Risk tolerance is a term you may have heard about when determining your investment strategy. While you might picture activities such as rock climbing or jumping out of an airplane when you think of risk, it has a different meaning when it comes to investing.
You just started a new job and have come across information about your company’s 401(k) in your benefits paperwork. You may be wondering what exactly it is and whether you should sign up. The 401(k) plan got its name from the portion of the IRS tax code that governs its use. In the past, most employees received guaranteed monthly retirement income through an employer-funded pension plan.
Many people mistakenly assume that the time for owning stocks is over once they hit retirement. But such blanket statements are not true for everyone. There are a variety of factors that should affect how much of your portfolio, if any, should be devoted to equities during your golden years. Here are some factors to keep in mind:
One often-cited guideline for determining asset allocation when planning for retirement is that you should subtract your age from 100 to find the percentage of your investment portfolio that you should keep in stocks. For example, it suggests if you're 40, you should keep 60% of your portfolio in stocks.
We’d all love to reap the rewards of high returns on our investments without risk. But unfortunately, wishing does not make it so. Like it or not, risk is part of the equation if you’re aiming for anything other than preservation of capital — a risky goal in and of itself, since the buying power of your money will slowly erode over time if you don’t outpace inflation.
With the proliferation of investment and personal finance websites, investors have access to a boundless number resources and tools once only available to financial professionals.
In my opinion, it is impossible to predict future stock market returns. Investment models can produce hypothetical returns but they can’t account for future events. So, in my opinion, investors who manage their investments based on market performance or what they perceive as opportunities for better returns have very little control over the outcome.
Most people would argue that living in a digital world, with instant access to an endless stream of information has made us smarter and more self-empowered than past generations. Investors believe that it has “leveled the playing field”, enabling them to make investment decisions based on the same information once only available to the investment pros.
When it comes to admitting that women are better at certain things, men have a difficult time conceding any degree of supremacy.
The employer-sponsored 401(k) has largely replaced the company-funded pension plan as the primary source of retirement savings for most Americans. Unlike a pension, however, 401(k) benefits are not automatic. Employees must choose whether or not to participate and then decide how much to contribute and how to best invest their contributions.
Risk tolerance is a term you may have heard about when determining your investment strategy. While you might picture activities such as rock climbing or jumping out of an airplane when you think of risk, it has a different meaning when it comes to investing.
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