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Summer is a Good Time to Review your 401k

Basic tips to keep in mind when it comes to your investment


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A lot of people ask me how often they should look at their 401k. You want to look at it at the beginning of the year to determine whether your current allocation is aligned with your risk tolerance and goals. The middle of the year is another good time to check in to see how your investments are doing and determine if you should increase your contribution.

Here are some basic tips to keep in mind when it comes to your 401k plan:

  • The purpose of a 401k plan is to save money for your retirement.  Review the material your employer provides about the investment options available. Determine which of the options best suit your objectives and then decide how much each month you want to contribute. 
  • Most employers will match your contribution to a certain percentage of your income. At the very least, you should be maxing out your employer matching contributions.  
  • Start early and save as much as you can.  By leaving your money invested, you can benefit from compounding.
  • Review your 401k portfolio with your spouse.  The strategies being used in both of your accounts should complement one another and fit with your overall financial plan.
  • Reevaluate your asset allocation as you get closer to retirement.  If you are in your 20s or 30s, you may want to favor investments that have the potential for growth but may carry risk.  Closer to retirement, your priority may shift to capital preservation.

It’s important to look at your total financial plan and what your goals are. If you don’t know how to do that, sit down with a financial advisor who can help you figure out your goals, look at your risk analysis and help create a plan that’s intended just for you. Most importantly, start planning early. There are a lot of strategies and ways to get you where you want to be, as long if you have the time to allow the strategies to work.

Sara Hemmings is Financial Advisor with Morgan Stanley Wealth Management in Loveland. Sara can be reached at Sara.Hemmings@morganstanley.com or 970.776.5506.

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