What Your House and Your Retirement Plan May Have in Common

By: Brenden Gebben, MBA, CIMA®, Portfolio Manager

march-2016-article-2If you are like many investors, your home and your employee-sponsored retirement plan may be among your two largest assets. In this article, we’ll explore opportunities to put your retirement plan assets on a “maintenance plan,” just as you may already be doing for your home.

In the United States, home ownership and participation in employer-sponsored retirement plans are the first two goals of many as they enter the work force. Throughout your adult life, these investments continue to serve as foundational assets. As such, these core assets each require your attention to ensure you maintain and grow your investments in them.

We all realize that we have to monitor our home in order to keep it in good repair. This both maintains the investment and may also give it the opportunity to rise in value. Further, if your home is like mine, a small repair that is left unchecked can turn into a much larger and costly repair down the road. Thus, some form of a “maintenance plan” is necessary.

But not all investors give this same time and attention to their employer-sponsored retirement plan. Unfortunately for many, this core asset often gets little to no maintenance and is frequently overlooked once established. The beauty and ease of automatic investment directly from your wages is a wonderful thing; however, just because the deposits are happening automatically, that doesn’t mean that the monitoring and management of it is. It can be far too easy to “set it and forget it” when it comes to your retirement plan.

What type of retirement plan do you have? There are various acronyms for employer-sponsored retirement plans such as 401(k), 403(b), 401(a) and 457. These acronyms usually center on the type of employer that you work for; for profit, non-profit or a governmental agency. These retirement plans are in addition to another type of account that is used for retirement savings, the Individual Retirement Account (IRA). No matter the type, they can all be efficient vehicles for retirement savings.

The first decision you made when you established your retirement plan was to determine the percentage you would be investing. An important consideration here is of course the company match. If you are able to at least contribute the percentage that earns you the maximum employer match, that can represent asset growth for your portfolio. But since the time you determined your percentage, have you revisited it? You may want to review your percentage contribution annually to see if you can afford to increase your percentage allocated to employer-sponsored retirement savings.

The next decision you made when you established your participation was to determine the allocation of your investment; that is, where the dollars you put in would be invested. You likely chose between a fixed menu of options in areas such as bonds, equities and balanced funds. You may have decided on your own or with a friend, co-worker or even a knowledgeable advisor. But regardless of how you decided, one thing for certain is that you decided at a point in time and with only the information that was available at that time. The thing is: markets change, information changes…even the available investment options can change. How are you factoring that in to your retirement plan investment? When was the last time that you looked at the fund lineup? Changed an allocation? Spoken to a financial professional about how this potentially valuable asset ties into your overall financial plan at this point in your life? If you are like many people, you may not yet be giving your retirement plan the attention that it deserves. You are not alone.

If you are like many and conclude that you have not given one of your potentially largest assets the attention it deserves, there are options available to you.

Did you know that you can add professional money management services to your retirement plan? Working with your financial representative, you may be able to add Absolute Capital’s professional money management to your plan. This provides continual monitoring and allocation for your portfolio through changing market conditions. Take your retirement plan assets from a static investment to a dynamic asset being managed at the core of your investment portfolio.

march-2016-article-1Further, did you know your plan may offer more funds than are on the fixed menu through an SDBA option? You may be asking yourself, “What is an SDBA option?” This acronym stands for Self-Directed Brokerage Account (SDBA). In addition to the limited menu of investment options offered in your plan, more and more plans are now also offering an SDBA option. This is a way to open up the investment options in your plan beyond just your employer’s fixed menu.

Yet why would you need more investment options when the menu you have is already confusing enough? Well, again, we believe the answer lies in the unavoidable fact that over time markets change, fund management changes…and these changes may warrant changes in your investment portfolio in order to navigate current market conditions. Think of it as more investment tools at your disposal.

And while you may not have the time or expertise to take advantage of these investment tools on your own, Absolute Capital may be able to manage your retirement plan assets within your particular plan, taking into account all of the investment options in your plan and through the SDBA option.

If you would like to learn more about folding your retirement plan assets into your overall investment plan, contact your financial professional or Absolute Capital today and give this important asset the attention it deserves.