Account Review

Reviewing Your Account

It's a good idea to at least glance at each of your plan account statements throughout the year. This will give you a sense of how your investments are doing over the short term.

But you may not want to make any big strategy changes based on one or two quarters of performance. Remember, a long-term investor (that's you) mostly ignores the day-to-day gyrations of the markets. You're looking for steady performance over years, not months.

Once each year (January is a good time to do this, after you've received your year-end statement), you can really study the numbers and decide if you need to do any fine-tuning to your account. Here are the two main items to consider:

  • Contribution rates. Decide if you want to change the percentage of your pay going into the plan. The calculator section can help you see how a change in your contribution rate may affect your account balance down the road. Even small changes can make a big difference over time.
  • Asset allocation. Your asset allocation (how much of your account value is in each asset class) will change according to how your investments perform.

For example, say you started the year with 60% of your money in stocks, 35% in bonds, and 5% in short-term investments. At year-end your stocks have grown more than the other investments in your portfolio so that now they make up 70% of your total account value. Your asset allocation has changed. You need to decide if you're comfortable with this change or if you want to get back to your original mix.

The asset allocation you established when you first put your portfolio together was probably based on your long-term goals, the length of time before you would need your money, and your feelings about risk. For most people, these factors don't change radically every year. So, to keep this as simple as possible, you may want to keep your target asset allocation about the same from one year to the next. You do this with a process called rebalancing. You can learn more about this topic by reading the article "Rebalancing Your Portfolio: Stay on Track to Meet Your Long-Term Needs."


Adobe PDF Icon You will need the free Adobe Acrobat Reader® to view these files. Adobe, the Adobe logo and Acrobat are trademarks of Adobe Systems Incorporated.