Page 161 - FebDefComp
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Review your goals Consider lifestyle or target
and risk tolerance date investment options,
As you review your investment objectives, ask if available
yourself, have your goals changed? How do
If you don’t have the time or confidence
you feel about risk? For example, if the idea of
to select individual investment options to
losing some of your money in a down market
diversify your portfolio, you may want to
keeps you up at night, you may want to reduce
consider a lifestyle or target date investment
the amount of money you have in stocks.
option, if your plan offers them.
Be sure to consider both investment risk AND
A lifestyle option tailors its investment
inflation risk. Inflation risk is the risk that your
approach to your individual tolerance for
choice of investments won’t earn enough to
risk by offering conservative, moderate or
keep pace with inflation. If you invest solely in
aggressive risk styles. It is automatically
short-term investments (i.e. cash), you subject
diversified across investment types (stocks,
your account to inflation risk. Remember that
bonds, and cash instruments) and different
even relatively low inflation can erode the
fund managers. You pick the option that
value of your portfolio over time.
most closely matches your risk profile, and
Diversify to spread professional investment managers do the rest.
It’s an easy-to-use, single solution investment.
your risk
A target date investment option is similar to a
Your best defense in volatile markets is lifestyle option, except that it links its portfolio
diversification, which means to spread your to your expected retirement date. Its portfolio
money within a variety of investments to will gradually become more conservative in
reduce your risk and enhance your return. its mix of investments as your year of
Diversifying your investments is an essential retirement approaches.
part of a solid investment strategy.
Generally target retirement date (lifecycle)
Diversification does not assure a profit investment options are designed to be held
and does not protect against loss in a beyond the presumed retirement date
declining market. to offer a continuing investment option
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