The money you're diligently socking away for retirement should not just sit in cash. If you go that route, your savings won't manage to outpace inflation.
Rather, it's important to invest your IRA or 401(k) plan so you're growing your money steadily over time. And it's also important to check up on your investments regularly to make sure they're serving your needs. Since we're at the midpoint of 2023, here are some moves worth making this month.
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1. Make sure your portfolio is well-diversified
A diverse portfolio is essential for growing wealth over time. If there are certain segments of the market you've historically shied away from, now's the time to consider incorporating them into your portfolio.
That said, one really easy way to diversify is to load up on S&P 500 index funds. These simply aim to track and match the performance of the S&P 500 over time, so you won't need to rack your brain trying to analyze stocks in market segments you're not familiar with.
2. Do some rebalancing
Certain segments of the market -- notably tech -- rebounded nicely during the first half of 2023. As a result, your portfolio may not be as balanced as you think it is. Even if you're invested in a wide range of companies and industries, your exposure to a single market segment may, at this point, be beyond your comfort level.
Now's a good time to take a look at your holdings and do some shifting, as necessary. That could mean unloading shares of certain stocks you own and adding to positions that comprise a smaller portion of your retirement portfolio.
3. Make sure your asset allocation is age-appropriate
If you're in your 20s, 30s, 40s, or even 50s, you may want to consider investing the bulk of your retirement savings in stocks -- either individual companies, broad market index funds, or a combination of both. But if you're within a few years of retirement, it may be time to shift over to some safer investments so you're not overly exposed to the stock market.
Take a look at your retirement portfolio and make sure it's invested in an age-appropriate manner. If you're 35 years old and only 40% of your holdings are in stocks, that may be a problem. And if you're scared to go heavier on stocks, do realize that over time, the market tends to reward investors who stick with it.
It's also generally not great to be 65 with 95% of your assets in stocks when retirement could be just a year or two away. Even if you have a higher tolerance for risk, it may be a better idea to put more of your assets into bonds, which tend to be far less volatile. Also, if you're close to retirement, you'll want one to two years' worth of living costs in cash.
The midpoint of the year is a good time to assess your retirement portfolio. Make sure to hit on these key points so you can feel fully confident in your investments and their ability to lead to the financially secure retirement you deserve.
