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3 Questions to Ask When Investing Your 401(k) Funds

For many investors, 401(k) and 403(b) plans are important to their long-term retirement strategy. Even during times of market volatility, the vast majority of workers continue to contribute. In fact, during the financial crisis of 2008, of more than 22 million defined contribution accounts, approximately 96% of participants still contributed.1

While maintaining regular contributions is key, investors should also consider if they are investing the funds to achieve the best long-term outcomes. Here are some questions to help you with that endeavor:

  1. How often are you changing allocations?
    Some investors take a “day trading” approach, buying and selling stocks or mutual funds based on short-term returns. They often find themselves chasing performance, changing allocations from an underperforming fund to a better short-term performer with the expectation that the strong performance will continue. Instead, consider a “set it and forget it” approach, buying a diversified mix of funds that fit your retirement goals and holding them for the long term.
  2. Are your investments too conservative?
    Many risk-adverse investors avoid stock funds and have a higher allocation to bond funds because of the short-term market volatility. However, stocks have historically provided higher returns compared to bonds and, therefore, provide valuable appreciation over time. Make sure your retirement account isn’t too conservatively structured. Consider your individual factors, including age, risk tolerance, and long-term goals, and allocate accordingly.
  3. Are you unsure about how to invest?
    Depending on the number of plan options and investment strategies offered in your 401(k) or 403(b), selecting investments can be a daunting task. Your Jemma Financial Advisor can help you make your selections based on your overall portfolio, including your taxable accounts and Individual Retirement Accounts (IRAs).

Let Jemma Financial help you build a personalized “set it and forget it” investment plan today.

We are here—by phone, video, or email—to answer your questions and help you with your long-term financial goals.

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