Take The Wheel

The Pension Protection Act doesn’t mean you can sit back and relax

spreading your money across a variety of investments. Even when you reach retirement age, you should maintain exposure to stocks so you lower the risk of outliving your money. That said, although everyone’s circumstances are different, my general rule of thumb for asset allocation is indicated in the accompanying charts.

It is critical to regularly re-examine your investment choices. When evaluating mutual funds, look for strong long-term track records; consistent portfolio management; and low fees. Also: make sure you are not over-weighted in your company’s stock and that you maintain diversification in the stock portion of your portfolio using a variety of mutual funds rather than individual securities.

Mellody Hobson is the president of Ariel Capital Management L.L.C./Ariel Mutual Funds, a Chicago-based mutual fund company and money management firm. She is also a regular financial contributor to ABC’s Good Morning America.

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