• WisBusiness

Wednesday, February 29, 2012

Kirk Spano: Picking a fund allocation for your 401(k)

By Kirk Spano
Over the past twelve years the average 401(k) return has been just about zero. Is that all the stock market’s fault? Or, are the funds in our 401(k) plans to blame? The answers are yes and yes. Over the past twelve years we know that the stock market has returned just about nothing and the funds inside of your 401(k) are for the most part pretty crummy.

What can you do about that sort of environment and the corresponding investment returns? There are three things I advise: cut risk, add interest and dividend income and make several tactical asset allocation moves per decade.

In advising clients, we have used a simple strategy for 401(k) investing that has worked extremely well for people at least five years away from taking income distributions. We select a default 401(k) setting of about one half of our money in fixed income subaccounts and the other half in stock funds that pay some dividend. The specific funds we select have to do with our choices and where we are in the economic and interest rate cycles.

Why do we take such a conservative default position? There are a number of reasons.

The first reason is that a 401(k) balance is a big part of most people’s retirement savings. It should not be put at high risk as most people cannot overcome losses fast enough given an ever closer retirement. Having 80% to 100% of your funds in equity subaccounts, which is what many do, exposes a 401(k) to almost all of the stock market risk. That is simply too much risk for a core asset.

Next, most mutual funds, called subaccounts in your 401(k), are pretty mediocre. There are few truly outstanding funds in most 401(k) because of how the plans are sold and set-up. While I have seen and set-up plans that have outstanding investment options, most plans I come into contact with are mediocre at best.

Finally, most people only rebalance their 401(k) about once per year. By contrast, the average institutional account, i.e. a pension or endowment, is rebalanced about eight times per year. In order to maintain an active and engaged 401(k) strategy, a person must be active, engaged and skilled. Most people do not fall into that subset of 401(k) owners simply because they are too busy.

There is an exception to the roughly 50/50 fixed income to equity approach. When the stock market has a serious correction, down 30% or more, it makes sense to increase your equity exposure to around 80%. As the market then rebounds to previous highs in later years, gradually move back to the 50/50 blend. In most decades you will only need to trade four or five times. Buy low and sell high can actually work if you have a simple system in place.

If you are younger and looking for an aggressive investment approach, what I have found to be a good place is within a Roth IRA. Roth IRA balances are generally smaller, thus can do less damage to your overall finances if losses occur versus if you suffer big losses in a larger 401(k) account. Also, in a Roth IRA custodied at a brokerage, you will have many investment choices from which to choose. Finally, there are substantial tax and liquidity advantages to a Roth IRA which coincide well with more aggressive investing.

What I have described is an easy and effective way to grow your retirement balances. It will also help you sleep at night knowing you are not taking a high risk approach with what is likely your largest piece of retirement money. For a handful of people, managing a 401(k) can take a more aggressive look, but for most people, a conservative approach makes a lot of sense.

-- Spano is the founder of Bluemound Asset Management, LLC in Elm Grove, as well as a columnist for MarketWatch.com of the Wall Street Journal network and a contributor to other financial publications. Spano is available to consult on financial planning, investment management and retirement planning. Visit http://www.BluemoundAM.com


Comments: 14

At May 11, 2016 at 2:42 AM, Blogger Huỳnh Duy said...

nhà hàng quận 1
nhà hàng quận 2
nhà hàng quận 3
nhà hàng quận 4
nhà hàng quận 5
nhà hàng quận 6
nhà hàng quận 7
nhà hàng quận 8
nhà hàng quận 9
nhà hàng quận 10
nhà hàng quận 11
nhà hàng quận 12
nhà hàng quận phú nhuận
nhà hàng quận bình thạnh
nhà hàng quận gò vấp
nhà hàng quận tân phú
nhà hàng quận tân bình
nhà hàng quận thủ đức
nhà hàng huyện bình chánh
Nhà hàng Quận Ba Đình
nhà hàng Quận Cầu Giấy
nhà hàng Quận Đống Đa
nhà hàng Quận Hà Đông
nhà hàng Quận Hai Bà Trưng
nhà hàng Quận Hoàn Kiếm
nhà hàng Quận Hoàng Mai
nhà hàng Quận Long Biên
nhà hàng Quận Tây Hồ
nhà hàng Quận Thanh Xuân
địa điểm ăn uống quận 1
địa điểm ăn uống quận 2
địa điểm ăn uống quận 3
địa điểm ăn uống quận 4
địa điểm ăn uống quận 5
địa điểm ăn uống quận 6
địa điểm ăn uống quận 7
địa điểm ăn uống quận 8
địa điểm ăn uống quận 9
địa điểm ăn uống quận 10
địa điểm ăn uống quận 11

At May 11, 2016 at 2:47 AM, Blogger Huỳnh Duy said...

