If you have been reading our work long you know we are conservative by nature, constantly worry about risk, and attempt to diversify as many problems away/offset as possible. So it might surprise you that we encourage risk under certain scenarios, and possibly even more surprising, our “Aggressive Beast” portfolio is often pointed towards the sacred 401k or similar contributory retirement plan.
Here are the most likely situations:
- A new plan to you that has little or no assets that you may just be beginning contribution
- Your/matching/company contributions are making up a large portion of the account today, on a current basis
- Good or reasonably good investment options/allocations
Here are a couple of important rules:
- If you add gasoline, make sure you are watching the fire… i.e. Do not put your retirement plan on autopilot and forget about it, as that can do more damage than good. If you decide to start out aggressive it will need more attention and eventually a more conservative allocation as the account grows in size.
- Must be easily and quickly adjustable; we still find plans today that are very restrictive in the adjustment of investments, in some cases ONLY annual changes. In these cases, a 401k beast allocation may not be correct.
- Take special notice when fund choices are exchanged. While this is a good idea in any situation, it is especially important when you have created an aggressive beast allocation for your 401k. A major fund change may throw your allocation out of whack, take note when announcements are made and adjust as necessary.
- Fund the plan evenly throughout the year. We encourage this in most all situations, but the importance is magnified when you have a beast 401k allocation as the volatility is your friend and even contributions are helpful over the long run.
So there you have it.
It’s ok to release the beast in aggressive allocations in specific situations, but always be careful and make sure you follow the rules above
Have a Great day!
JK214-706-4300 http://www.jkfinancialinc.com 8222 Douglas Ave Suite 590 Dallas, TX 75225