Retirement: Planning Strategies: Selecting Your Investment
Whether or not you achieve your financial goals doesn't depend exclusively on how much you save. It also depends on how well your investments perform over time. One important component of investment performance is asset allocation. This strategy involves finding the right mix of stocks, bonds, and other investments to achieve the highest potential for return while also managing risk.
Some investments, like stocks, may rise in value at the same time other investments, such as bonds, decrease. A good asset allocation strategy takes this into account, spreading your investments across different asset classes to help even out the up-and-down effects of the markets.
As a leader in asset allocation, The Principal® offers a suite of asset allocation options, including target-risk and target-date funds. In fact, The Principal is the fifth largest manager of lifecycle funds* in the U.S. today.
Principal Strategic Asset Management Portfolios
Target-risk funds are allocated according to a stated risk level. You select the fund that most closely matches your personal risk tolerance, and our asset allocation team manages and monitors the funds on a daily basis, adjusting the portfolio as necessary to take advantage of market conditions. As you near retirement, you can move to more conservative target-risk funds.
Each Principal Strategic Asset Management (SAM) Portfolio is professionally diversified to help you achieve your long-term financial goals while managing risk. The SAM Portfolios also offer "active" asset allocation. This means that they are continually monitored and reallocated in response to changing economic and market conditions.
Principal LifeTime Funds
Target-date funds tie the asset allocation formula to a specific date, most often the year you expect to retire. Each fund's allocation automatically becomes more conservative as it approaches a designated target date.
The Principal LifeTime Funds offer simplified, automatic retirement investing. Just identify the year you wish to retire and select the corresponding Principal LifeTime Fund. It's an easy way to ensure consistent, professional asset allocation - up to and during retirement.
Asset allocation/diversification does not guarantee a profit or protect against a loss.
* Top-tier ranking for managers of lifecycle funds (No. 5 in the nation as measured by lifecycle mutual fund assets under management as of June 30, 2011 - source: Financial Research Corp.)
The Principal LifeTime Funds, which are target-date funds, invest in underlying Principal Funds. Each Principal LifeTime Fund is managed toward a particular target (retirement) date, or the approximate date the participant or investor starts withdrawing money. As each Principal LifeTime Fund approaches its target date, the investment mix becomes more conservative by increasing exposure to generally more conservative investment options and reducing exposure to typically more aggressive investment options. The asset allocation for each Principal LifeTime Fund is regularly re-adjusted within a timeframe that extends 10-15 years beyond the target date, at which point it reaches its most conservative allocation. Principal LifeTime Funds assume the value of the investor's account will be withdrawn gradually during retirement. Neither the principal nor the underlying assets of the Principal LifeTime Funds are guaranteed at any time, including the target date. Investment risk remains at all times.
To obtain a prospectus, download online or call Customer Service at 1.800.222.5852
While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal® is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. For more information about our funds, including their full names, please see the Principal Funds, Inc. prospectus or call Customer Service at 1.800.222.5852.
A mutual fund's share price and investment return will vary with market conditions, and the principal value of an investment when you sell your shares may be more or less than the original cost.
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