ăn gì ở quận 8
ăn gì ở quận 9
ăn gì ở quận 10
ăn gì ở quận 11
ăn gì ở quận 12
ăn gì ở quận phú nhuận
ăn gì ở quận bình thạnh
ăn gì ở quận gò vấp
ăn gì ở quận tân phú
ăn gì ở quận tân bình
ăn gì ở quận thủ đức
ăn gì ở huyện bình chánh
ăn gì ở Quận Ba Đình
ăn gì ở Quận Cầu Giấy
ăn gì ở Quận Đống Đa
ăn gì ở Quận Hà Đông
ăn gì ở Quận Hai Bà Trưng
ăn gì ở Quận Hoàn Kiếm
ăn gì ở Quận Hoàng Mai
ăn gì ở Quận Long Biên
ăn gì ở Quận Tây Hồ
ăn gì ở Quận Thanh Xuân
nha hang quan 1
nha hang quan 2
nha hang quan 3
nha hang quan 4
nha hang quan 5
nha hang quan 6
nha hang quan 7
nha hang quan 8
nha hang quan 9
nha hang quan 10
nha hang quan 11
nha hang quan 12
nha hang quan phu nhuan
nha hang quan binh thanh
nha hang quan go vap
nha hang quan tan phu
nha hang quan tan binh
nha hang quan thu duc

At May 11, 2016 at 2:59 AM, Blogger Huỳnh Duy said...

cach lam xoai dam chua ngot
cach lam xoai dam don gian
cach lam xoai dam muoi ot ngon
cach lam Kem dua
cach lam kem dua ngon
cach lam kem dua don gian
cach lam kem dua tai nha
cach lam kem dua ngon
cach lam kem dua ngon tai nha
cach lam Banh ran Doremon
cach lam banh doremon
lam banh ran doremon
cach lam banh ran doremon don gian
cach lam banh ran doremon nhan socola
cach lam banh ran doremon ngon
cach lam banh doremon dorayaki
cach lam banh dorayaki
cach lam dorayaki
cach lam banh ran dorayaki
cach lam Banh goi
cach lam banh goi don gian
cach lam banh goi ngon
cach lam banh goi chien
cach lam banh goi nhan thit
cach lam Banh goi ha noi

At May 11, 2016 at 3:07 AM, Blogger Huỳnh Duy said...

Tóc Đẹp Khang Nguyễn
Nail Xinh
Salon Hà Lan Bạch Mai
Hosana Hair Salon
Hair salon Toni Vien
Ruby Nguyen Nails
MANO MANO Beauty Garden
Xíu Nails
shop 105
Hair salon Quyền anh
Viện Tạo Mẫu Tóc Seoul
QQ Nail Beauty
Thu Nails
Quynh chi nails
Salon Thanh Hà
Hương Nguyễn
haircare hoanh
Sline Hair Salon
Chi Nail
Đạt Hair Salon
Hair Salon Tuấn Nguyễn
Peter Hair Salon Đê La Thành
Hà Mi Lò Đúc
Hair Salon Sáng Tân Vĩnh
Hair Salon Sơn Nguyễn
Hair salon Hà Cung & Academy
Hải Hair Salon, Spa & Nail

At May 11, 2016 at 3:09 AM, Blogger Huỳnh Duy said...

cách nấu chè đậu xanh
cách nấu chè đậu xanh đánh
cách nấu chè đậu xanh ngon
nấu chè đậu xanh đánh
nấu chè đậu xanh
cách nấu chè đậu xanh đơn giản
cách nấu chè đậu đen
cách nấu chè đỗ đen
cách nấu chè đậu đen ngon
cách nấu chè đậu đen nhanh nhừ
nấu chè đỗ đen ngon
nấu chè đỗ đen
cách nấu chè đỗ đen bằng nồi cơm điện
cách nấu chè đỗ đen đơn giản
cách làm bánh gạo hàn quốc
cách làm tokbokki
cách làm bánh gạo
cách làm bánh gạo cay
cách làm bánh gạo tteokbokki
làm tokbokki
cách làm tokbokki đơn giản
cách làm tokbokki ngon
cách làm bánh gạo hàn quốc ngon
cách làm bánh gạo cay hàn quốc ngon
cách làm món bánh gạo hàn quốc

At May 11, 2016 at 3:09 AM, Blogger Huỳnh Duy said...

