Is your retirement rockin or rollin
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Is Your Retirement Rockin ’ or Rollin’?. Nationwide Retirement Solutions Retirement Education for LIFE™. How to Manage Your Investment Risk.

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Is your retirement rockin or rollin

Is Your RetirementRockin’ or Rollin’?


Is your retirement rockin or rollin

Nationwide Retirement SolutionsRetirement Education for LIFE™

How to Manage YourInvestment Risk

Retirement Specialists are registered representatives of Nationwide Investment Services Corporation, member FINRA. In Michigan only: Nationwide Investment Svcs. Corporation.

NRM-3448A0.1 (308)


Today you will

Today, you will …

  • Define the main types of investment risk

  • Learn three ways to manage investment risk

  • Prepare an action plan to help you manageinvestment risk


What is risk

What is risk?

The possibility of loss


Investment risk

Investment risk

  • Five main types:

    • Volatility (market risk)

    • Purchasing power (inflation risk)

    • Business-specific

    • Interest rate

    • Longevity

Action step


Managing investment risk

Managing investment risk

  • Three methods (strategies):

    • Match investments to time horizon

    • Diversification

    • Dollar cost averaging

Action step


Jane s time horizon

Jane’s time horizon

  • Life expectancy 85

  • Expected retirement age 65

  • Current age40

  • Time horizon: 85 - 40 = 45 yearsNOT 65 - 40 = 25 years

Action step


Diversification

Diversification

spreading

Diversification is the

principle of __________

your assets around, or not

putting all of your _____ in

one basket.

eggs

Use of diversification as part of an overall investment strategy does not assure a profit or guarantee against loss in a declining market.

Action step


Diversification in action

Diversification in action

$ 82,030

  • Option #1

  • $50,000 @ 2% for 25 years =

  • Option #2

  • $10,000 @ -100% =

  • $10,000 @ 0% =

  • $10,000 @ 5% for 25 yrs =

  • $10,000 @ 8% for 25 yrs =

  • $10,000 @ 10% for 25 yrs =

$ 0

$ 10,000

$ 33,864

$ 68,485

$108,347

$220,696

This illustration is hypothetical and is not intended to predict or project investment results. It doesn't reflect any fees or charges. If they were, the results would be lower.


Dollar cost averaging

Dollar cost averaging

$10.79 13

$10 .59 17

$10.39 26

$10.7913

Amount Price # of Golf Balls

Dollar cost averaging does not assure a profit and does not guarantee against loss in a declining market.


Dollar cost averaging1

$10.79 13

$10 .59 17

$10.39 26

$10.7913

Dollar cost averaging

Amount Price # of Golf Balls

$40

$2.56

69

Average store price per ball $2.56 divided by 4 = 64 cents

Average price paid per ball $40 divided by 69 = 58 cents

Please be aware that dollar cost averaging does not assure a profit and does not guarantee against loss in a declining market.

Action step


Tools for managing risk

Dollar cost

averaging

Time

horizon

Type of risk

Definition

Diversification

The up and down movements

In the price of an investment

Volatility

Purchasingpower

The risk that your money won’t

buy as much in the future

The risk that the value of a

particular company’s stock

declines

Business–specific

How an upward move in

interest rates makes the value

of your fixed income investment decline

Interest rate

The risk that you might not have

enough money on which to retire

Accumulation

Tools for managing risk

Action step


Tools for managing risk1

Dollar cost

averaging

Time

horizon

Type of risk

Definition

Diversification

The up and down movements

In the price of an investment

Volatility

Purchasingpower

The risk that your money won’t

buy as much in the future

The risk that the value of a

particular company’s stock

declines

Business–specific

How an upward move in

interest rates makes the value

of your fixed income investment decline

Interest rate

The risk that you might not have

enough money on which to retire

Accumulation

Tools for managing risk

Action step


Tools for managing risk2

Dollar cost

averaging

Time

horizon

Type of risk

Definition

Diversification

The up and down movements

In the price of an investment

Volatility

Purchasingpower

The risk that your money won’t

buy as much in the future

The risk that the value of a

particular company’s stock

declines

Business–specific

How an upward move in

interest rates makes the value

of your fixed income investment decline

Interest rate

The risk that you might not have

enough money on which to retire

Accumulation

Tools for managing risk

Action step


Tools for managing risk3

Dollar cost

averaging

Time

horizon

Type of risk

Definition

Diversification

The up and down movements

In the price of an investment

Volatility

Purchasingpower

The risk that your money won’t

buy as much in the future

The risk that the value of a

particular company’s stock

declines

Business–specific

How an upward move in

interest rates makes the value

of your fixed income investment decline

Interest rate

The risk that you might not have

enough money on which to retire

Accumulation

Tools for managing risk

Action step


Tools for managing risk4

Dollar cost

averaging

Time

horizon

Type of risk

Definition

Diversification

The up and down movements

In the price of an investment

Volatility

Purchasingpower

The risk that your money won’t

buy as much in the future

The risk that the value of a

particular company’s stock

declines

Business–specific

How an upward move in

interest rates makes the value

of your fixed income investment decline

Interest rate

The risk that you might not have

enough money on which to retire

Accumulation

Tools for managing risk

Action step


Tools for managing risk5

Dollar cost

averaging

Time

horizon

Type of risk

Definition

Diversification

The up and down movements

In the price of an investment

Volatility

Purchasingpower

The risk that your money won’t

buy as much in the future

The risk that the value of a

particular company’s stock

declines

Business–specific

How an upward move in

interest rates makes the value

of your fixed income investment decline

Interest rate

The risk that you might not have

enough money on which to retire

Accumulation

Tools for managing risk

Action step


So what can you do

Ways to manage risk

So what can you do?

  • Annually rebalance your investments

  • Change allocation as you get closer to retirement

  • Invest fixed amounts at regular intervals

  • Diversify

Action step


Why combine other retirement dollars into this plan

Why combine other retirement dollars into this plan?

  • It may make investing easier!

  • Personal help now and after you retire

  • May pay less in annual account fees

  • Nationwide is an industry leader in both 457(b) and 401(k) markets


What types of accounts can you combine

What types of accounts can you combine?

  • Qualified 401(k) retirement plan

  • Qualified 403(b) retirement plan

  • Rollover IRA, Contributory IRA or SIMPLE IRA account

  • You can transfer other 457 dollars or rollover dollars from a:

  • There are differences between deferred compensation plans, individual retirement accounts, and qualified plans, including fees and when you can access funds. There may be sales charges or other fees when you move money out of your current account. You should consider all factors before making a decision. Assets rolled over from a qualified plan, DROP plan or IRA may be subject to a 10% penalty tax if withdrawn prior to age 59½. Neither Nationwide, nor any of its representatives give legal or tax advice.


Tools and services to make informed investing decisions

Tools and services to make informed investing decisions

  • Face-to-face

  • Online

  • By phone

  • Other financial education workshops

Information provided by Retirement Specialists is for educational purposes only and is not intended as investment advice.

Action step


Thank you for your attendance

Thank you for your attendance!


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