5 Reasons to Shift Investments

We must start off saying, it's best not to stir up your investments. When you choose to invest, it’s advised to relax and ride out the roller coaster twists of the market. Trying to beat the market is not a good strategy and often doesn’t work. Stick to the motto of investing steadily, diversely and for the long term. This will provide the most foolproof route to success.

However, there are times when Showtime’s rotisserie chicken oven infomercial tagline “Set it and Forget it” just isn’t meeting your needs. Here are 5 relevant situations where you might be better off moving your funds around.

1. New job, new retirement account  

   If your employer provides the option to invest in a 401(k), 403(b) or similar retirement saving vehicle your contribution to this investment typically cuts off when you terminate employment with that employer. It’s often a good idea to consider rolling the funds over to your new retirement saving investment vehicle whether that’s a new employer-sponsored plan or a different account of your choosing. It is possible to leave the account as it stands but this could become a loose end. If you choose to roll it over, you’ll want to follow the protocol from the IRS to avoid a tax penalty and opt for a direct rollover to reduce tax filing complications.

   Side note: In a previous post, I analyzed the state employee’s paycheck. The state-sponsored 457 plan is yours to keep after you leave state employment, and you can roll it. There is no age penalty but you are responsible for paying income tax on the funds.

2. You're over the fees

   There will always be fees, every cent you pay in fees is a cent not in your account, not earning returns. If you’re using a digital adviser, you can expect to be charged about 0.25% - 0.30% of your assets per year. If you’re shelling out for fees themselves, or if moving your investment could lower your fees, it’s probably a good idea to make the move. You may also consider moving your investments if the options you’re looking for aren’t available for you. If impact investing or investments made to generate positive, measurable social and environmental impact alongside a financial return, is your desire, you may have to shift your investments to meet this ambition.

   

3. Requires excess memory 

   An overall financial picture can be difficult to maintain if you have multiple accounts. Consolidating your investments can ease your stress and create a simpler way to follow your investment goals. Another benefit of having your investments all under one scope is the ability to work with a single person or company. Developing a relationship with one person that you can speed dial with all your investment questions is a relief when it comes to money. Multiple accounts also means multiple logins, statements, and tedious account updates when your address or beneficiaries change.

4. Need some risk or stability

   Managing your investments all in one spot can avoid overlapping investments, but it’s still important for your portfolio to stretch across multiple asset classes. Maintaining balance within your portfolio might urge you to shift your asset allocations. Maybe you bought a stock a while ago and then inherited a similar or were gifted an investment. Rebalancing your portfolio helps preserve your desired amount of risk and continue progress towards your goals.

5. Retirement is on your horizon

When you’re getting close to the golden years you may want to reevaluate your assets. You can’t keep money in tax-advantaged retirement accounts forever. There are age restrictions on certain accounts and you are required to begin withdrawing at least the minimum distributions. If you don’t, you will lose that hard-earned and saved money to penalties. It’s easy to forget about an old 401k, from a previous job, if you have not consolidated in a while.​​​​​​

As you may have noticed none of the examples above include moving investments due to market dip. It’s important to remember when investing if you experience a market plummet or prolonged downtown, the loss is not locked in until you sell. History shows the market always returns and often surpasses the previous high. If the conditions above apply to you and you decide the time is right to shift your investment, be sure to ask about a direct rollover or in-kind transfer to ease the process. Investments and taxes can be complicated, if you have any questions, be sure to seek out a licensed professional. To confirm a professional licensure, you can search the database on the Securities Portal.