Some points to consider with respect to diversification
Congratulations! You're officially an investor. Plus, you're taking an important step that can help you build a strong financial future. Another important step is to diversify your 401(k) plan investments.
If you're not excited about spending time on finances, you're not alone. In fact, a 2005 survey from Aetna and the Financial Planning Association found that 31 percent of pre-retirees would rather clean their bathroom or pay bills than plan for retirement! But cleaning your bathroom isn't going to help you pave more solid footing for your future.
Fortunately, the task of figuring out how to diversify may be easier than
you think. Four basic steps are recommended. The total time you spend on these
activities could range from 30 minutes to several hours, depending on how much
effort you want to apply.
- Revisit your asset allocation to determine whether it's still appropriate
for your situation.
If you're not sure what "asset allocation" means, we strongly encourage
you to log on to www.retireonline.com and
complete the "Asset Allocation Profiler" quiz. You'll need a few
minutes to answer some pretty basic quiz questions that can help you pinpoint
your investment goals, investment horizon and tolerance for risk. (To locate
the Asset Allocation Profiler on our site, click
- Consider how your existing investments are currently spread among the various
Each fund in your plan's investment lineup belongs to an asset class such as
stocks, bonds or cash alternatives. If you don't remember the asset classes
of the funds that you're currently invested in, you can find this information
(Click your plan name and then "Fund Information" on the left side
of the screen. Then click the name of each fund for more details.)
Or, just call us at 800-345-2345. Have the results
of your Asset Allocation Profiler quiz on hand when you call, and one of our
registered representatives can explain what your results mean in light of your
plan's offerings. (In other words, if the results suggest a sample portfolio
that's 40% invested in large-cap stocks, we can tell you which funds
in your 401(k) plan's investment lineup are large-cap stock investments.)
- Compare your findings to your preferred asset allocation to identify where
adjustments may be needed.
If your investments are not divided among the various asset classes (stocks,
bonds and cash alternatives) in a manner consistent with your preferred asset
allocation, you may want to diversify your account. See "When to diversify" for more information.
- Take action if desired.
Diversifying your account involves selling certain investments and buying more
of others, to bring your account more closely in line with your preferred asset
allocation. Although this sounds complicated, it's not hard to do, and you
can complete this task with just a few clicks of your mouse once logged onto www.retireonline.com.
Or, you can call 800-345-2345 weekdays between
7 a.m. and 8 p.m. Central time for assistance. The TDD number for those with
a hearing impairment is 800-345-1833.
Return to "How do I diversify my investments?".
This material has been prepared for informational and educational purposes only. It is not intended to
provide, and should not be relied upon for, investment, accounting,
legal or tax advice.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than original cost. Past performance is no guarantee of future results.
Diversification does not assure a profit nor does it protect against loss of principal. Diversification among investment options and asset classes may help to reduce overall volatility.
Recordkeeping and administrative services for the retirement plan provided by J.P. Morgan Retirement Plan Services LLC (JPMRPS); securities transactions for the retirement plan may be introduced by J.P. Morgan Institutional Investments Inc. (JPMII), member
FINRA/SIPC. Retirement brokerage services are offered by J.P. Morgan Securities LLC (JPMS), member FINRA/NYSE/SIPC. JPMRPS, JPMII and JPMS are affiliates of J.P. Morgan Chase & Co.