Understanding Asset Allocation in your Retirement Plan

This video provides a straightforward explanation of how asset allocation works and why it’s such an important part of retirement planning. It breaks down concepts like diversification, market risk, inflation, and how your investment mix should evolve as you move closer to retirement. It also introduces target-date funds as a simple, hands-off way to keep your portfolio aligned with your long-term goals.

• Diversification helps manage risk by spreading investments across many different stocks, bonds, and other assets rather than relying on a single investment.

• Market fluctuations are normal, and staying focused on long-term growth is often more important than reacting to short-term ups and downs.

• Inflation is a major long-term risk, and your savings need to grow at a pace that keeps up with rising costs to maintain purchasing power over time.

• The right level of risk depends on your time horizon—younger investors generally need more growth-oriented investments, while those nearing retirement often shift to more stable options.

• Target-date funds offer a simple solution, automatically adjusting the mix of investments over time so your portfolio becomes more conservative as retirement approaches.