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Diversification opportunities in your workplace retirement plan
Although diversification doesn't ensure a profit or prevent a loss in a declining market, taking advantage of the range of investment options offered by your workplace retirement plan may help guard your account against major market swings. You don't need to invest in a whole lot of options; just enough to ensure you have a good mix of different investment types.

Many retirement plans offer investment options that include built-in diversification opportunities. We have summarized a few of these below.

Mutual funds
Think of a mutual fund as a basket that contains many different investments - that all have something in common - be it companies that together make up a market index, a particular asset class (such as stocks or bonds, international or domestic) or a specific sector (such as companies in the energy, construction, manufacturing, transportation or technology industries). There are also mutual funds that invest solely in companies that adhere to certain ethical or environmental principles (also known as socially responsible funds). You should be aware that most mutual funds are diversified for one purpose or objective, and are not considered a diversified portfolio.

What's nice about mutual funds is that investors are able to purchase collection of investments that are professionally managed. It's instant, easy diversification that lets you avoid researching and buying stocks or other types of investments one by one.

Asset allocation funds
Asset allocation funds also offer diversification, professional management and monitoring within a single basket of investments. Within this category are risk-based funds (also known as lifestyle funds) that allocate the money in your retirement account among investment options aligned to your comfort with risk. Age-based funds (also known as target-date or lifecycle funds) correspond with the year you expect to retire and automatically invest more conservatively over time as the date approaches.

Managed account or advice services
Some plans offer a professionally managed investment advice service that is personalized for each participant. This may appeal to some participants, especially those who would prefer that someone make investment decisions and selections for them. Most investment advice services provide a customized investment strategy, based on your own unique time horizon, risk tolerance and other financial goals. In addition, they automatically rebalance your investments on a regular basis so that your asset allocation strategy (the percentage of your money that's divided up among stock, bonds and cash asset classes) remains in place according to your wishes - especially important during either a market downturn or rebound.

Kmotion, Inc., 412 Beavercreek Road, Suite 611, Oregon City, OR 97045; www.kmotion.com

©2020 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this newsletter are those of Kmotion. The articles and opinions are for general information only and are not intended to provide specific advice or recommendations for any individual. Nothing in this publication shall be construed as providing investment counseling or directing employees to participate in any investment program in any way. Please consult your financial advisor or other appropriate professional for further assistance with regard to your individual situation.