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Is Your Retirement Rockin ’ or Rollin’?

Is Your Retirement Rockin ’ or Rollin’?. Nationwide Retirement Solutions Retirement Education for LIFE™. How to Manage Your Investment Risk.

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Is Your Retirement Rockin ’ or Rollin’?

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  1. Is Your RetirementRockin’ or Rollin’?

  2. Nationwide Retirement SolutionsRetirement Education for LIFE™ How to Manage YourInvestment Risk Retirement Specialists are registered representatives of Nationwide Investment Services Corporation, member FINRA. In Michigan only: Nationwide Investment Svcs. Corporation. NRM-3448A0.1 (308)

  3. Today, you will … • Define the main types of investment risk • Learn three ways to manage investment risk • Prepare an action plan to help you manageinvestment risk

  4. What is risk? The possibility of loss

  5. Investment risk • Five main types: • Volatility (market risk) • Purchasing power (inflation risk) • Business-specific • Interest rate • Longevity Action step

  6. Managing investment risk • Three methods (strategies): • Match investments to time horizon • Diversification • Dollar cost averaging Action step

  7. Jane’s time horizon • Life expectancy 85 • Expected retirement age 65 • Current age 40 • Time horizon: 85 - 40 = 45 yearsNOT 65 - 40 = 25 years Action step

  8. Diversification spreading Diversification is the principle of __________ your assets around, or not putting all of your _____ in one basket. eggs Use of diversification as part of an overall investment strategy does not assure a profit or guarantee against loss in a declining market. Action step

  9. Diversification in action $ 82,030 • Option #1 • $50,000 @ 2% for 25 years = • Option #2 • $10,000 @ -100% = • $10,000 @ 0% = • $10,000 @ 5% for 25 yrs = • $10,000 @ 8% for 25 yrs = • $10,000 @ 10% for 25 yrs = $ 0 $ 10,000 $ 33,864 $ 68,485 $108,347 $220,696 This illustration is hypothetical and is not intended to predict or project investment results. It doesn't reflect any fees or charges. If they were, the results would be lower.

  10. Dollar cost averaging $10 .79 13 $10 .59 17 $10 .39 26 $10 .79 13 Amount Price # of Golf Balls Dollar cost averaging does not assure a profit and does not guarantee against loss in a declining market.

  11. $10 .79 13 $10 .59 17 $10 .39 26 $10 .79 13 Dollar cost averaging Amount Price # of Golf Balls $40 $2.56 69 Average store price per ball $2.56 divided by 4 = 64 cents Average price paid per ball $40 divided by 69 = 58 cents Please be aware that dollar cost averaging does not assure a profit and does not guarantee against loss in a declining market. Action step

  12. Dollar cost averaging Time horizon Type of risk Definition Diversification The up and down movements In the price of an investment Volatility Purchasingpower The risk that your money won’t buy as much in the future The risk that the value of a particular company’s stock declines Business–specific How an upward move in interest rates makes the value of your fixed income investment decline Interest rate The risk that you might not have enough money on which to retire Accumulation Tools for managing risk Action step

  13. Dollar cost averaging Time horizon Type of risk Definition Diversification The up and down movements In the price of an investment    Volatility Purchasingpower The risk that your money won’t buy as much in the future The risk that the value of a particular company’s stock declines Business–specific How an upward move in interest rates makes the value of your fixed income investment decline Interest rate The risk that you might not have enough money on which to retire Accumulation Tools for managing risk Action step

  14. Dollar cost averaging Time horizon Type of risk Definition Diversification The up and down movements In the price of an investment    Volatility    Purchasingpower The risk that your money won’t buy as much in the future The risk that the value of a particular company’s stock declines Business–specific How an upward move in interest rates makes the value of your fixed income investment decline Interest rate The risk that you might not have enough money on which to retire Accumulation Tools for managing risk Action step

  15. Dollar cost averaging Time horizon Type of risk Definition Diversification The up and down movements In the price of an investment    Volatility Purchasingpower    The risk that your money won’t buy as much in the future The risk that the value of a particular company’s stock declines    Business–specific How an upward move in interest rates makes the value of your fixed income investment decline Interest rate The risk that you might not have enough money on which to retire Accumulation Tools for managing risk Action step

  16. Dollar cost averaging Time horizon Type of risk Definition Diversification The up and down movements In the price of an investment    Volatility Purchasingpower    The risk that your money won’t buy as much in the future The risk that the value of a particular company’s stock declines    Business–specific How an upward move in interest rates makes the value of your fixed income investment decline    Interest rate The risk that you might not have enough money on which to retire Accumulation Tools for managing risk Action step

  17. Dollar cost averaging Time horizon Type of risk Definition Diversification The up and down movements In the price of an investment    Volatility Purchasingpower    The risk that your money won’t buy as much in the future The risk that the value of a particular company’s stock declines    Business–specific How an upward move in interest rates makes the value of your fixed income investment decline    Interest rate    The risk that you might not have enough money on which to retire Accumulation Tools for managing risk Action step

  18. Ways to manage risk So what can you do? • Annually rebalance your investments • Change allocation as you get closer to retirement • Invest fixed amounts at regular intervals • Diversify Action step

  19. Why combine other retirement dollars into this plan? • It may make investing easier! • Personal help now and after you retire • May pay less in annual account fees • Nationwide is an industry leader in both 457(b) and 401(k) markets

  20. What types of accounts can you combine? • Qualified 401(k) retirement plan • Qualified 403(b) retirement plan • Rollover IRA, Contributory IRA or SIMPLE IRA account • You can transfer other 457 dollars or rollover dollars from a: • There are differences between deferred compensation plans, individual retirement accounts, and qualified plans, including fees and when you can access funds. There may be sales charges or other fees when you move money out of your current account. You should consider all factors before making a decision. Assets rolled over from a qualified plan, DROP plan or IRA may be subject to a 10% penalty tax if withdrawn prior to age 59½. Neither Nationwide, nor any of its representatives give legal or tax advice.

  21. Tools and services to make informed investing decisions • Face-to-face • Online • By phone • Other financial education workshops Information provided by Retirement Specialists is for educational purposes only and is not intended as investment advice. Action step

  22. Thank you for your attendance!

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