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Eight Dos and Don’ts For Your 401k

The end of the 2011 is nearly here, and that means many of us have started setting our financial goals for 2012. Included in your 2012 goals should be getting the most out of your 401(k), and to help work towards that goal, I offer up eight dos and don’ts.


Do Review Your 401(k) Statements- 401(k) statements are filled will valuable information on the performance and details of your 401(k). Most of these statements can be accessed anytime online. These statements are important education tools and should not be ignored.

Don’t Let the Headlines Scare You- Doom and gloom seems to dominate the market headlines lately, but don’t let it rush you into a decision you may regret later. A drop in the markets may make you want to pull money out of your 401(k), but doing that means you could be selling investments when they are low, and possibly buying back in when the values are high. This is not the route to take when investing for your retirement.

Do Know Your Risk Tolerance- Risk tolerance is a financial industry measure that refers to an investor’s willingness to take risks and to stomach losses. Think about how dips in the market make you feel to better understand your risk tolerance. Knowing this information can help you as you decide how to allocate your funds in your 401(k).

Don’t Have a Day Traders Mentality- When you are dealing with retirement investing, you are most likely dealing with a long-term plan. Scott Holsopple, Smart401k CEO, spoke about dealing with a long-term plan in a short-term world in this clip. Bottom line, don’t chase quick returns for your retirement. Buying and selling the funds in the short term is not an effective way to plan for your retirement. There are too many potential areas for getting the timing wrong and, in addition, some funds in 40(k) plans have redemption or selling fees attached that will take a hit to potential earnings.

Do Increase Your Contribution Amount- Many retirement advisers recommend you try to increase your contribution amount by 1% each year. If that situation does not work with your current financial standing, try to increase your contribution amount with each raise or promotion you receive. The extra amount you contribution can go a long way in helping you building your nest egg.

Don’t Follow the Footsteps of a Co-worker- It can be tempting, your co-worker is more in tune with the markets than you are and seems pretty educated about investing, but following blindly in the footsteps of a co-worker is rarely a good idea. Every retirement investor is different, with their own goals, time horizon and risk tolerance. Even though your co-worker may know investing, he or she may value risk differently and probably has a VERY different idea of retirement than you. Create a plan based on your retirement ideas and goals.

Do Re-balance Your Retirement Account- The ups and downs of a market can greatly affect the performance of you investment portfolio, possibly changing the percentages in your carefully crafted asset classes. Because of this, it is important that you re-balance at least semi-annually to ensure that your current balances match up with your recommended allocations.

Don’t Ignore Resources Available to You- Most 401(k) plan providers offer access to an array of resources and education tools to help you gain a better understanding of retirement investing and planning. Use these tools to better educate yourself as you prepare to make decisions with your 401(k).

If you have any questions about your 401(k) as you prepare for 2012, contact our advising team at 877.627.8401 or

Evan Davis

Marketing Associate

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About Smart401k

Smart401k is a web-based investment adviser providing unbiased advice to help employees invest in their employer-sponsored retirement plans.  Smart401k provides service to almost 11,000 clients who collectively have more than $1.5 billion in assets. Individuals receive personalized investment recommendations based on the funds in their plan and support of professional investment advisers available to answer all investment questions. Based in Overland Park, KS, Smart401k can be found at