Considering Retirement Funds

If you haven't reviewed your 401-K holdings for a while, there's no time like the present. Unlike taxable mutual fund holdings, there's no real downside to buying into a new fund at year-end, when weighed against buying in at the beginning of the year.

Those investing in standard mutual fund accounts, those that are taxable now, risk having to pay capital gains taxes on distributions the fund itself made earlier in the year, but that's not a factor with retirement accounts, because taxes are deferred on the investments until they are withdrawn.

Many financial advisers suggest you look at long-term retirement accounts, mindful of your age. The idea here is that you can withstand more risk when you are younger, less risk as you get closer to the time when you need to begin drawing money out.

Broadly speaking, fixed-income is viewed as less risky. One formula, take your age, subtract it from 110. Take the resulting number and consider that percentage of your retirement income be placed into stock funds. The remainder goes into bonds or fixed income.

Different advisors have their own formulas, and some investors will want to take on less risk, others may want you to be more aggressive.