Beware this "Billion Dollar Blind Spot"
Morgan Newman, CFP?
Financial Advisor | The Newman Group of Oppenheimer & Co. Inc. | Women in Finance | Women at Work Speaker
Have you recently rolled over a 401(k) plan or made an IRA contribution? Did you know it was a two-step process? If not, you’re not alone! A recent survey from Vanguard shows some staggering (but not surprising) data about 401(k) rollovers...
- 68% of people who do rollovers don’t realize how their assets are invested
- About 48% of people (incorrectly) believed their rollover was automatically invested
I was doing an Investing 101 presentation last week and this came up in conversation. Putting money into an IRA account, whether through rollovers or contributions, is STEP ONE of the process. IRA stands for Individual Retirement Account – it is a type of account, not an investment.
Rollovers and contributions come into IRAs in cash. If these funds sit in cash – unless this is an intentional choice – they won’t be growing to help you meet your retirement goals.
As the Vanguard survey shows, many don't realize that there is a STEP TWO - actually investing the money you put into the IRA.
One of the benefits of rolling money out of a 401(k) and into IRA is that you can invest it however you like. This can be both a blessing & a curse – while you can chose whatever investment you would like, you then have to decide what the right investment for you is.
I have seen a number of scenarios over the years – some people love picking and following their own investments. They consistently monitor their IRA and have a process to determine when to make changes to it. Kudos to them!
Others need help – they may feel overwhelmed or intimidated by making investment decisions on their own. They may need a guiding hand in choppy markets, be afraid of making a mistake or not know when it’s time to make changes.
If you fall into this camp, then you need to reach out to me!
Your retirement funds are not working for you if they are unintentionally sitting in cash. We can make a plan together on how to invest them and get you moving closer to your retirement goals.
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