RECENT ARTICLES
    COMMUNITY CALENDAR
    BUSINESS DIRECTORY
    CLASSIFIED ADS
    PRESS RELEASES
    ARTICLE ARCHIVE
    HOME DELIVERY SUBSCRIPTION
    CONTACT US
    HOME
   
    PONY POSTAL CENTER
    REMEMBER WHEN ANTIQUES
    HAGERSTOWN AUCTIONS
   


 
 

Article Archive >> Business

Financial Focus Donít Tear Up That 401(k) Statement

If you have a 401(k) plan, reviewing your statement may not always be pleasant. During prolonged market slumps, your balance could drop month after month. And, since your 401(k) represents part of your retirement savings, you might start to have real worries about your future. Is there anything you can do to avoid getting all shook up by your 401(k) statement?

You could, of course, just ignore it and file it away. Or you could use it to make paper airplanes or to line your catís litter box. However, these actions, while temporarily satisfying, are not really solutions.

Instead of mutilating your 401(k) statement, take a closer look at it. Once you get beyond the bottom line, you may find sections that are particularly useful to you in helping you maximize your plan.

One important area to look at is your asset allocation. This is the section that shows how your investment dollars are divided among stocks, bonds, money market accounts and whatever other options you may have in your 401(k). Ideally, your asset allocation should reflect your investment personality. That is, if you consider yourself an aggressive investor, and youíre willing to take greater risks in exchange for potentially higher returns, you may want to weight your 401(k) more heavily toward stocks. On the other hand, if you are more conservative in your investing, you might want a 401(k) portfolio thatís tilted more toward bonds and government securities. Keep in mind, though, that a 401(k) is a long-term vehicle designed to help you build resources for retirement; even if youíre a conservative investor, you will still need some stocks in your portfolio.

Over time, your asset allocation can change, even if you had nothing to do with it. For example, if the stock market has been down for a while, the equity accounts in your 401(k) may have lost value. At the same time, you might have some bond-based accounts that have done quite well. Consequently, your 401(k) portfolio may now be weighted more heavily toward fixed-income investments - and that can be cause for concern if youíre investing for growth. Conversely, a long bull market can inflate the overall percentage of equities in your 401(k) holdings, causing you to inadvertently take on more risk than youíd like.

In short, you need to review your 401(k) statementís asset allocation every so often - and make adjustments when necessary.

What else should you look for on your statement? You may want to pay attention to the investment summary, which shows the annualized total returns of your individual holdings over various time periods, such as one, three, five and 10 years. This historical perspective should be of interest to you, even though past performance wonít guarantee or predict future results. By having a track record to look at, you can at least see how various investments have done in different economic environments. If you see a pattern of consistent under-performance in all types of markets, you may need to evaluate whether you could find better opportunities for your money in other investments.

When you donít like what you see in your 401(k) account balance, donít reach for your document shredder. Instead, keep on reading. You may well find some information that you can use to speed your progress toward your retirement goals.

This article was submitted by the financial representatives of Edward Jones in Hagerstown: Greg Garner, 301-733-9465; Dave Walker, 301-766-7300; Joan Bowers, 240-420-8514; and John R. Pullaro, 301-824-7726.

Printable version

<< back to Articles on Business
<< back to All Articles