ZIPSTORM 401(K) PLAN Investment Options

How to Build a Smart Portfolio in Your 401(k)

Your investment lineup is only as good as how you use it. Here are the key steps to building a portfolio that works for your retirement goals:

1. Know your risk tolerance and timeline. If you are decades from retirement, you can generally afford more stock exposure. Closer to retirement, you may want to shift toward bonds and stable value for capital preservation.
2. Diversify across asset classes. Spread investments across U.S. stocks, international stocks, bonds, and possibly real estate or stable value. This reduces the impact of any single market downturn.
3. Favor low-cost index funds. Even a 0.5% difference in annual fees compounds to tens of thousands of dollars over a 30-year career. If your plan offers an S&P 500 index fund or a total stock market index fund at low cost, that is typically a strong core holding.
4. Consider a target-date fund if you prefer simplicity. Target-date funds automatically adjust your stock/bond allocation as you approach retirement, making them a solid one-fund solution for hands-off investors.
5. Rebalance at least annually. Over time, your portfolio drifts from its target allocation as some assets outperform others. Rebalancing keeps your risk level consistent.

Learn more in our Four-Step Guide for 401(k) Retirement Investing, or use the Asset Allocation Calculator to find the right mix for your age and risk tolerance.

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