The following appears in the latest PERSI report for state employees
If your money has been invested in aggressive funds in the past, which probably meant you earned higher returns, it may be time to consider the more conservative investment options available to you. If you are invested in the Choice 401(k) Plan, you can get fact sheets on every investment option by visiting the PERSI Web site at www.persi.idaho.gov. If you scroll down to the bottom of the Choice Plan page, you will find a Choice 401(k) Plan Investment Options link. You can change your investment choices quickly and easily online. Regardless of the country’s economic situation, you should review and evaluate your investments annually.
Plus, the earnings on your investments are also tax deferred as long as they remain invested. Since your earnings are reinvested and nothing is taken out to pay taxes, you’ve got more money to compound and grow. This means when you withdraw the funds, your retirement investment may be larger than a similar investment that was subject to annual capital gains tax. And, since you are investing for retirement you are more likely to be in a lower tax bracket when you finally withdraw the money than you are today.
This is a technique designed to reduce market risk by systematically investing a fixed dollar amount at regular intervals. Many investors already practice DCA without realizing it. Using DCA, more shares are purchased when prices are low and fewer shares are bought when prices are high. Regardless of your investment mix, you are practicing DCA if you contribute money on a regular basis to a retirement account and purchase more shares at a lower cost while prices are down.
The expectation is that when the market rebounds, prices will rise and you will make money. If you’ve ever planted a garden, you did more than sow the seeds. You made a commitment to water, fertilize and weed. Investing for retirement is similar. It requires more than a commitment to saving. It also requires constant attention to changing conditions, and occasionally some action on your part to ensure you reach your retirement goals.