6 Smart Retirement Plan Investing Tips

Participant Resources, Starting Out

If you haven’t put away money for retirement, now is the best time to start! The thought of saving enough money for those 30 plus years of retirement sounds daunting, but if you’re well prepared, you will have nothing to worry about.

Here are 6 tips that will help you with successful retirement plan investing.

1. Know Your Investment Options

There are many different ways you can invest your money. If you’re employed, find out what kind of retirement benefits your employer offers.

There are different types of retirement plans such as:

  • 401(k)/403(b)/Company Plans

  • Traditional/Roth IRAs

  • And More!

As well as different types of portfolio investments such as:

  • Mutual Funds

  • Exchange Traded Funds (ETFs)

  • And More!

It’s important to understand the risk/reward return when you’re building your portfolio. Generally, more aggressive (higher risk) investments may deliver higher average returns over time, however, this is offset by a higher potential for loss of principal compared to safer, more conservative investments. Generally, those nearing retirement will opt for a lower risk/lower return because they have less time to recover from loss.

2. Start Saving Early

It seems easy enough, but many people feel like they can’t start saving for retirement when they‘re younger because they’re not making enough. Here’s the thing—you don’t need to save 10% of your income right away. Start saving 3% and as your pay increases, gradually increase how much you’re investing.

The earlier you start saving, the more you will have in retirement. You will also have the time to invest more aggressively and should be able to recover from any loses.

3. Set Goals

Decide when you want to retire, what you want to do in retirement, and how much money you’ll need to live off that lifestyle.

For example:

  • I want to retire at 65.

  • I plan on paying off my house and all debt before retirement.

  • I plan on traveling.

  • I plan on having medical expenses.

  • Based on my plans, I’ll need $48,000 per year in retirement.

  • I estimate that I’ll live 20 years in retirement. Thus, I’ll need a minimum of $960,000 saved. Keep in mind that this does not take into consideration inflation, taxes, any changes to social security or investment earning rates, etc. It is also very likely that you could live longer than 20 years after you retire.

4. Keep Your Emotions in Check

Don’t let your emotions direct the way you deal with your investments. Understand that they will fluctuate—sometimes a lot, sometimes a little. If certain investments don’t seem to be doing well, look for another one.

5. Know Your Fees

All investment companies have expenses for the services that they provide. Unfortunately, most people do not know this because they haven’t been given complete and accurate value expense disclosure information. It’s a good idea to find out how much you are paying fees and search around for better options if you think they are too high.

6. Ask Questions

At Envoy, our service team is always available and happy to serve you. Please contact us with any investment questions you might have and we will be happy to direct you to the right answer.

Looking for faith-based IRA options? The FaithBased IRA from Envoy Financial could be the perfect solution for you!

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