How to Manage Your 401k or Roth IRA Retirement Plan

Are you worried about your retirement? Has the stock market eaten away your investments on your 401k and Roth IRA? Are you ready to hedge and actively protect your retirement portfolio? Then read on.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• A 401k or Roth IRA Plan.
• Make sure there are no for transactions in your retirement plan because this requires an increase in volume in your trade.

1. 
    

   The stock market is currently rising and falling rapidly as uncertainty for the economic future begins to become apparent due to high unemployment. Many individual who has lost 30-50% of their portfolio began to mistrust their mutual fund and either decreased their contributions, or withdrew their investments. The first step to securing your retirement future is to never withdraw or decrease your monthly contribution. When the stock market falls, and you sell your earnings, you deny yourself from the future comeback. Selling your investment will also marginally decrease the stock market and could further fuel the downward spiral. So if you do not need the money to live, do not withdraw your investments merely on speculation.

2. 
    

   The stock market rises and falls. All recessions are followed by huge rallies, but timing the stock market in huge transactions usually leads to a decline in investments. The best way to manage your portfolio is through rule-based small transactions that will protect your investments by minimizing the losses and gains of the future. I will provide a model that consists of 100k in an individuals 401k plan. The model is subject to change based on percentages.

3. 
    

   Consider this example:
   Yearly Income: 65,000
   Balance: 100,000
   Diversify portfolio this way: 30% bonds 60% stocks, 10% Money market funds
   Bonds: 3-8% gain
   Stocks: Historically 7% gains
   Money market funds: 1-5% gains
   Yearly Contribution: 6%
   Mutual Fund handler: Vanguard – No fees for transactions or loads

4. 
    

   Your contributions should be assigned to the money market funds. The money market fund is a short-term fund that preserves your residual investment with an increase of 3-5% APR depending on the mutual fund owner. The money market fund usually allows you to withdraw and deposit an unlimited amount of times with no fees or penalties.

5. 
    

   The S&P is the best indicator among the three current leading indicators. At the end of each market session, check CNBC, or the news about the movement of the S&P. View the S&P as a percentage movement. For Example: If the S&P was 1000 yesterday and became 975 today. The S&P was down 25 points but percentage wise was down 2.5%. If the S&P moves down by at least 1%, then it is time to buy some mutual funds since it means that the prices of the stocks have fallen. For this Example, I suggest you transfer $1000 from the money market fund to a mutual fund that handles stocks. (Preferably large value international stocks, in that order of preference) Diversify in Domestic and International stocks. (International due to future inflation in America)

6. 
    

   When the S&P rises above 5%, then it is time to sell some mutual funds directed to stocks. For this example, I would recommend selling $10000 or 10% of the mutual funds invested in stocks. When the S&P rises by 3%, the market will likely fall the next day due to profit taking.

7. 
    

   I will now explain the importance of why these transactions are an effective way to manage your portfolio. In a recession, the stock market falls, and so does your portfolio. As the market falls, the stocks become cheaper. Consider this example:
   A stock falls in value. You invest 1000$.
   The stock continues to fall in value. You continue to pay 1000$. The stock is priced cheaper so you purchase more stocks.
   The stock further decreases and bottoms in value. You continue to pay 1000$. The stock is priced cheaper so you purchase even more stocks.
   The stock rebounds gradually to the original price. You gain a profit regardless of the lack of difference between the price you started with and the current price, because you were able to buy from the bottom.

8. 
    

   Follow these rule-based transactions and you will protect yourself from future volatility and almost guarantee yourself positive results if viewed in 10 years.

9. 
    

   By the way, this strategy is a form of hedging that is used by professionals. Handle your portfolio in a percentage rule based basis and you will further secure the future you deserve.

[rakhib]

on 11/18/2009 good article.5* and a recc

[spiralmedia]

on 10/28/2009 very good advice

[lighthouse1958]

on 10/4/2009 A person doesn't know what to do anymore. Most of us are just trying to ride it out and see. But we are watching and listening just in case. 5*