Asset allocation is a continual process. As the markets fluctuate, you ll need to rebalance your account at least once a year to bring it into line with your desired asset allocation strategy. While it may be tempting to leave your stock market gains on the table, rather than transfer them to the more conservative side of your investment balance sheet, spreading your bets by rebalancing will help cushion the impact of a market downturn. These funds have preset asset allocations related to a particular investor profile, such as conservative, moderate, or aggressive. This fee generally ranges from .5 percent to one percent of assets, and is charged in addition to regular mutual fund expenses associated with the component funds.
Balanced funds are another popular option.
Stay tough when the going gets rough. Ten years later, after the Asian currency crisis hit, most of them stayed put, he says. But we haven t tested how people might react with a more prolonged downturn. Sometimes, the mutual fund company acting as plan administrator allows participants to occasionally purchase funds from outside the fund family. They don t always advertise or encourage this service, though, so you need to ask if it s available.