not offer the diversification advantages of mutual funds, which may invest in hundreds of different stocks.

Many retirement plans let you borrow money from your account, but think very carefully before you do. When you take a plan loan, you’re borrowing money that is intended to help make your retirement years secure. During the time you have money out of the plan as a loan, it’s not earning potential investment gains. As a result, your account balance at retirement is going to be less—possibly significantly less. Before you borrow, consider the pros/cons of a plan loan first.

Don’t let your portfolio get off track. Assess your progress at least once a year and rebalance as needed. Over time your asset allocation mix may slip away from its original percentages due to changes in the market. Rebalancing helps ensure that your asset mix stays aligned with your investment strategy and goals. We’re here to help you achieve and maintain a balanced investment mix. In fact, this service is one of our Certified Differences.

You can time an egg, but you can’t time the market. Unfortunately, lots of people think they can, but we’re here to say “Nope. It’s not possible.” It might be possible to buy funds just before a big market uptick or sell right before a big decline, but very few professional investors manage to get both transactions right consistently over time. A better approach for most people is steady, long-term investing that adheres to a clearly defined investment strategy and uses a well-diversified mix of investments. Take comfort in the fact that historically, over time, the market has gone up more than it has gone down.