| Plan your meal before you shop |
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| Protect your investment assets by making sure you own a balanced mix of investments (e.g., stocks, bonds, cash).
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Consider the task of planning a meal for a get-together of
family and friends. First, you want the food and drinks for
the meal to be well balanced and fit together, so the experience
as a whole is enjoyable and nutritious. Second, you can’t put
together a shopping list before deciding what your entire meal
is going to be. Similarly, asking what investment funds you
should invest in makes no sense if you haven’t figured out your
retirement goals and strategies.
Get the right balance in your retirement savings
Trying to pick the “best” investment funds or best fund companies without a strategy for how
they should fit together is a loser’s game. Experts say that 90% of your investment success will
be based on getting the right balance, or asset allocation, in your savings. Why does balance
matter? Most investments go up and down in value over time, but not necessarily at the same
time. This is known as diversification, or not putting all of your eggs in one basket.
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- Diversification means getting the right mix of different asset classes: stocks, bonds, cash
and U.S.Treasury inflation-indexed bonds. A good mix of different asset classes helps spread
investment risk and allows you to set how much risk you want in your savings.
- Diversification does not mean investing in a lot of investment funds. If you invest in funds that
are too similar, you may not get any protection against market declines — and you may end up
paying higher costs.
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Avoiding the loser’s game is easy!
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| Protect your investment assets by making sure you own a balanced mix of investments (e.g., stocks, bonds, cash).
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Use financial guidance from Financial Engines® at MyFRS.com or
call a counselor at the toll-free MyFRS Financial Guidance Line —
1-866-446-9377, to help you determine:
- How much retirement income you will need to live comfortably,
- How likely you are to meet your retirement income goal,
- How you can improve your retirement income by saving more and
investing tax-efficiently (postponing taxes),
- How you can best change your investments to improve your chances of reaching your
retirement goals, and
- How much the value of your savings could fall over the short term because of your decisions.
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