I use your investment strategy for my Roth IRA and Rollover IRA. My current employer uses Prudential for my company’s 457 plan. Looking at the options, I cannot seem to use your allocation strategy due to a lack of choices. Do you have any suggestions?
A recurring theme in most plans is a limited number of investment options. This restricts your ability to properly allocate and diversify your account.
If you find yourself in this situation the allocation tactic described below is a simple and practical way to get your portfolio on track.
Whenever you leave a job, whether it’s your choice or not, there are many details and changes competing for your attention, and it’s easy to overlook the disposition of your employer-sponsored retirement plan such as a 401(k), 403(b) or 457.
You don’t actually have to do anything, but doing nothing is usually not your best choice. Making the right choice can let you add many thousands of dollars to your retirement nest egg. Making the wrong choice can unnecessarily squander some of your savings to the tax man and deprive you of future earning power.
You may get some very general guidance from your employer. But employers are prohibited by law from giving you specific advice. The custodian of your retirement plan (Vanguard or Fidelity, for example) has little incentive to overcome a basic conflict of interest: Even though your investment options will be restricted if you leave your money where it is, that’s exactly what your custodian hopes you will do.
This is a choice you need to make on your own. Fortunately it’s neither complicated nor difficult. In addition, you don’t have to do it immediately (although the lack of a deadline is a mixed bag if it leads you to procrastinate and then become complacent). (more…)
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