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Considering Funding

 
Considering Funding
 
 
 Investments
 
Once you have decided where to save your money, there are many factors to consider in deciding how to invest your savings, such as your age, income, retirement goals and risk tolerance. Every investment you make carries a certain amount of risk and potential reward. Whatever your financial status and risk tolerance, diversifying your investments is always the safest strategy.
 
Diversifying your investments means spreading your contributions among the different types of investments offered by your IRA or 401(k) plan. The theory is that asset allocation/diversification may reduce risk because it combines several different asset classes, each with different risk and return characteristics.
 
You can diversify between investment categories, such as stocks, bonds, money market funds and bank products. And, you can diversify between investment classes within each category. For example, most 401(k) plans offer mutual funds as a way for participants to invest in stocks. A mutual stock fund is a fund that invests in many different types of stocks. This way, a professional stock manager is picking a large group of stocks to invest the fund in – you are not responsible for monitoring Wall Street on a daily basis to pick individual stocks.
 
 
Mutual funds usually buy shares within one type of company, such as large, well-established companies, small, newly formed businesses, or international companies.  You can choose which type of mutual fund to invest in based on your risk tolerance and earnings expectations. Diversifying between investment categories and investment classes may be one way to help you reduce risk and tailor your investment strategy to meet your retirement goals. (Diversification cannot eliminate the risk of fluctuating prices and uncertain returns.)
 
  
 
Getting Ready to Retire
Creating a Game Plan
Setting Goals
Identifying Resources
Being Realistic
Considering Inflation
Considering Funding
Retirement FAQs

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