Financial Stability and Market Volatility: Putting it All in Perspective
July 23, 2008
Recent news about bank failures and the turmoil surrounding the housing market can contribute to investors' concerns about the stability of various financial institutions. With the current level of change in the financial industry and fluctuations in the market, it is understandable that investors may have similar concerns about the safety of their retirement plan assets.
A Safeguard for Retirement Plan Assets
Those who participate in their employer-sponsored retirement plans with ICMA-RC should know that their retirement plan assets are not commingled with ICMA-RC assets, and therefore, are not subject to any claims of ICMA-RC creditors. As a safeguard, the money that participants place in their 401 or 457 plan is held in a trust, separate from ICMA-RC's corporate assets, for the exclusive benefit of plan participants and beneficiaries.
ICMA-RC serves as the plan administrator and record keeper for retirement plans, but has no direct access to the assets. This means that when participants invest in a registered mutual fund through their retirement plan account they are purchasing shares of that fund. ICMA-RC does not hold the money.
Registered mutual funds that a participant may invest in have their own management and oversight, as described in the applicable prospectus. When participants invest in funds offered through VantageTrust (the Trust), their assets are invested through the trust which purchases shares of underlying mutual funds.
For more information about ICMA-RC, VantageTrust, or the Vantagepoint Funds, you can read the following:
Maintaining a Long-Term Investing Perspective
ICMA-RC believes that investing with an appropriately long time horizon and not attempting to time the market, while applying sound investment strategies, has served to benefit most retirement-plan investors. Often, investors may find that a turbulent market can present investment opportunities because the price of some mutual funds may decrease, allowing investors to buy more shares that could potentially increase in value over time.
In addition, history has shown that over time stock market losses tend to be made up by gains for long-term investors who choose investments that are appropriate for their goals and stick with them. The chart below reflects 40 years of history for the Dow Jones Industrial Average, an index consisting of 30 large capitalization U.S. companies and used as one barometer of the U.S. stock market. The chart covers the period from 1968 through 2008, and it also highlights some of the major events that have occurred in the economy and securities markets during those years.
As always, investors should read the fund prospectus carefully to determine the right investments for their retirement goals and objectives. It's also important to remember that it's time in the market, not timing the market, which often leads to investing success.
This illustration was compiled by information from outside sources. These companies are not affiliated with ICMA-RC. This information is being provided for educational purposes and is not intended to be construed as or relied upon as investment advice. ICMA-RC does not offer specific tax or legal advice. Individuals are advised to consider any new investment strategies carefully prior to implementing.
Please consult both the current applicable prospectus and MAKING SOUND INVESTMENT DECISIONS: A Retirement Investment Guide carefully for a complete summary of all fees, expenses, charges, financial highlights, investment objectives, risks and performance information. Investing in mutual funds and other investment vehicles involves risk, including possible loss of the amount invested. Investors should consider the Fund's investment objectives, risks, charges and expenses before investing or sending money. The prospectus contains this and other information about the investment company. Please read the prospectus carefully before investing. All Vantagepoint Funds invested through 401 or 457 plans are held through VantageTrust. Vantagepoint Funds are distributed by ICMA-RC Services LLC, a wholly owned broker-dealer subsidiary of ICMA-RC and member FINRA/SIPC. For a current prospectus, contact ICMA-RC Services, LLC.
The performance data quoted represents past performance. Past performance is no guarantee of future results. Investment returns and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data illustrated. For performance data current to the most recent month end, contact ICMA-RC Investor Services at 800-669-7400.