These days, people leave jobs and move on to new ones all the time. Chances are, you’ve made at least a few jumps yourself. You’re probably quite familiar with the process of getting your new company email, joining their health insurance plan and deciding which employer-sponsored retirement program to contribute to.
But what happened to the 401k you started at your last company?
Don’t worry, it’s still there, doing its thing. But where your hard-earned (and employer-matched) money is invested might not be to your liking.
Finding your old retirement accounts can be tricky.
If you don’t know where your old 401k account is, you’re going to have to do some digging. Usually, you will receive a statement at least quarterly, and this will typically have login information that you can use for your account. You can also check your former company’s website and they may have details about how the employee 401k program works and how to log in to your account. If all else fails, you can also contact the HR department directly.
Once you find your orphaned 401k, it’s not recommended to just leave the money where it is. For starters, some plans charge higher fees for managing the accounts of former employees. In general, the more accounts you have, the more management fees you pay. There’s also the possibility you could forget that you have the account altogether and lose the money (literally).
You will be better off keeping your retirement accounts in one place. It’s just easier to keep track that way. Investors have two options when they leave a company. They can roll their assets into an IRA or they can roll their assets into their next employer’s 401k plan. The benefit to moving into an IRA is that you’re likely to have more investment options than what’s available in your next employer’s 401k plan.
An IRA, or Individual Retirement Account, is best understood as a savings account—but one specifically designed for retirement. Mutual funds, stocks and bonds can easily be held in an IRA. Many, actually most, of our clients have retirement accounts. Many of those accounts are IRAs that were once old 401ks.
Invested Interests can help you gather your orphaned 401k accounts into one IRA that supports social impact companies. Check out our Portfolios HERE and will be in touch.
Last week, August 14th, the yield on the 10-year US Treasury note fell to 1.58 percent, a number that was last reached in late 2016. Also last week, the yield on a 30-year bond fell to 2.03 percent, the lowest record ever. When this happened in 2007, the Great Recession followed.
So, why exactly is this happening? Investors are worried about a lot of things right now, including the US-China trade war and the fact that the German economy is not doing well. When investors are worried, they tend to start selling riskier investments, like stocks, and start shifting their money to investments like bonds, since bonds are safer than stocks. This helps them protect their money in case the economy takes a turn. Bond prices go up, and yields down, when people buy bonds all at once. Economists carefully monitor bonds and when yields are declining or there are radical moves in the bond market, they take it as a strong sign that a recession may be around the corner.
But it’s important to note that even as falling bond yields can be a sign of a weakening economy, there are other ways to gauge how the economy is doing, such as the job market and the consumer outlook ratings. Coincidentally, both are doing pretty great right now.
With all this uncertainty, is this a good time to start investing? The answer is YES! The thing is, there’s always going to be worse times and better times to invest, and since NO ONE can predict when those times are going to happen, one of the best techniques is to invest consistently (i.e. investing a certain $/mo automatically) no matter what’s going on in the economy/market, which is also known as dollar-cost averaging. Dollar-cost averaging takes the guesswork out of the process and allows an investor to buy more when prices are low and less when prices are high. In addition, dollar-cost averaging takes emotion out of the process, which can be an investor’s worst enemy, gets rid of guessing, and makes investment a consistent habit. Dollar-cost averaging gives yourself the opportunity to grow your investments at a steady pace over time. And when making consistent investments, it also makes sense to place those funds into a well-diversified portfolio. Like the saying “don’t put all your eggs in one basket,” diversification can protect you from big declines when the market does take a big turn by being invested at all times in assets that react differently in different markets (strong markets, weak markets, inflationary markets, deflationary markets, etc.).
Here at Invested Interests, we help you create a diversified portfolio with mutual funds that only contain companies that align with your values. That way you’re not only investing in your future, and keeping risk at a minimum if a recession happens, but you’re also aligning your investments with the socials issues you most care about.
Want to learn more about how to align your investments with your values and becoming an Impact Investor with us? Click HERE and will be in touch.