Step 1: Finding Balance
As an investor, it’s important to find balance. You want stability, but you also want the potential to grow. You may be willing to take on some risk, but only up to a certain point. Diversification and asset allocation can help you meet these conflicting goals.
Asset Allocation
You need to decide how much of your retirement contributions to put in the individual asset classes: stocks, bonds and cash. This is called asset allocation.
Note: The use of asset allocation does not guarantee returns or insulate you from potential losses and diversification does not assure a profit and does not guarantee against loss in a declining market.
Diversification
Remember the saying, “Don’t put all your eggs in one basket?” That’s the basic idea behind diversification. It’s all about making sure your retirement portfolio contains a mix of different types of investments. If you have all your retirement funds in one investment and that investment performs poorly, your nest egg could be in trouble. But, if your funds are divided between several investments, poor performance from one investment has less impact on the overall portfolio.
For example, you could diversify by investing in one stock, one bond and one money market investment option. If you want to diversify further, your plan might allow you to divide your stock investments by company size (e.g., large-cap, mid-cap and small-cap) or location (e.g., domestic, European, Far East or emerging markets). Similarly, your bond investments might be spread among short-term, intermediate-term and high yield investment options.
Diversification can help smooth out the ups and downs in your portfolio. Although you might reduce volatility and risk with diversification, you can’t eliminate investment risk all together. Diversification does not ensure a profit or protect against loss.
Note: Each group of investments carry their own unique risks. Before investing, please read each fund prospectus for a detailed explanation of the risks, fees, and costs associated with each underlying investment option.
How do I get started?
If asset allocation and diversification sounds complicated, there’s help! This guide directs you through a series of questions designed to help identify your investor profile. Using the model portfolios as a guide, you can choose a mix of investments.
Investment information is provided for educational purposes only. Contributions to your retirement account are deposited into separate accounts, which in turn are invested into the investment options you select. It is not possible to invest your contributions directly in stocks, bonds or mutual funds.
Tax qualified retirement plans from American United Life Insurance Company® (AUL) are funded by an AUL group annuity contract. While a participant in an annuity contract may benefit from additional investment and annuity related benefits under the annuity contract, any tax deferral is provided by the plan and not the annuity contract.
The retirement plan discussed is funded by a group annuity. A variable annuity contract is a long-term, tax-deferred investment designed for retirement that will fluctuate in value. The annuity has underlying investment options. These investment options may not be available for purchase outside the variable annuity. Contributions are used to purchase units of an investment account within an AUL separate account and AUL in turn purchases shares of the corresponding investment option.
Investments made into the plan are tax-deferred. The tax deferral is a result of the tax treatment of the plan itself and not the group annuity. The group annuity adds no additional tax benefit. Withdrawals from the plan are taxed as ordinary income and remember if withdrawals are made before age 59½, there may be an additional 10% tax penalty in addition to the ordinary income tax due.
Investing always involves risk, including the potential loss of principal. Participants should carefully consider their risk tolerance, investing time horizon, needs, and objectives as well as the specific risks and limitations associated with each of the investment options before investing. It is important to note that there are costs associated with the group annuity including investment costs associated with each of the investment options, as well as expense fees and contract charges.
Variable products are sold by prospectus. Both the product prospectus and underlying fund prospectuses can be obtained from your investment professional or by writing to 433 N. Capitol Ave., Indianapolis, IN 46204, 1-877-285-3863. Before investing, carefully consider the fund's investment objectives, risks, charges and expenses. The product prospectus and underlying fund prospectus contain this and other important information. Read the prospectuses carefully before investing.
Registered group variable annuity contracts issued by AUL are distributed by OneAmerica Securities, Inc., Member FINRA, SIPC, a Registered Investment Advisor, 433 N. Capitol Ave., Indianapolis, IN 46204, 1-877-285-3863, which is a wholly owned subsidiary of AUL.
