Saturday, May 17, 2008

Retirement Planning - D is for Diversity

D is for Diversity

Diversity creates more problems for retirement investors than we have space here to count. More than one study has revealed that fear of making the wrong choice stops us from making any choice at all. It is no different when you need to make a choice about which mutual fund to put in your 401(k). The problem is, which fund is the right fund?

Many mutual funds often have default investments for new enrollees. This is a way to get you participating without too much effort. But your employer doesn’t always hire the best fund families to run the plan and the choices might be limited. No problem.

The single greatest way to gain immediate diversification is with an index fund that tracks the S&P 500 index of the largest companies. This Goldilocks index – never too hot, never too cold, but just right – is the perfect investment to use as you begin your retirement journey. Once you learn more about how to make your plan work, you will need to diversify to include an index that tracks the rest of the market.

A is for Asset Allocation

B is for Balance

C is for Continuity

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