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| Five Facts You Should Know About Your Savings Plan Account |
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If you are questioning what all the recent financial news means for your Alcoa Savings Plan, you're not alone. But you shouldn't make an impulsive move simply based on a news article. Instead, arm yourself with the facts and determine what, if anything, the recent financial news means for your retirement investments, and speak to a financial advisor if you are still concerned.
Fact #1: Stocks experience volatility. You need to expect some ups and downs when investing. These past few months, the market has experienced more ups and downs than most financial experts predicted. While there are no guarantees on what will happen in the future, the best advice may be the same advice you've heard for years: Keep a long-term focus and don't panic. Remember, if you sell when the market is down, the only thing you guarantee is a loss.
Fact #2: While some financial companies are having problems, you need to separate the company from the assets they manage. The assets they manage are not the same as the value of the financial company. Instead, the fund assets or accounts they hold or manage for investors (such as a specific investment fund) are kept separate from the company's budget. If a financial company is bought or sold or requires financial assistance, that does not mean the funds they manage or the assets within those funds disappear.
Fact #3: Your Savings Plan investments are in a trust for plan participants. As you contribute money to your account, the plan buys shares of the investments you choose. Those investments are held in a trust and cannot be used for any purpose except participants' savings.
That doesn't guarantee that you won't see a negative rate of return on your investments at times. But it does provide you with some assurance that your assets are out of the reach of others.
Fact #4: A diversified portfolio can help you weather volatility in the market. A diversified portfolio means you invest in a variety of stocks (often through an investment or mutual fund) so that, if one stock hits hard times, your entire portfolio won't. It also means you invest in different types of assets, such as stocks, bonds and stable value investments, so that if one segment of the marketplace experiences a downturn, there may be another segment that doesn't.
Fact #5: A 401(k) savings plan is still one of your best opportunities for long-term savings. It allows you to save on an automatic basis. While saving may be hard, it may be a really smart move in the long run.
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