Excuse After Excuse
It’s so easy to make excuses about why you’re not investing in your retirement plan; maybe you’ve made a few of these yourself:
- No extra money.
- No time to learn about investments.
- Unsure about what to invest in.
- The market is too jumpy “right now”.
- Investing is scary.
- Fear of losing money.
- No financial guidance.
Enough With The Excuses
When you reach retirement age and cannot retire due to lack of money, will any of these excuses matter??? Probably not.
When you want to retire, will you remember any of the excuses you made for not saving enough money??? Probably not.
Look around you, many people who should be in retirement today are still working because they made financial excuses during their working years about saving money. Do you want to be in that same financial situation??? Probably not.
Financial Knowledge Beats Financial Excuses
You should never invest in something you know little about. But lack of knowledge is not excuse for not investing. You will be more confident if you understand the investment language on your retirement plan statements and website.
Those investments most easily converted into cash. Examples include money market accounts, short-term bonds and treasury bills. Money market accounts are popular in 401k retirement plans when the markets are in a slump.
Target Date Funds
The mutual fund is set up with a feature to automatically readjust your asset allocation between stocks, bonds and cash as time goes by. The target date would be your retirement date. The closer you get to retirement, the more conservative your asset allocation becomes.
A type of mutual fund that tracks or matches a specific index. Standard and Poor and Dow Jones are the two indexes commonly matched against. Most index funds have lower operating costs; but not all, so be sure to research the fees before investing.
This type of mutual fund invests in smaller companies; many company names you most likely never heard of before. These companies are generally underpriced so offer a better opportunity for growth; which makes small cap funds a bit riskier.
Based on size, mid-Caps are between small cap and large cap. They are considered less risky than small, but riskier than large cap. These are companies that are growing but not large enough yet to be considered large cap. You may never have heard of many of the company names.
Over 75% of the largest companies in the world are large-cap stocks. These are stocks of well established companies; for example McDonald’s, Wal-Mart, IBM. These companies are considered the most stable of stocks. The price and value increase when the economy does well and decrease when the economy does poorly.
These mutual funds invest in companies in other countries. These are much more risky due to political concerns, governmental policies and currency differences of other countries.
Excuses Are Okay?
It’s okay to be fearful of the market; but don’t stay there too long otherwise you may reach retirement without enough money therefore be forced to keep working.