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| Investment basics : Carefully consider the fund's investment objectives, risks, charges and expenses |
Investment Basics
Understanding how to invest in your plan may seem complicated, but once you learn a few terms and investing strategies, the choices can become clearer.
There are three major types
of investments:
1. Cash equivalents
2. Bonds
3. Stocks
2. Bonds
3. Stocks
CASH EQUIVALENTS
Cash equivalents, which
include certificates of deposit (CDs), U.S. Treasury bills and money market
funds, can be turned into cash at any time.
While these are some of the less risky investment options, returns may not
keep pace with inflation.
BONDS
Bonds are loans made to a
government or corporation. In return for
borrowing our money, bonds may pay a fixed amount of interest. Bonds are sensitive to interest rates – and
can gain or lose value.
STOCKS
Stockholders own a part of
the assets of the company they invest in and part of the stream of cash those
assets generate. As the company acquires
more assets and the stream of cash it generates gets larger, the value of the
business increases. This increase is
what drives up the value of its stock.
"I knew I needed to
start contributing to my plan if I wanted to retire someday. But there's so much information and so many
choices, I wasn't sure what to do about selecting and managing the investments
that would help me reach my goals. I
needed help. And I got it."
WHAT IS A MUTUAL FUND?
A mutual fund is a mix of
investments that may include stocks, bonds and cash equivalents. The fund is managed by a professional money
manager and has a stated objective or investment style. The core investment options in your
retirement plan are mutual funds rather than individual stocks or bonds.
HOW MUCH RISK SHOULD YOU TAKE?
Knowing your investment horizon time (or years until retirement) is important because it indicates the number of years your money will remain invested. Generally speaking, the longer your time horizon, the more aggressive you can be with your investment.
HOW MUCH RISK SHOULD YOU TAKE?
Knowing your investment horizon time (or years until retirement) is important because it indicates the number of years your money will remain invested. Generally speaking, the longer your time horizon, the more aggressive you can be with your investment.
DIVERSIFICATION HELPS, TOO.
Diversification is the process of spreading your money among different investment types. By investing in stock, bond and cash mutual funds, down periods in one fund may be offset by gains in another. Maintaining a diversified portfolio can help smooth the ups and downs of your investments – though diversification itself does not ensure profit nor protect against loss.
YOU SHOULD KNOW.
For more information about the funds available, including all charges and expenses, please consult a prospectus. Fund prospectuses and additional information relating to your retirement plan can be obtained by contacting your pension representative. Before investing, carefully consider the fund's investment objectives, risks, charges and expenses. The fund prospectus contains this and other important information. Read the prospectus carefully before investing.
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| Hollis Lamon Lamon & Stern Atlanta, Georgia |
Contact Hollis Lamon of Lamon & Stern today for all your retirement planning needs! 770-951-8411
