401k Investing: Tips to Balancing Your Asset Classes

When dealing with 401k investing, there are many things that you need to take into consideration. One of the most important factors involved is how you balance your asset classes. Here are a few tips on making sure that your portfolio is balanced properly.

Balancing Asset Classes

While most people like to invest simply in stocks or mutual funds, the ideal portfolio would consist of many other asset classes. If you can invest a portion of your funds into different asset classes, you can more effectively diversify your portfolio as a whole. When you successfully do this, your portfolio will not be as negatively affected by downturns in the market. It will be better able to withstand recessions, wars and other outside influences.

Asset Classes

In your portfolio, you should invest a good percentage of your money into index funds and other mutual funds. This will provide you with even more diversification as well as professional money management. You also need to invest directly into stocks in your domestic market as well as in international companies. It is a good idea to include some domestic and foreign REITs (Real Estate Investment Trusts) in your portfolio so that you can take advantage of the real estate market as well. Then you also need to include some corporate and government bonds as well.

blog comments powered by Disqus