In building an SRA portfolio it's important to accommodate what sometimes seem to be conflicting goals. Here are some common errors participants make in allocating among the TIAA and CREF accounts. Of course, any strategy should be designed for your personal goals and circumstances. These are only guidelines, and there's no guarantee any particular strategy will succeed. Putting all your eggs in the equity basket Even if you're an aggressive investor comfortable with considerable fluctuations in your portfolio value, consider keeping some part of your SRA in accounts that protect your principal and provide guaranteed future income.
Diversification is the best strategy for reconciling low risk with strong performance.
Guaranteed accounts such as the TIAA Traditional Annuity cushion your retirement funds against market downswings. Putting at least some of your SRA funds in equities will allow you to benefit from any high returns in the future. The Money Market Account works best as a temporary holding place for funds if you're uncertain about where to put them and need time to decide. But although the Money Market Account has exceeded the Donoghue Money Fund Average nearly every week since its opening in 1988, its high liquidity and low volatility aren't enough to offset its lower rates of return for most long-term investors. If you're considering it for the long term because it offers a high degree of safety, you might think instead about allocating to TIAA's Traditional Annuity whose guaranteed rates have historically been at least a few percentage points above the returns posted by the CREF Money Market Account.