The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks or securities. Nothing is more central to your retirement plan than your k.
It represents the largest chunk of most retirement nest eggs. Finding the money to save in the account is just step one. Some people think investing is too risky, but the risk is actually in holding cash.
Uninvested, it could be worth less than half that in 30 years, factoring in inflation. You can use our k calculator to do the math. But how? The answer is a careful asset allocation, the process of deciding where your money will be invested. Asset allocation spreads out risk. Stocks — often called equities — are the riskiest way to invest; bonds and other fixed-income investments are the least risky.
Instead, you want a road map that allows for the appropriate amount of risk and keeps you pointed in the right long-term direction. Investors who have decades to save should take more risk early on and gradually dial it down as retirement approaches. As a rule of thumb, you can subtract your age from or to find the percentage of your portfolio that should be invested in equities; the rest should be in bonds. Using will lead to a more aggressive portfolio; will skew more conservative.
Or will I make a mistake and sell? In addition, it's not as fail-safe as the first three because the asset mix may not be suitable for your retirement goals, and you have to rebalance the portfolio to maintain a certain percentage of each asset category over time. When possible, it is always recommended that you complete an online risk questionnaire or consult a knowledgeable investment professional before haphazardly choosing stock investments that may lose you money.
In addition to the above options, you can opt to have a financial advisor recommend a portfolio that is tailored to your needs.
The advisor may or may not recommend any of the above k allocation strategies. If they pick an alternate approach, they will usually attempt to pick funds for you in a way that coordinates with your goals, risk tolerance, and current investments in other accounts. If you are married and you each have investments in different accounts, an advisor can be of great help in coordinating your choices across your household. But the outcome won't necessarily be better—and your nest egg won't necessarily be bigger—than what you can achieve through the first four k allocation approaches.
But the exact target for you depends on your life stage, investing goals, and the aggressiveness of your portfolio. You also may want to combine a k with other retirement investment accounts such as a Roth k for tax strategy. Talk to an advisor to discuss the right investment plan for you. How you define a good rate of return depends on your investment goals. If you're playing catch-up, you may want higher returns.
If you have a long way until retirement and a low tolerance for risk, you might be comfortable with a lower return. Although there is no way to perfectly protect your investments from a financial downturn, there are solid strategies you can take to hedge against a major crash. These include keeping a diverse portfolio, not panicking when dips happen in the market, and consistently funding your k over time. Actively scan device characteristics for identification.
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Measure content performance. Develop and improve products. List of Partners vendors. Retirement Planning k Plans. This information is provided for educational and illustrative purposes only and is not all encompassing and is not a solicitation or an offer to buy any security or instrument or to participate in any planning, trading, or distribution strategy. Investors need to make their own decisions based on their specific investment objectives, financial circumstances, and tolerance for risk.
Investing involves risk, including the possible loss of principal. Asset allocation and diversification are investment methods used to help manage risk. They do not guarantee investment returns or eliminate risk of loss including in a declining market. Banking Accounts and Services. Loans and Credit Accounts and Services. Investing and Retirement Our Investing Services.
Wealth Management Wealth Services. Rewards and Benefits Explore Rewards. Comienzo de ventana emergente. You are leaving the Wells Fargo website You are leaving wellsfargo. Cancel Continue. Take Control of Your Retirement Savings. Roll over your retirement savings into an Individual Retirement Account IRA Rolling your money to an IRA allows your assets to continue their tax-advantaged status and growth potential, the same as in your employer's plan. Features Investments retain tax-advantaged growth potential.
Access to more investment choices, which provide greater potential diversification. Ability to maintain your retirement savings along with your other financial accounts. Additional contributions are allowed, if eligible. Keep in mind IRA fees and expenses are generally higher than those in your QRP and depend primarily on your investment choices. Required minimum distributions RMDs begin April 1 following the year you reach 72, and annually thereafter. IRAs are subject to state creditor laws regarding malpractice, divorce, creditors outside of bankruptcy, or other types of lawsuits.
If you own appreciated employer securities, favorable tax treatment of net unrealized appreciation NUA is lost if rolled into an IRA. Leave your retirement savings in your former QRP, if the QRP allows While this approach requires nothing of you in the short term, managing multiple retirement accounts can be cumbersome and confusing in the long run. Features No immediate action required of you. Assets retain their tax-advantaged growth potential.
You typically have the ability to leave your savings in their current investments. Fees and expenses are generally lower in a QRP.
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