In this guide we have put together some retirement investing tips that we feel will be helpful to you as a Fortune 500 employee or retiree. Market movements, inflation, economic growth, politics, and interest rates— are just a few of the many factors that can influence the performance of your investments.
Instead of worrying about events that are out of your hands, focus on what’s in your control. Build an investment strategy that reflects your goals, time horizon, and risk tolerance. Diversify, but remember diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if security prices decline. Lastly, focus on managing your tax situation.
The sooner you start investing, the more compounding can work for you. With time, your chances of making money increases, and the volatility of your returns decreases. The chart shows how various asset classes have performed over time. Keep in mind, however, that past performance does not guarantee future results and individuals can’t invest directly in an index.
News cycles driven by fear, uncertainty, and doubt can challenge even the most disciplined investor. Everything you see and hear is designed to keep you watching or reading, not necessarily to inform you. Although we live in an era of seemingly infinite data, information overload can cause you to reconsider investment decisions. Tuning out the noise will foster better investing decisions and lead to long-term success.
Market timing is the strategy of trying to predict future market movements to time buying and selling decisions. When markets are rallying or pulling back, it can be very tempting to try to seek out the top to sell or the bottom to buy. The problem is that investors usually guess wrong, missing out on the best market days.
We have seen countless cases of Fortune 500 employees and retirees, losing big with this strategy. Another approach is to focus on time in the markets, which may let you ride out the natural market cycles and focus on your long-term goals.
Ways to Manage Money
Define Your Time Horizon
Understanding your time horizon, the time from now until your retirement data at Fortune 500, is a critical first step in determining what type of investments may fit your overall strategy.
Stay Calm, Don't Be Impulsive
It’s natural for markets to fluctuate. During periods of volatility, focus on managing your emotions rather than making changes to your portfolio.
Start As Soon As You Can
The earlier you start, the greater the compounding potential. If you start saving and investing early, you may gain an advantage over someone who waits to save and invest.
Market risk-- or the risk of your investments declining in value because of economic developments-- isn’t the only type of risk to be concerned about. Personal risks, such as longer lifespans and rising healthcare costs, means that Fortune 500 employees need to consider a variety of factors as they prepare for retirement. Understanding risk as it relates to your time horizon and investing goals is critical to a financial strategy.
The more complex the choice and the more uncertain the subject matter, the more emotions may influence the decision. These emotions are often rational, especially in investing. According to Nobel Prize-winning psychologist Daniel Kahneman, for most people, the fear of losing $100 is more intense than the prospect of gaining $150. This so-called loss aversion is an example of how emotions can overtake logic during period of market volatility.
The sooner you begin investing, the longer your money can work for you. Let’s look at two hypothetical investors, Sally Starts, and Dave Delays. When Sally turns 50, she starts contributing $25,000 a year to an account that earns a hypothetical 6%. After 10 years, she stops making payments. Dave puts off his investing program.
At age 60, he begins setting aside $25,000 a year into an account that earns a hypothetical 6%. Though both have contributed equal amounts, Sally has the magic of compounding interest working for her. When they both reach age 70, Sally’s account balance is nearly twice the size of Dave’s.
The Retirement Group is a nation-wide group of financial advisors who work together as a team.
We focus entirely on retirement planning and the design of retirement portfolios for transitioning corporate employees. Each representative of the group has been hand selected by The Retirement Group in select cities of the United States. Each advisor was selected based on their pension expertise, experience in financial planning, and portfolio construction knowledge.
TRG takes a teamwork approach in providing the best possible solutions for our clients’ concerns. The Team has a conservative investment philosophy and diversifies client portfolios with laddered bonds, CDs, mutual funds, ETFs, Annuities, Stocks and other investments to help achieve their goals. The team addresses Retirement, Pension, Tax, Asset Allocation, Estate, and Elder Care issues. This document utilizes various research tools and techniques. A variety of assumptions and judgmental elements are inevitably inherent in any attempt to estimate future results and, consequently, such results should be viewed as tentative estimations. Changes in the law, investment climate, interest rates, and personal circumstances will have profound effects on both the accuracy of our estimations and the suitability of our recommendations. The need for ongoing sensitivity to change and for constant re-examination and alteration of the plan is thus apparent.
Therefore, we encourage you to have your plan updated a few months before your potential retirement date as well as an annual review. It should be emphasized that neither The Retirement Group, LLC nor any of its employees can engage in the practice of law or accounting and that nothing in this document should be taken as an effort to do so. We look forward to working with tax and/or legal professionals you may select to discuss the relevant ramifications of our recommendations.
Throughout your retirement years we will continue to update you on issues affecting your retirement through our complimentary and proprietary newsletters, workshops and regular updates. You may always reach us at (800) 900-5867.
Stern.NYU.edu, 2021
S&P 500 return includes price appreciation and reinvestment of dividends. Treasury bond return includes coupon and price appreciation. Treasury bill return is a three-month rate. Past performance is no guarantee of future results. Indexes are not available for direct investment. Historical performance does not reflect taxes and fees associated with the management of an actual portfolio.
Gains and Losses: What Are Your Prospects For A Successful Project, 2020
This example is for illustrative purposes only and does not represent an actual investment or combination of investments. Annual contributions are made at the beginning of the compounding period. This hypothetical example does not reflect taxes or any fees. Past performance does not guarantee future returns.
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