You're not alone when it comes to managing your 401(k). You'll want to anticipate future returns as accurately as possible—and you may need the help of outside resources to do so. Luckily, there are a few places where you can look for advice.
Your Employer
Your employer or 401(k) plan administrator may offer resources to help you with your financial planning. Many provide educational material and seminars about retirement planning and saving. They also may provide access to investment advice for retirement online or through a financial professional. Most of these services are available at little or no cost to you.
Online Resources
There are many websites that specialize in 401(k) advice. Most likely, these sites will ask you to provide information about yourself, such as the investments you own, your contribution rate, your financial goals, the age you would like to retire and the level of risk you’re comfortable taking.
Some sites may run your information through a Monte Carlo simulation to determine the most probable outcomes for your current allocation. Based on those outcomes, the programs also may recommend that you adjust your investing strategies or goals. However, there’s usually a charge for this analysis.
Online resources can offer a quick overview of your 401(k) portfolio. Just keep in mind that some of these resources will charge you for more personalized recommendations. And some sites sell their own investments, so you should weigh their recommendations against the profit they stand to make from your investment decisions.
| What’s a Monte Carlo simulation?
A Monte Carlo simulation is a statistical projection of how things are likely to turn out that’s produced by combining pieces of key information in random order. In a financial analysis, software-generated combinations of economic variables, such as interest rates, tax rates, inflation rates and various investment portfolios, generate thousands of possible outcomes, called scenarios, and predict the most probable results for those portfolios. |
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