"How should I structure my retirement portfolio?"
Answer: Your first step is to take advantage of tax-favored retirement savings tools. If you have access to a 401(k) or other employersponsored plan at work, participate and take full advantage of the opportunity. Open an IRA account and contribute as much as you can. Ideally, you’d be able to invest in both an employer plan and an IRA.
Contributions to employer plans like 401(k)s are typically made on a pretax basis, but plans may also allow you to make after-tax Roth contributions. Your pre-tax contributions reduce your current income, but those contributions, and any investment earnings, are subject to federal income tax when you withdraw them from the plan. Your Roth contributions, on the other hand, have no up-front tax benefit. But your contributions are always tax free when distributed from the plan, and any investment earnings are also tax free if your distribution is qualified. Similarly, IRAs allow a choice of either tax-deductible contributions (traditional IRA) or tax-free withdrawals (Roth IRA). Plus, funds held in an employer plan or IRA grow tax deferred. These tax features may enable you to accumulate a sizable retirement fund, depending on how well the underlying investments perform.
With that in mind, you should aim for long-term investment returns and steady growth. Many financial professionals suggest a balanced portfolio of stocks, bonds, mutual funds, and cash equivalents. The percentage of each will depend on your risk tolerance, your age, your liquidity needs, and other factors. However, the notion is fading that you should change your investment allocations and convert your entire portfolio to fixed income securities, such as bonds or CDs, by the time you retire. Instead, many professionals now advise that you continue investing for long-term growth even after you retire--especially since people are retiring younger and living longer on average. Your own personal circumstances will dictate the right mix of investments for you, and a qualified financial professional can help you make the right choices.
Before investing in a mutual fund, carefully consider its investment objectives, risks, fees, and expenses, which are contained in the prospectus available from the fund. Review the prospectus carefully, including the discussion of fund classes and fees and how they apply to you.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. In general, the bond market is volatile as prices rise when interest rates fall and vice versa. Any fixed income security sold or redeemed prior to maturity may be subject to a substantial gain or loss. An issuer may default on payment of the principal or interest of a bond. Bonds are also subject to other types of risks such as call, credit, liquidity, interest rate, and general market risks. This material is intended for informational purposes only and should only be relied upon when coordinated with individual professional advice.
Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Security Federal Savings Bank and Security Federal Investment Services are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Security Federal Investment Services, and may also be employees of Security Federal Savings Bank. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Security Federal Savings Bank and Security Federal Investment Services. The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: Indiana. Securities and insurance offered through LPL or its affiliates are:
Not Insured by FDIC or Any Other Government Agency
Not Bank Guaranteed
Not Bank Deposits or Obligations
May Lose Value