Our daily roundup of retirement news your clients may be thinking about.

Here’s how investors sabotage their portfolios
Retirement savers sometimes make investing decisions that can hurt their portfolios if they are not aware of their tolerance level to risk, according to this article on MarketWatch. “Everyone knows they should buy low and sell high, but do the exact opposite, primarily because they do not know their own risk tolerance,” says an investment officer. One such example comes from the 2008 market crash, which prompted many investors to dump their stocks at rock bottom prices, which cost them dearly. On the flip side of that, the bull market in large-caps that has lasted nearly eight years has led many people to have a false sense of stability and prompted them to stock up on equities and take on more risk than they should. Wall Street may be somewhat responsible for its marketing, but the many self-directed investors who read online content to justify their decisions and don’t take a careful measure of their own risk tolerance also share some of the blame, according to this story.

Why Roth 401(k)s are a great deal for millennials
Making Roth 401(k) contributions can help millennials catch up on their retirement savings goals, as withdrawals of these funds are not subject to tax, according to this article from U.S. News & World Report. "First, the higher contribution amounts are great. When you look at earning patterns of workers, we typically earn less when starting our career and thus are in a lower tax bracket," says an expert. "Consequently, saving on a tax-deferred basis does not make as much sense at the beginning of a career. It will likely make sense for the worker to change their savings to a tax-deferred basis later in his or her career."

401(k)s offer a creative way to fund an entrepreneurial passion
401(k) participants have the option to start their own business using their retirement funds through a process called "rollover-as-business-startup" transaction, according to this article on Kiplinger. The IRS Employee Plans Compliance Unit declares that retirement savers do not avoid any taxes if they decide to take advantage of this process. Those who consider this option are advised to get help from a CPA to understand how the process works and avoid unfavorable tax outcomes.

Are your clients’ retirement savings crash-proof?
Retirement investors need to diversify their portfolio to minimize financial losses during market volatility, according to this article on Fox Business. To diversify their investment portfolio effectively, investors should check the correlation of returns between investments and the extent to which their performances track each other. The investments provide less diversification if there is a greater correlation of their returns.

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