A Free-Reprint Article Written by: Irene A. Majchrzak
Article Title:
Understanding Your 401(k), IRA and Other Pre-Tax Investments
See TERMS OF REPRINT to the end of the article.
Article Description:
What does all of the bad economic news mean to you, the
average investor. Well, if you are still working and
contributing to your pre-tax 401(k)'s, 403(b)'s, or IRA
savings your strategies for salvaging your retirement will
include reviewing all of the investment options found in
your 401(k), etc.
Additional Article Information:
===============================
1005 Words; formatted to 65 Characters per Line
Distribution Date and Time: 2010-08-03 11:15:00
Written By: Irene A. Majchrzak
Copyright: 2010
Contact Email: mailto:irene.majchrzak@thephantomwriters.com
Irene A. Majchrzak's Picture URL:
http://debtfreetoretire.com/images/portrait-small.jpg
For more free-reprint articles by Irene A. Majchrzak, please visit:
http://www.thePhantomWriters.com/recent/author/irene-a_-majchrzak.html
=============================================
Special Notice For Publishers and Webmasters:
=============================================
HTML Copy-and-Paste and TEXT Copy-and-Paste
Versions Of Article Are Available at:
http://thePhantomWriters.com/free_content/db/m/understanding-pre-tax-investments.shtml#get_code
----------------------------------------------------------
Understanding Your 401(k), IRA and Other Pre-Tax Investments
Copyright (c) 2010 Irene A. Majchrzak
Debt Free To Retire
http://debtfreetoretire.com/
Yes, the values of various stock are falling every day and the
media can not make up its collective mind if we are coming out of
the recession or if there is still a long road ahead. What does
all of this mean to you, the average investor. Well, if you are
still working and contributing to your pre-tax 401(k)'s,
403(b)'s, or IRA savings your strategies for salvaging your
retirement will include reviewing all of the investment options
found in your 401(k), etc.
Many of the pitfalls within an employer based pre-tax plan begin
with the investment choices placed in the plan. The lack of
experience in setting up 401(k)'s, etc. caused the corporations
to rely upon their need to develop "something" for their
employees to invest in on a pre-tax basis.
Pensions were being dissolved, rolled into other pre-tax accounts
for the employees and eventually led to the current investment
decisions you still may have in your 401(k); either too few or
too many mutual fund choices, little differentiation between the
funds of any one category and often very little real
diversification of the portfolio.
The pre-tax mutual funds did not offer a mix of large, mid/small
or international funds in either a growth, value or blend style.
Often one mutual fund may contain the same stock corporation
found in two or three other mutual funds within the same pre-tax
plan. As your plan grew it was not an issue because all of the
mutual funds were growing because of the same stock, but in a
bear market the same stock flowing throughout all of your mutual
funds could cause a major decrease in fund values.
Your responsibility begins by reading the descriptions of the
asset choices within your particular plan. Besides a company
stock purchase plan your options may include 5-10 mutual funds.
You may have one or two of all of the following options; cash
options, bond choices and asset classes in large, mid or small
capitalization companies in either value, growth, or
international stock companies.
Look for the diversification within your employer plan.
Basically, a mutual fund consists of a small percentage of
multiple corporations within one asset class chosen by a fund
manager to balance and support the companies inside the mutual
fund. For example, if the fund manager purchases large
capitalization companies like Coca cola, he might balance it with
Pepsi products; purchase Mac Donald's and support the fund with
a Burger King purchase. The fund may own a variety of different
segmented companies as well, and may include purchases of health
care corporations, oil companies and/or financial institutions.
Next, ask your investment company to send you a fact sheet which
describes the mutual fund, explains how the companies are chosen
inside the fund and the names of the top ten companies owned by
the mutual fund. You will be interested to know how your mutual
fund is constructed. Is the fund heavily invested in oil
companies, banks, mortgage companies?
In the current economic situation you may want to discuss this
mutual fund with your advisor.
Asset classes are cyclical and move from value to growth, and
back. They also favor small cap, international, large cap or
bonds at various times in the market environment. Risk and reward
are the two major factors an investor needs to look at when
considering his asset choices.
In the market failures of 2000 to 2003, value funds were often
discounted as unfavorable to investors. The world was invested in
Blue chip Growth. But value became the place to be for the next
4-5 years. Cash was also belittled as most investors felt that
cash wasn't working if it was in the bank. Yet cash was seen to
be an important commodity during that bear market as it is in
today's.
The most important ideas to recognize is that the stock market
has never been more global than it is today. Factors affecting
our economy are having an effect on the whole world. So new
strategies are important and understanding the economy and its
effect on your investments is essential to the renewal of your
savings. You need to be able to speak to your advisor and help
him to realize that you are an active participant not a bystander
in your account. You will want answers from him/her. So know your
questions. Remember that you can change your investments in 6
months or a year from now as the stocks weather the storm.
