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Nationwide: Investment Basics

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


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 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.


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."


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. 


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 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. 


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.

Hollis Lamon
Lamon & Stern
Atlanta, Georgia

Contact Hollis Lamon of Lamon & Stern today for all your retirement planning needs! 770-951-8411