From
Your Perspective:
Identifying an investment strategy
Your age & your
strategy
When retirement is many years away, you can
afford to take greater risks with your 401(k) account. You
may want to invest the bulk of your money in stock
mutual
funds
or in stocks themselves if your plan has a
brokerage window.
If an investment doesn’t perform
as well as you expect for a period — because the manager’s
investment style is out of favor or stocks are in a slump
— you’ll have time to recoup the loss.
On the other hand, if you’re planning
to retire fairly soon, you may want to gradually shift a
portion of your assets into less volatile investments to
preserve capital, or hold on to what you’ve got. Remember,
though, that
it’s important to keep at least a portion of your
assets focused on growth even after you retire.
Choosing
volatile
investments can lead you on a bumpier path than sticking
with investments that are more stable in price. But along
with the added risk comes the potential for greater long-term
growth. And if you still have plenty of time before you retire,
that potential growth could mean the difference between a
retirement that’s more — rather than less — comfortable
than you need.
