Astor Asset Management: 5 Simple Steps to a Safer 401k

2008-07-24 23:37:15 -

- Astor Asset Management Michael Hovanec Managing Director 312-373-6286 michael@astorllc.com www.astorllc.com If the value of your 401k is dropping at the same rate as the stock market, something is wrong, and it has to be fixed immediately. In the first 6 months of the year, the stock market lost more than 12% of its value (S&P 500). 8% of that drop came in June alone. "A professionally managed and balanced portfolio can protect your downside," says Michael Hovanec, managing director for Astor Asset Management, "but if you are suffering losses, we suggest a few simple moves to stop the bleeding."

1. Don't Ignore your Statement

When you finally do open your report, your 401k will be down -- maybe a lot. "If we've learned anything from the tech wreck and the housing crisis, it is that ignoring the problem is not an option", says Hovanec. So, open the report, assess the damage and get ready to move forward.

2. Stay Away from the Watercooler

Now is not the time to take tips from the brain trust surrounding the watercooler. Call a professional. "We believe you should have a direct line right to an advisor who is familiar with your portfolio," suggests Hovanec, "but even if your support comes from an 800 number, call, get some direction and advice."

3. Keep Investing

It may be hard to do after reviewing your statement, but it is very important to keep contributing to your 401k. The key to protecting that investment is diversification. Hovanec suggests using Exchange Traded Funds (ETFs), or low-cost index based mutual funds. These investments are more diversified and less volatile than individual stocks and can expose your 401k to asset classes such as commodities, fixed income and real estate.

4. Think Long Term

After losing money, be careful you don't get too aggressive trying to get it back. The knee-jerk reaction is to chase "hot investments" that have had big gains in the market - and jump into them after they have run their course. The market changes all the time, as one sector rolls over, more emerge - your long-term asset allocation and goals should not.

5. Consider a Professionally Managed Account

"This is the kind of market you have to watch from pre-market through post-market," says Hovanec. "That's a full time job, not something you do after dinner or on the weekends." Rebalancing becomes necessary as the market changes and as your life changes. An experienced advisor should know your goals and always have an eye on your investments.

Founded by economist Rob Stein and headquartered in Chicago, Illinois, Astor Asset Management, LLC provides world-class financial services to individual and institutional investors. Request a complimentary review of your portfolio at www.astorllc.com.

¶ Smart Ways to Protect your Retirement Assets in an Uncertain
Market