An allocation plan established in 2009 calls for reducing combined domestic and international equities, now accounting for 50 percent of the portfolio, down to 43 percent, she said.
Investors who rushed to sell out of stocks, rather than rebalance to their target, long-term allocation plan, missed out on a chance to recoup a good chunk of their losses.
If we instead merely changed the allocation to plan on always keeping about two years of extra cash (increase the cash allocation from 5% to 14%), the historical odds of exceeding the spending goal drop from 85% to 63%.
Varma, who plans to start deferring 15% of her pay after the wedding, wants a more conservative allocation in her plan to offset that risk, but is baffled by which of 12 Fidelity funds to choose.
Participants in defined benefit plans are generally less concerned about and aware of plan performance and asset allocation.
Rebalancing is the process of returning your portfolio to its target asset allocation as outlined in your investment plan.
Both the pathetic 13% participation rate and alarming 44% company stock asset allocation are facts well-known to the sponsor of the plan which, if it cared about worker preparedness for retirement, the sponsor could have done something to address.
Essentially, an investor can just put money in an age-based investment option within a 529 college savings plan account and the money manager will automatically change the allocation of stocks and bonds to a mix that is less heavy in stocks and more heavy in bonds and cash as college draws near for the account beneficiary.
FORBES: Is Your 529 College Plan Safe? Bond Managers Flash Warning Signals
Some financial "planners" will consult with you for an hourly fee to create a financial plan and maybe even get you rolling with a targeted investment-asset allocation (a mix of stocks, bonds, cash and other investments) or a model portfolio.
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