3 Tips to Managing Your Self-Directed 401k

A self-directed 401k can provide you with complete control when saving for your retirement. However, when you are using this type of account, there are a few things to keep in mind. Here are some tips on how to manage your self-directed 401k. 

1. Conduct Research

When you are in charge of a self-directed retirement account, you are responsible for doing your own research on investments. If you have someone else help you with this, they will typically research for you. However, if you want to find solid investments, it will be completely up to you with this type of account.

2. Watch the Risk

When choosing investments for your self-directed 401k, you should try to choose investments that are considered relatively low risk. If you are younger, there is nothing wrong with investing in some stocks. However, you want to exercise some caution when choosing every investment. With retirement funds, you do not want to risk losing them. This is the money that you will be living on at some point.

3. Asset Allocation

Many investors like to allocate their assets based upon a certain ratio. For example, you might choose to invest and 60 percent in stocks and 40 percent in bonds. You will need to rebalance your portfolio several times a year in order to keep these ratios intact.

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