Investing for retirement
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Investment education
If you want to be ready for retirement, you need to know a little about investing or, at a minimum, how to find the right knowledge and advice.
The content in this section is intended for educational purposes only. Our goal is to outline some of the most important things for you to consider when investing for retirement, but you should contact a retirement planning professional if you need more guidance.
Investment strategy
When you first get started with investing, a great exercise is to create an investment strategy. You can do this on your own, or you can get help from a professional.
Before you get started, there are a few key concepts you need to understand. This checklist will help you get started:
- Build a financial plan. Start with a comprehensive financial plan that outlines your goals and milestones. These objectives can range from buying a home, funding your children's education, building an emergency fund, supporting a business venture, to ensuring a comfortable retirement.
Start planning - Make saving a priority. Set aside a portion of your paycheck. Utilize employer-sponsored savings plans like a 401(k) and consider other automatic saving options. Budget wisely and track expenses.
Explore saving strategies - Understand the power of compounding. Harness the power of compounding by saving and investing regularly, starting as early as possible. Even in a low-interest environment, compounding remains crucial for wealth building.
See the benefits of compounding - Keep costs low. You cannot control the future returns on your investments, but you can control the costs. You should consider fees along with other factors in making your investment selections.
Learn about costs - Understand risk. Determine your risk tolerance as a crucial step in your planning process. Assess how much potential loss you can handle and how comfortable you are with ongoing price fluctuations in your investments.
Learn about risk - Know when to seek expert advice. The stock market can be unpredictable and, for some, it can seem daunting. Vanguard provides resources to help you learn more about saving for retirement and investing. FedEx and Vanguard provide periodic live webinars, or you can learn at your own pace on the Vanguard website. To access Vanguard’s online education center, log in to your account at vanguard.com/retirementplans.
Get advice
Investment options in the 401(k)
The 401(k) plan is just another way FedEx helps you create the retirement picture of your dreams. You have a wide range of investment options, and investment changes can be made easily at vanguard.com/retirementplans.
Why cost is one important consideration
Pay attention to investment option costs. All plan investment options have fees. You can get a sense of how much a mutual fund costs to own by looking up its expense ratio in a fund’s prospectus or fact sheet. You can also compare the expenses of all of the investment options in the plan’s lineup by reviewing the plan’s annual fee disclosure or viewing the investment options online at vanguard.com/retirementplans.
Here’s an example. Let’s say there are two funds that invest in the same stocks. The only difference is that Fund A has an expense ratio of 1.19% and Fund B has an expense ratio of 0.23%. For every $1,000 you invest in Fund B, you’ll save $9.60 due to that fund’s lower expense ratio.
| Fund | Expense ratio | Cost per $1,000 invested |
|---|---|---|
| Fund A | 1.19% | $11.90 |
| Fund B | 0.23% | $2.30 |
Keep in mind that cost isn’t the only consideration you should make when choosing investment options. You also should review an option’s investment objectives and risks to ensure the fund aligns with your own investment goals, time horizon and tolerance for risk.
A note about market volatility and your retirement
Stock prices rise and fall every day. That’s perfectly normal. In fact, you’ve probably noticed periods when there are stock market gains for several weeks or even several months. These increases are the reason we invest in stocks in the first place. However, prices can also fall, sometimes for extended periods. Knowing what to do – and what not to do – during difficult times in the stock market may help you manage your retirement investments.
Any losses your investments suffer during market declines are only “paper losses” until you sell the investments to switch with other investments (or to take a cash distribution). As long as you continue holding an investment, you haven’t lost money yet. Your portfolio may be able to recover from its paper losses over time.
Selling your stock investments during down periods could potentially do more harm than good. Past market declines have often been followed by periods of price gains. You won’t be able to benefit from potential upswings in the market if you have moved out of stocks and are sitting on the sidelines.
Investing for retirement is a long-term goal. Although there are no guarantees, based upon historical stock market performance, no other asset class matches the potential of stocks to provide inflation-beating returns over the long term – despite periodic downturns. This fact may help you maintain a long-term view of investing when the market is falling.
While it’s true that stocks have an historical track record of long-term growth, consider the other types of investments your plan offers. Diversification simply means that you invest your plan money in a range of investments in several different asset classes (stocks, bonds and cash equivalents). Then, if one investment type loses value, the others may gain or hold steady. This time-tested strategy can help you manage investment risk in your portfolio.
Don’t let market ups and downs make you lose sight of why you are investing – for a financially secure retirement. By focusing on your goal, you’ll be more likely to stay the course when the investment climate is stormy.
The FedEx benefits described on this website are based on a formal plan document or contract. While this information is intended to be accurate, retirement benefits are subject to the detailed provisions of the applicable plan documents. If there is a conflict between this website and the official plan documents, the plan documents always govern. You are not entitled to retirement plan benefits due to a misstatement on or an omission from this website. FedEx reserves the right to amend or terminate any benefit plan at any time and for any reason.