Portfolio Management Today Financial Planning Tips for Employer Company Stocks 401ks West Chester PA
UBMI Publications
November 03, 2009
For most of us, employer sponsored benefit plans represent the major vehicle for retirement savings. These include a 401(k), 403(b), employer stock, pension and so forth. When saving for retirement, it is essential to maximize every opportunity you are going to get. This means taking full advantage of a company match or other programs your employer provides.
Since the financial crisis began late last year some people are wondering if they should still contribute to these plans. If you are one of those who saw years of savings disappear during the market´s decline, it is natural to become fearful and hesitant. So what do you do? Do you follow the crowd out the door, stay put, or do you keep contributing? The short answer is………keep contributing!
While the financial crisis has taken its toll, it is not the first major crisis, nor will it likely be the last. Media commentators often reference the Great Depression as a comparison for our modern day predicament, but their awareness of history tends to end there. In fact, there have been many financial calamities in our nation´s history including 1907, 1901, 1893, 1873, 1857, 1837, 1825, 1819, and let´s not forget the Tulip crisis that occur in Holland during the 1600´s.
Financial crises have and most likely will be a fact of life, so you should not let this shake your confidence. If you can accept this reality, it will be easier to continue saving in the face of contrarian wisdom. Regardless, there are steps you can take to manage your investments. While the potential for financial crisis has not change, the vehicles by which we invest have. So, let review some of the do´s and don´t s you can apply today.
Tips for Company Stock:
*Disclosure: Employees should consider their risk tolerance and the financial stability of their employer prior to investing. Investing in securities involves risks including the potential loss of principal.
Do:
1. Do invest in your employer stock if they offer it at a discounted price.
2. Do reinvest dividends into new stock purchases.
3. Do sell employer stock over time to spread out the tax liability.
Don´t:
1. Do not allow employer stock to exceed 10% of your portfolio.
2. Do not buy employer stock if you are also receiving it as stock awards or stock options.
3. Do not wait until retirement to start selling your employer stock.
Tips for 401(K):
Do:
1. Do rebalance your portfolio quarterly or semiannually.
2. Do maximize your employer match.
3. Do readjust your risk tolerance every 5 years.
Don´t:
1. Do not take a 401(K) loan (unless absolutely necessary).
2. Do not take distributions before age 59 1/2.
3. Do not contribute less than your employer matching percentage.
In conclusion, stick to your goal and stay disciplined. The road to retirement is bound to have a few rough spots over a 30-year career, but do not become discouraged. By following the above tips, you can help to ensure that you are taking these steps you are taking full advantage of the benefits offered to manage your retirement.
Disclosure:
This material is meant for general illustration and/or informational purposes only. Individual situations will vary. The views expressed are not necessarily the opinion of Royal Alliance Associates, Inc.
This material should not be relied upon as investment advice. Investors should seek the advice of their financial advisor prior to making any changes to their investment strategy or purchasing any securities.
Securities and Advisory Services Offered through Royal Alliance Associates, Inc. Member FINRA/SIPC.
Advisory services offered through Key Financial, Inc.
A Registered Investment Advisor not affiliated with Royal Alliance.
1560 McDaniel Drive, West Chester, PA 19380
E-mail: pbrennan@keyfinancialinc.com, Phone: 610-429-9050
For more information, please visit www.keyfinancialinc.com.