Hair Salon Karon
Diễm Hồng Làm Đẹp Tại Nhà
Linh Nail & Nối Mi
Salon Lili
Salon Quý MyMy
Hair salon Hương Giang
Yến Xù Nối Mi Đẹp
Hồng Nail
Bống Bridal Makeup&hair
JUDY Cosmetics
Beauty Salon Thiên Long & Chăm sóc tóc
LyLy Nail Art
Bambii Nail
Hair Salon Liên
Vu Hoang hair beauty salon
Loan's Nails
Thúy Lan Hair Salon 2
Nail Kiều Ly
Nhung Nail
Hair Salon Jolie
Nail Hương Hiền
JUNO Hair's & Studio
Bibi Nails
Tiệm Nails Mì Tôm
Ichiban Hair Salon
Nối Tóc Gia Hiếu
Thưởng Hair Salon
Bee Nails
Ichi Hair Salon

At December 13, 2016 at 1:36 AM, Blogger meyerangel said...

good which you can see cost-free HD films as well as TV programs on your Android phone, cinemabox hd apk Although this was developed for usage on Smartphones, the app can be downloaded and install , nice.

At December 24, 2016 at 3:28 AM, Blogger HannahAMueller said...

good live sporting activities on Kodi, maintain checking Kodi Tips for koditvguide.com with exactly how the user interface acts. nice.

At October 13, 2017 at 1:52 AM, Anonymous Anonymous said...

unblocked games
unblocked games 66
unblocked games 77
games unblocked

At October 13, 2017 at 1:52 AM, Anonymous Anonymous said...

november 2017 Printable Calendar
november 2017 Calendar Template
Calendar november 2017
december 2017 Printable Calendar
december 2017 Calendar Template
Calendar december 2017

At November 11, 2017 at 1:11 AM, Blogger tom50 said...

december calendar 2017
december calendar 2017 printable
december calendar 2017

At November 11, 2017 at 1:11 AM, Blogger tom50 said...

unblocked games
unblocked games 77
unblocked games 66
games unblocked

At July 19, 2018 at 3:44 AM, Blogger linlin huang said...

It is a time consuming process to locate a legitimate, high-quality designer Michael Kors Handbags On Sale at a decent price. One brand name that is sought after is the Michael Kors Bags On Sale. Anywhere you see high demand you will find people out to make a quick buck.

At October 10, 2018 at 8:41 PM, Blogger Top Images Wishes Quotes said...

Freedom apk download

Freedom apk

cinemabox hd

cinema box ios

Cinemabox For PC

AppLock APK

gbwhatsapp 6.55 apk download

gbwhatsapp messenger

gb whatsapp for pc

gb whatsapp download

gb whatsapp apk download


Post a Comment

Back to BizOpinion main page

: See newer blog items : : See older blog items :

BizOpinion site feed

wisbusiness.com Social News

Follow Us

Site Sponsors


· January 2009
· February 2009
· March 2009
· April 2009
· May 2009
· June 2009
· July 2009
· August 2009
· September 2009
· October 2009
· November 2009
· December 2009
· January 2010
· February 2010
· March 2010
· April 2010
· May 2010
· June 2010
· July 2010
· August 2010
· September 2010
· October 2010
· November 2010
· December 2010
· January 2011
· February 2011
· March 2011
· April 2011
· May 2011
· June 2011
· July 2011
· August 2011
· September 2011
· October 2011
· November 2011
· December 2011
· January 2012
· February 2012
· March 2012
· April 2012
· May 2012
· June 2012
· July 2012
· August 2012
· September 2012
· October 2012
· November 2012
· December 2012
· January 2013
· February 2013
· March 2013
· April 2013
· May 2013
· June 2013
· July 2013
· August 2013
· September 2013
· October 2013
· November 2013
· December 2013
· January 2014
· February 2014
· March 2014
· April 2014
· May 2014
· June 2014
· July 2014
· August 2014
· September 2014
· October 2014
· November 2014
· December 2014
· January 2015
· February 2015
· March 2015
· April 2015
· May 2015
· June 2015
· July 2015
· August 2015
· September 2015
· October 2015
· November 2015
· December 2015
· January 2016
· February 2016
· March 2016
· April 2016
· May 2016
· July 2016
· August 2016
· October 2016
· December 2016
Copyright ©2013 WisBusiness.com All rights reserved. | WisOpinion.com | WisPolitics.com  |  Website development by wisnet.com LLC  | Website design by Makin’ Hey Communications