π¨πππΎππππΎππ πΊπ½ππππππ ππΎππππΌπΎπ πΏππ π¦πππ½πΎπ πππΎβπ 401(π) (πππΎπ 3(38) πΏππ½ππΌππΊππ ππΎππππΌπΎπ πΊππΎ πΊπππππππΎπ½) πΊππ½ π²π€π― π¨π±π /π¨π±π ππππ½ππΌππ πΊππΎ ππΏπΏπΎππΎπ½ π»π π¦πππ½πΎπ πππΎ π¨πππΎππππΎπππ, π«π«π’, πΊπ π²π€π’-ππΎπππππΎππΎπ½ ππππΎππππΎππ πΊπ½ππππΎπ. π±πΎπΏπΎππΎππΌπΎπ ππ βπ¦πππ½πΎπ πππΎβ βππΎβ ππ βπππβ ππ ππππ πΊππππΌπ πΎ πππΎπΌππΏππΌπΊπ π π ππΎπΏπΎπ ππ π¦πππ½πΎπ πππΎ π¨πππΎππππΎπππ, π«π«π’. π₯ππ ππππΎ πππΏππππΊππππ ππΎππΊππ½πππ πΏπΎπΎπ πΊππ½ ππΎππππΌπΎπ, ππΎπΎ π¦πππ½πΎπ πππΎβπ π π£π΅ 2π π‘πππΌππππΎ πΊππ½ π₯πππ π’π±π².
While Guideline offers six managed portfolios, which offer diverse pre-selected funds for different ages and risk tolerances, you can also choose to build a custom portfolio.
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Building a custom portfolio will allow you to select the individual investments from our fund menu for your 401(k) or IRA and set the allocation percentage for each.
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Here are some major factors you might want to consider when building a custom retirement portfolio.
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Age and time until you retire
The amount of time left until you retire, also known as your time horizon, may be one of the most important factors to consider when deciding how to allocate your portfolio investments. Volatility, or the change in a given securityβs value over time, is generally a bigger risk in the short-term than in the long-term.
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For example, if youβre retiring in 30 years, the volatility of your investments would likely have less of an impact than if you were to retire within the next few years. With a long time horizon, your portfolio may have time to recover from market downturns.
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Risk tolerance
Risk tolerance considers how your emotions affect your investment-making decisions. Knowing your comfort level can help you avoid some investing mistakes, such as reacting to short-term volatility.
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Riskier portfolios tend to see high returns when times are good, but severe losses during challenging times. If youβre risk averse, then it may be suitable to sacrifice a bit of long-term returns by investing in less volatile assets.
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Diversification
When it comes to investing, you may not want to hold all your eggs in one basket. Instead, you may want to diversify your portfolio β or invest over a wide range of asset classes and markets.
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The goal of diversification is to reduce risk and volatility of a portfolio by offsetting losses in one asset class with gains in another asset class. And rebalancing means making regular adjustments to ensure you're still hitting your target allocation over time. All are important tools in managing investment risk.
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For more information, see this guide by The Securities and Exchange Commission regarding asset allocation, diversification, and rebalancing.
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Cost
When choosing specific investments for your custom portfolio, youβll want to consider the cost, known as the expense ratio of the fund.
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Expense ratios are fees mutual funds or other investment providers charge for managing investments in the funds, and are usually charged as a percentage of assets. The higher the expense ratio, the more the investments will cost you over time.
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How to build a custom portfolio with Guideline
If youβre ready to create your custom portfolio, simply navigate to the Portfolio section of your Guideline dashboard, then select the βBuild a Custom Portfolio" option.
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You can find step-by-step instructions for building a custom portfolio here.
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Remember, itβs important to do your research on any funds you select for your portfolio. If you have questions about your unique situation, consider consulting with a qualified financial adviser.
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βThe information above is provided for educational purposes only and should not be construed as personal investment advice or a guarantee of performance.
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Diversification and asset allocation do not ensure a profit or guarantee against loss. Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal.
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You should choose your own investments based on your particular objectives and situation. Be sure to review your decisions periodically to make sure they are still consistent with your goals.
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