Tips for Getting Your Retirement Plan Back on Track
Depending on the ideal asset allocation now may be a good time to sell some of those fixed income investments and buy stocks with the proceeds. Many people have seen the percentage of fixed income investments soar as the prices of stocks have come down. Purchasing additional equity positions can put the overall portfolio back in balance and set you up for the next run up in stock prices.
Of course this advice is best suited to those with a long time horizon and plenty of time before retirement. Workers who are closer to retirement may find that the stock market crash has done their asset allocation for them – as retirement nears most workers will want to move more assets into fixed income investments and less into the stock market. Workers who have took no action while stocks were falling may find that bonds and other fixed income investments already make up a much higher portion of the portfolio than they used to.
Get Into the Savings Habit
For all workers now is a great time to ramp up savings. With job losses still on the rise and not expected to peak for quite some time, now is not the time to become complacent about savings. Workers should have – at a minimum – six months worth of living expense put away in a savings account, bank money market account or similar rock solid investment. Having cash readily available can lessen the sting of a job loss and make it easier to focus on finding a great new job.
As someone from the younger generation I have found it very hard to be convinced to put any money at toward “asset allocation” and “diversification” The traditional financial tools and buzz words just aren’t working anymore and there has got to be a shift in thinking.