The value of my Savings Plan account dropped considerably this quarter. What should I do?
Northrop Grumman can’t provide investment advice; however, here are a few generally accepted financial investment principles to consider:
- Diversify your investment portfolio. If your Savings Plan investment portfolio is predominantly invested in one asset class, consider investing a portion of your future contributions among a variety of asset classes (including stocks, bonds, and cash equivalent investments) to help maximize your returns while minimizing your risk. If you’re not comfortable making investment decisions, you may want to consider investing in one of the plan’s Retirement Path portfolios. The value of diversification can be seen by reviewing the performance of a number of different asset classes from 1998-2007. See our example.
- Focus on your long-term goal. Many financial advisors point out that over most 10-year periods even a large stock market decline is typically followed by a recovery in stock prices. Thus, if you are 10 or more years from retirement, you may have time to ride out the current market decline and regain the value that you lost. And given the extent of the recent market decline, this may actually be a good time to invest “new” money (such as your future Savings Plan investment contributions and, if applicable, company matching contributions) in funds that invest in stocks, since you can buy them at relatively low prices and benefit from their appreciation in value over time.
- Continue investing in the Savings Plan, particularly if you receive company matching contributions. The Savings Plan offers an easy, convenient way to save for your future through automatic payroll deduction and, if you are eligible to receive company matching contributions, it offers you an automatic “return” on your investment. For example, if you participate in sub-plan A and invest 8% of your pay in the plan, the Company contributes an amount equal to 4% of your pay to your account. That’s like a 50% immediate return on your investment. The plan also offers the opportunity to defer taxes on your contributions until you withdraw them, which gives you the advantage of having more money “working” for you while reducing the impact on your take-home pay.
If you are near retirement and/or are not sure what to do with your Savings Plan and other personal investments, you may wish to discuss your personal financial situation with a financial advisor. A financial advisor can help you develop an investment and withdrawal strategy to meet your retirement goals.
This Investment Center includes links to tools and information provided by organizations that are not associated or affiliated with Northrop Grumman. The tools and information provided by these organizations are not the property of Northrop Grumman, and Northrop Grumman is not responsible for their accuracy, completeness, or continued availability. You are solely responsible for the investment and asset allocation decisions you make pertaining to your personal savings and investments, including investments in the Northrop Grumman Savings Plan, Financial Security and Savings Program, and any other savings plans sponsored by Northrop Grumman.