In Investing, No Risk Means No Reward

In Investing, No Risk Means No Reward The post In Investing, No Risk Means No Reward appeared first on The Network Journal.

In Investing, No Risk Means No Reward

Is there any value in converting an existing employer-sponsored 401(k) into cash without removing the funds from the 401(k)?  

Employer-sponsored retirement plans, such as 401(k), typically have a cash option within the list of investments available to plan members. Look for a money market fund. If you move your account assets into that fund, which is perfectly allowable, the money is going to just sit there, not earning. It will be shielded from the wild swings in the market but will begin to lose value because you will not earn enough on your account to even keep up with inflation (reportedly 3.18 percent at this writing).

The very nature of investing is that you expose money to reasonable levels of risk with the expectation of achieving a profit or gain. Not all of the choices in your 401(k) plan carry the same level of risk. Just remember that in order to achieve a reward, you must be willing to take a reasonable level of risk. No risk, no reward.

The biggest problem with moving your account into a “cash position” is figuring how you will know when to move it back into investment funds that will give you a chance of achieving a gain. A better idea would be to contact your plan’s administrator and make an appointment to meet with an investment counselor to assess all of the options you have in your 401k plan. This person can help you match your tolerance for risk against the options you have in order to find the most comfortable place for the money you are contributing to your retirement account.

Where to find information on determining one’s full retirement age? Can a person continue to work full or part time (mostly for health insurance benefits), and draw Social Security at the same time?  

The official Social Security website ( is remarkably useful and user-friendly. For people born in 1954, the full retirement age (FRA) is 66. However, for those born in subsequent years, FRA gradually increases by a few months. For example, for those born in 1955, the FRA is 66 and 2 months.

If you choose to take early retirement at age 62, there are earnings limits that may affect your benefits. In 2023, the limit adjusted for inflation is $21,240. This means that if you earn more than this limit in a year before reaching your FRA, Social Security will deduct $1 in benefits for every $3 earned abve the limit.

In the year you reach your FRA, different rules apply. You can earn more without having your benefits reduced, and there is no earnings limit.

Understand that these figures and rules can change over time, so it’s always a good idea to check the most up-to-date information from the Social Security Administration or consult with a financial adviser for personalized guidance regarding your specific situation.

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