Melting Swiss glacier yields Neolithic trove, climate secrets (AFP)
AFP - Some 5,000 years ago, on a day with weather much like today's, a prehistoric person tread high up in what is now the Swiss Alps, wearing goat leather pants, leather shoes and armed with a bow and arrows.
One of the concerns in a volatile financial markets is, what should be done with my retirement account fund allocations?
Keep an eye on the prime rate set by the Federal Reserve Bank and the stock market indexes such as Dow, NASDAQ, and S&P 500.
As the prime interest rate increases , the beginning of credit tightening begins and the increasing in interest rates starts. Stocks will slowly go down, bonds yield will increase but the principal will decline at a more rapid rate resulting in investment loss. Interest will increase on loans and delayed increase on rates for savings.
The stock market indexes will decline and so will the funds in retirement accounts. One option is to transfer all or part of the balance to the money market account to stop any loss and wait for the downward trend to change.
Retirement accounts such as a 401(k) for profit companies, 403 (b) for non-profit companies, 408(a) Individual Retirement Account and 457 Deferred Compensation are long term retirement investments that take advantage of the time value of money.
An investment company (fiduciary) buys and sells investments from the securities market for the different fund allocations in the plan.
In addition, the fiduciary provides an account report quarterly and annually. Your account should be accessible over the internet by using your access code and password. This will give you current account information and the historical performance of each llocation.
You should be able to check past dates as to the balance of your account to check how the funds have performed. Be sure to check your account every quarter and review the fund allocations for per- formance.
A retirement account starts in the growth phase and over the years transitions to the conservation phase. An account with interest income will keep up with inflation and very little actual growth. Bonds will perform over time about 2% more than money market. Equities should yield 4 to 6% growth over inflation.
When retirement is on the horizon reduce high risk allocations and select funds with less risk. Keep you selections diversified by using 6 to 8 account allocations. Rule of thumb, when the fee charged by the investment company is in the 1.25 to 2% range the portfolio has high turnover and is higher risk. Stay in the .80% to 1.2 range or lower to moderate the risk.
In a recovering market, take the opposite action and return your allocations to the equity funds. The market makes most of its money in a six week period during the year. Take some time to give this matter a little attention.
More to come in the next Make Money Work newsletter.
To your financial success,
Martin Braddock
P.S If you have any friends or family that may be interested in making money work harder have them contact my website: http://www.makemoneywork.info for more information. E-A115 584
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Martin Braddock - martin@makemoneywork.info
Martin Braddock with 23 years of financial planning experience can give you expert advice and the best plans for your financial future in one shot. With the commission selling removed, you get honesty advice and the best financial care that you can possibly have.
