Investing for retirement
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. To create an investment strategy, you should ask yourself questions like:
- Am I saving enough?
- What investments should I be considering?
- Will I be financially ready once I decide it’s time to retire?
- What’s my time horizon?
- How much risk am I willing to take?
Sorting through the investing jumble doesn’t have to be complicated if you take it step by step. One of the first things you need to know when it comes to investing is what the different types of investments are and that each type has a unique risk.
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. When we discuss the investment options in the plan’s investment lineup, we sometimes refer to the investment options in the lineup as “funds.” The lineup of investment options or funds consists of different types of investment vehicles, such as mutual funds and collective investment trusts, that allow investors to pool their resources to purchase multiple assets.
How your money is invested among stocks, bonds and short-term reserves – now and as you grow older – is one of your most important financial decisions. The plan’s investment lineup provides a variety of solutions. You can choose a single all-in-one investment option or create your own mix from the core and/or supplemental investment options. Read more about each of the three investment tiers below:
- All-in-one options – Vanguard Target Retirement Trusts
- Core investment options – index-based (also known as passive) and money market investment options, plus a stable value investment option
- Supplemental investment options – actively managed investment options
New brokerage option
The FedEx retirement plans include a self-directed brokerage option with brokerage services provided by Charles Schwab. The brokerage option gives you access to individual stocks, bonds, and mutual funds from hundreds of fund families, as well as exchange-traded funds (ETFs). Keep in mind that the risks are substantially different with this strategy and that you’ll have to pay certain commissions and other costs.
To learn more about this option, watch a short video at workplacefinancialservices.schwab.com/content/choosepcra.
Review the pricing guide to learn more about commissions and costs at schwab.com/resource/schwab-personal-choice-retirement-account-pcra-vanguard-pricing-summary.
You can learn more about brokerage service for your FedEx 401(k) plan by downloading the applicable FedEx Brokerage Plan Highlights document.
* This document covers the brokerage option for RSP for Puerto Rico. It applies to employees of FedEx Express Puerto Rico (Federal Express Corporation employees residing in Puerto Rico); FedEx Freight, Inc. employees residing in Puerto Rico; and FedEx Trade Networks Transport & Brokerage, Inc. employees residing in Puerto Rico.
** This document covers the brokerage option for both RSP I and RSP II. It applies to employees of FedEx Express (Federal Express Corporation, including team members residing in the U.S. Virgin Islands and Guam); FedEx Services (FedEx Corporate Services, Inc.); FedEx Corporate (FedEx Corporation); FedEx Custom Critical, Inc.; FedEx Forward Depots, Inc.; FedEx Freight Corporation; FedEx Freight, Inc.; FedEx Ground (FedEx Ground Package System, Inc. excluding package handlers); FedEx Logistics, Inc.; FedEx Trade Networks Trade Services, LLC; FedEx Trade Networks Transport & Brokerage, Inc.; FedEx Office and Print Services, Inc.; FedEx Supply Chain Distribution System, Inc. (includes ATC Information Services, Inc., GENCO Marketplace and Supply Chain); GENCO Infrastructure Solutions, Inc. – Salaried Employees; and GENCO Infrastructure Solutions, Inc. – Hourly Employees.
All-in-one options
Each Vanguard Target Retirement Trust provides a professionally maintained, diversified mix of investments that shift the emphasis to more conservative investments as you move closer to retirement.
By investing your plan account balance and contributions in a Vanguard Target Retirement Trust, you can achieve a diversified portfolio that aligns your plan investments with your goals. The Vanguard Target Retirement Trusts are designed to keep your assets invested appropriately for someone in your stage of life, up to and including your retirement years.
The Target Retirement Trust Funds contain a year in the names. The year in the trust name refers to the approximate year (the target date) when an investor in the trust anticipates retiring and leaving the workforce. When you invest in a Target Retirement Trust, consider choosing the trust with the date that’s closest to the year when you expect to retire. For example, if you think you’ll retire in or around 2040, consider the 2040 fund. If you are already retired, consider choosing Vanguard Target Retirement Income Trust. This investment option is designed to provide retirees with income while preserving the original investment.
You’re not required to choose the fund that matches your projected retirement year. Once you review that fund’s mix of stocks and bonds, you could choose a fund with a later target date if you’d prefer a more aggressive investment mix. On the other hand, if you’d prefer a more conservative mix, you could choose a fund with an earlier target date.
Investments in the Vanguard Target Retirement Trusts are subject to the risks of their underlying investment options. The year in the trust name refers to the approximate year (the target date) when an investor in the trust anticipates retiring and leaving the workforce. The trust will gradually shift its emphasis from more aggressive investments (stocks) to more conservative ones (bonds and short-term reserves), based on its target date. An investment in a Target Retirement Trust is not guaranteed at any time, including on or after the target date.
