Building an investment strategy is an essential part of retirement planning.
Your plan should reflect the kind of investor you are by taking into account your age, investment goals, risk tolerance, and a holistic view of your finances. MassMutual offers a variety of tools and resources to help identify an investment strategy that may be right for your retirement savings.
Once you understand how much risk you are willing to take, you are ready to develop a strategy. When it comes to selecting investments for your retirement savings, Nextep’s 401(k) has options for everyone, from beginners who let the pros manage their portfolios to knowledgeable investors who do it all themselves.
Here’s a cheat sheet on different investment strategies. Find the one that makes the most sense for you!
Build My Own Investment Options
For do-it-yourself investors, your 401(k) may offer a variety of investment options to choose from. With Nextep’s MassMutual retirement account, you have access to each investment’s profile, prospectus (a financial security disclosure document), regulatory publications, quarterly reviews, and average annual returns.
Risk-Based Portfolios
Risk-based investment strategies simplify your investing down to one fundamental question: How much risk are you comfortable taking? A risk-based approach allocates the money in your account among the investment options aligned to your desired level of risk. Investment professionals will manage the risk-based funds and periodically rebalance the portfolio to keep you invested within your selected risk level.
Target Date Funds
Our most simple, auto-pilot method of investing is the professionally managed target-date or age-based fund. As its name suggests, this investment portfolio “targets” the year investors anticipate retiring. All you have to do is select the fund most closely aligned with your expected retirement year. For example, if you’re 30 years old in 2019 and you expect to retire in 30 years, you might select the 2050 Target Date Fund (TDF) since it is closest to the year you plan to retire. Each fund is managed by investment professionals who diversify your investments within different asset classes (such as stocks, bonds, etc.) with different risk and return expectations. A vital benefit of a TDF is that investments within the portfolios are automatically rebalanced for you as you get closer to your anticipated retirement year, growing more conservative over time. TDFs serve as the Nextep 401(k) default investment, meaning participants who contribute to their 401(k) without making an investment selection will be invested in their appropriate age-based, target-date fund.
RetireSMART Ready Managed Path
Unlike traditional risk-based or target-date funds, which periodically reallocate funds based on risk level or age, the RetireSMART Ready Managed Path allows professionals to tailor your account allocation to the personal financial data and goals you provide. This serves as a cost-effective solution for those investors looking for an individualized investment portfolio.
Nextep 401(k) participants have a dedicated financial advisor to help you reach your retirement goals. Contact us at 401k@nextep.com to find out more.
