If you’re like most people, you started off the new year by taking an inventory of your lifestyle and resolving to make some changes. Maybe you pledged to eat less junk food or spend more quality time with your kids.
Now’s a good time to also take an inventory of your finances and resolve to make some changes, like rebalancing your portfolio, cutting your spending or increasing your 401(k) contribution.
• Rebalance your portfolio. Your portfolio may have changed due to losses or gains in your investment options during the past year. Rebalancing makes sure the original asset allocation of your retirement funds remains in place, and you keep the level of risk you’re willing to take by readjusting your investment portfolio.
For example, let’s assume your original asset allocation was 30 percent domestic stocks, 30 percent international stocks, 20 percent money market, and 20 percent guaranteed interest. A year later, due to stock market activity, all but one of your investment choices make excellent gains which in turn changes the weighing of your portfolio. Now, your domestic stocks make up 33 percent, international stocks 35 percent, money market 22 percent, and guaranteed interest 10 percent. You can rebalance your portfolio by taking some money out of the accounts that have gone over your desired allocation and transferring them to the accounts that have dipped under.
• Cut your spending. It’s easy to overspend. Even small purchases can have an impact on your financial goals.
• Increase your 401(k) contribution. A small increase can grow over time. Just by increasing your 401(k) contributions by 1 percent, you can make a big difference to your retirement savings. If you’re making $25,000 a year, 1 percent is about $20 per month or only $5 a week!.Assuming 20 years to retirement and an 8 percent annual growth rate, your additional $20 per month would grow to $11,780. *
*This illustration is for hypothetical purposes only and is not intended to represent the performance of any specific investment product.
Jeff Meislahn is a Financial Representative of Principal National Life Insurance Company and Principal Life Insurance Company and a Registered Representative of Princor Financial Services Corporation. Securities offered through Princor Financial Services Corporation, 800/247-1737, member SIPC. Principal National (except in New York) and Principal Life are issuing insurance companies of the Principal Financial Group. Principal National, Principal Life and Princor® are members of the Principal Financial Group®, Des Moines, IA 50392. Jeff can be reached at 515-771-8175 or Meislahn.email@example.com.