Why Do You Need A 401(k) Investment Strategy?

If you are like many Americans, outside of home equity, your employer-sponsored retirement plan (401k, 403b, 457, etc.) is your largest financial asset. In order to grow the largest liquid retirement asset in your life, you should be investing with a clearly defined plan, using the best funds on the market, and investing in these funds at the RIGHT time to be invested in them.

Traditionally picking investments for your retirement plan is DIY – you’re on your own to choose from a pre-selected group of mutual funds.

We often see our clients asking questions like:

  • Are there fees embedded in those funds?
  • Are they quality funds?
  • How have they performed?

Unfortunately, most of the time YOU, the investor, are on your own to answer these questions.

In many retirement plans, the funds available to pick from are overly expensive and often underperform the broader stock market. This combination of overly expensive, average-performing mutual funds, and no help from a real person often creates anxiety and underperforming investment allocations.

At Easy 401(k), we believe that you shouldn’t have to fly solo when making decisions for the largest piece of your financial future.

You deserve to know that you are choosing high-quality investments that are right for your portfolio, financial goals, and risk tolerance.

With the recent growth in popularity of the Self-Directed Brokerage account, you are now able to invest your 401(k) with the investment strategies and best-in-class funds that we have used with our clients for decades. This newly opened window allows us to help you achieve your financial goals with the utmost confidence!

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Easy 401(k) Investment Strategy

Core & Satellite

The foundation of our investment strategy is what we call “Core and Satellite.” It’s a strategy that allows us to capture both big-picture economic behavior and unique trends. 

This approach helps you build a portfolio based on timeless knowledge and major economic factors, while also incorporating new opportunities for growth.

How It Works

Core Strategy

In Core, we allocate 50-80% of your account to broadly diversified market indexes like the S&P 500 or the NASDAQ. By investing in broadly diversified indexes, we are decreasing unnecessary market risk and providing similar returns to the indexes.

On a quarterly basis ,we adjust how much of your account is invested in each index based on the momentum and risk we are seeing in each sector, as well as the broader global economy.

Satellite Strategy

In Satellite, we allocate 20% to 50% of your account to the highest momentum trends on the market.

Our goal is to identify the trends and innovations that are on the horizon and have historically provided outsized market returns. For example, we may invest in a fund made up of companies in the cloud computing space due to the speed at which that part of our economy is growing.

What Is The Easy401(k) Investment Management Process?

On a weekly basis, our team does the following:

Analyze Market & Economic Data

We measure the momentum and volatility of each market sector (US, International, and Fixed Income). We seek out which sectors are providing the highest level of momentum at the lowest level of risk.

Review Current Allocation

We then review the current investment allocation and funds to determine the impact of the above momentum and volatility to our current positions. We track the returns on a weekly basis to determine if a trend is taking route that requires a change to the investment allocation.

Quarterly Review

At the end of each quarter we review all of the data we have compiled and make any necessary adjustments to the investment allocation to ensure your funds are invested in a manner to take advantage of the current market momentum and reduce investment risk where possible.

Current Investment Models

Aggressive Growth

Your Risk Score is between 70-99. You plan to use these funds in 10+ years and are comfortable with large swings in your investment account. And/or, during periods of market volatility you are able to refrain from selling investments.

Moderate Growth

Your Risk Score is between 40-70. You plan to use these funds  in 1-15 years. And/or you prefer your portfolio to be less susceptible to swings in value during periods of market volatility.

Conservative Growth

Your Risk Score is between 1-40. You plan to use these funds in 1-5 years. And/or you prefer your portfolio to hardly decrease in value during periods of market volatility. You understand that this strategy will result in limited growth as a tradeoff for less potential for loss.

Is Your 401(k) Invested Correctly?

Are You Aggressive, Moderate, Or Conservative?