Today, your risk may be less aggressive, you may want to put more
money into cash, you may want your advisor to actively discuss
dollar cost averaging your money into the market slower than your
monthly contribution. Ask for suggestions and strategies. Ask
your advisor to describe the market economy for growth or value
investments. Ask him to show you fact sheets that describe the
construction of a recommended mutual fund. Feel comfortable with
the ideas.
Stock market issues affect investors differently. You will want
to recognize that there are some issues that will not affect you
at the same level that it may disrupt the savings of your friends
over 65. What to do if you are over 65 and you are no longer
saving into your investments? Preservation of your cost basis is
key.
This market may start to come back soon but based on what
happened in 2000, I would suggest that you may have 3-5 years of
leveling and fluctuating markets. I would suggest talking with
you advisor and moving into cash or bonds. Have him discuss the
bond funds that he is recommending and find out how it is being
affected specifically, in this market. Do your own research as
well. Move into cash and dollar cost average your money back into
the market as slowly, or quickly as you feel comfortable.
If you are invested in annuities you may still want to move into
a cash fund within your annuity and then reinvest your cash
slowly back into the investments within the annuity.
----------------------------------------------------------
Irene A. Majchrzak helps people retire debt-free with a sense
of well-being and the freedom to have the things they want.
Get her free ebook, Debt Free to Retire, by going to
http://debtfreetoretire.com/
--- END ARTICLE ---
Get HTML or TEXT Copy-and-Paste Versions Of This Article at:
http://thePhantomWriters.com/free_content/db/m/understanding-pre-tax-investments.shtml#get_code
.....................................
TERMS OF REPRINT - Publication Rules
(Last Updated: May 11, 2006)
Our TERMS OF REPRINT are fully enforcable under the terms of:
The Digital Millennium Copyright Act
http://thomas.loc.gov/cgi-bin/query/z?c105:H.R.2281.ENR:
.....................................
*** Digital Reprint Rights ***
* If you publish this article in a website/forum/blog,
You Must Set All URL's or Mailto Addresses in the body
of the article AND in the Author's Resource Box as
Hyperlinks (clickable links).
* Links must remain in the form that we published them.
Clean links should point to the Author's links without
redirects having been inserted into the copy.
* You are not allowed to Change or Delete any Words or
Links in the Article or Resource Box. Paragraph breaks
must be retained with articles. You can change where
the paragraph breaks fall, but you cannot eliminate all
paragraph breaks as some have chosen to do.
* Email Distribution of this article Must be done through
Opt-in Email Only. No Unsolicited Commercial Email.
* You Are Allowed to format the layout of the article for
proper display of the article in your website or in your
ezine, so long as you can maintain the author's interests
within the article.
* You may not use sentences from this article as an input
for any software that steals sentences from others in
order to build an article with software. The copyright on
this article applies to the "WHOLE" article.
*** Author Notification ***
We ask that you notify the author of publication of his
or her work. Irene A. Majchrzak can be reached at:
irene.majchrzak@thephantomwriters.com
*** Print Publication Reprint Rights ***
If you desire to publish this article in a PRINT
publication, you must contact the author directly
for Print Permission at:
mailto:irene.majchrzak@thephantomwriters.com
.....................................
If you need help converting this text article for proper
hyperlinked placement in your webpage, please use this
free tool: http://thephantomwriters.com/link-builder.pl
Would you like to learn how to improve the performance of your
article marketing campaigns? Download our F.R.E.E. 108-page
Article Marketing Ebook at:
http://thephantomwriters.com/ebooks/advanced-article-marketing.html
*****************************************************************
*
* This email is being delivered directly to members of the group:
*
* aabusiness@yahoogroups.com
*
*****************************************************************
=====================================================================
ABOUT THIS ARTICLE SUBMISSION
http://thePhantomWriters.com/ is a paid article distribution
service. thePhantomWriters.com and Article-Distribution.com
are owned and operated by:
Bill Platt
3010 E Raintree
Stillwater, Oklahoma USA 74074
Learn more about our article distribution services by visiting:
http://thephantomwriters.com/x.pl/tpw/info/article-distribution/index.html
The content of this article is solely the property
and opinion of its author, Irene A. Majchrzak
http://debtfreetoretire.com/
----------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
----------------------------------------------------------
Looking For Quality Content?
The Syndicator provides free, quality syndicated articles
for your website that are automatically updated each week.
Syndication feeds include:
Business/Sales
Internet Marketing/Promotion
Web Design/Development
Biz Tips
Web Design Tips
Home & Family Matters
Dinner Ideas
Health & Fitness
Horoscopes
AngelVoice
Headlines
and more...
http://www.web-source.net/syndicator.htm
########################################################
Post Articles: mailto:aabusiness@yahoogroups.com
Subscribe: mailto:aabusiness-subscribe@yahoogroups.com
Unsubscribe: mailto:aabusiness-unsubscribe@yahoogroups.com
Change subscription: http://groups.yahoo.com/group/aabusiness
List owner: mailto:aabusiness-owner@yahoogroups.com
0 comments:
Post a Comment