As previously explained, Target Retirement Trusts are one-fund options that gradually shift to more conservative investments over time. For a look at how the investment mix changes over time, see the chart in Target Retirement Trusts: a one-fund investing approach from Vanguard.
Your risk tolerance probably will change over time depending on changes in family status, health, life goals, and other factors, so it’s a good idea to periodically check your assets so that you can assess whether or not the Target Retirement Trust you chose still meets your needs.
If you did not select investment options when you became a participant in the 401(k) plan, your contributions were invested automatically in a Target Retirement Trust, based on your age and an anticipated retirement age of 65.
Depending on how long you have until retirement and any other personal considerations, you should periodically review whether the objectives of the default fund satisfy your investment goals. If you need help establishing investment goals, you might want to check out the periodic webinars from FedEx and Vanguard, review the Vanguard financial education resources at vanguard.com/retirementplans in “Lessons” under “Financial Help” in the menu of the Employer Plans page for your FedEx Retirement Savings Plan, and consider the advice options offered through Vanguard that are discussed below under Resources from Vanguard.
No. It’s important to understand that while the Target Retirement Trust investment options shift to more conservative asset allocations as you approach the target date, they do not guarantee you will have sufficient retirement income on or after the target retirement date. The Target Retirement Trusts continue to have exposure to stocks and equities for the life of the fund. As a result, the Target Date Retirement Trusts reach their most conservative investment mix seven (7) years after the target date.
Each Target Retirement Trust is designed to be the sole investment in your account. A Target Retirement Trust can simplify your investment decisions because it automatically changes your investment mix over time. Based on how long you have until retirement and your risk tolerance, consider whether the objectives of the Target Retirement Trusts satisfy your investment goals.
Although Target Retirement Trusts can simplify investment selection, whenever you invest, there’s a chance you could lose money. Each Target Retirement Trust invests in several broadly diversified trusts – primarily low-cost Vanguard index investment options – and is subject to the risks associated with these underlying funds. Investments in bond funds are subject to interest rate, currency, country credit and inflation risks. Diversification does not ensure a profit or protect against loss.
For more information about Target Retirement Trusts, log in to your account at vanguard.com/retirementplans. In the top left corner, click Menu, Research Funds, Prospectuses and Reports.
Core investment options
Depending on your personal circumstances, interest, and comfort with investing, you may want to create your own diversified investment mix by starting with the investment options in this tier. The tier is composed mostly of index-based investment options, also known as passively managed options.
Index-based investment options (often called “index funds”) generally use a buy-and-hold strategy to try to track the performance of a given market. In other words, these investment options replicate as closely as possible a particular index (for example, the S&P 500). Why would anyone invest in an index fund and earn just what the market earns? Because index funds generally cost less to run than actively managed investment options, managers of which try to outperform the market. That means index funds can provide low-cost access to broad segments of the stock and bond markets.
You may create your own portfolio mix by choosing from this tier alone or in combination with investments in the Supplemental options.
The core investment options, like all plan investment options, are not guaranteed and subject to risk.
Supplemental investment options
If based on your interests, personal circumstances, and available time, you are comfortable with developing your own retirement plan investment portfolio, the investment options in this tier are actively managed and can help you diversify and fine-tune your investment mix with more specialized investments.
In actively managed investment options, the investment managers select specific investments with the goal of outperforming an investment benchmark (for example, the S&P 500). Because more work goes into researching and choosing specific investments, an actively managed investment option can cost more to run than passively managed investment option. But specific funds can be useful if you want to invest in a specific segment of the stock or bond markets.
Why cost is one important consideration
Pay attention to investment option costs. All plan investment options, including Target Date, Core, and Supplemental options, have fees. You should consider fees along with other factors in making your investment selections. 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.
Select or change your investment options
Your choices
The 401(k) investment lineup is organized into three tiers: all-in-one, core and/or supplemental options. You may choose a single all-in-one investment option or create your own mix from the core and/or supplemental investment options, as long as the total equals 100%, such as:
FUND A
45% FUND A
AND 55% FUND B
50% FUND A
AND 50% FUND B
50% FUND A, 15% FUND B,
AND 35% FUND C
10% FUND A, 10% FUND B,
10% FUND C, 10% FUND D,
10% FUND E, 10% FUND F
AND 40% FUND G
Note: Selections may be made in 1% increments.
There are two ways you can change your investment choices:
- You can transfer your existing balance among your investment fund options.
- You can also change your investment choices for future contributions at any time.
Each investment change is independent of the other. To change both existing balance and future contributions, you must make two independent changes. They may be made any day, 24 hours a day, subject to limitations, as set forth in each fund’s prospectus. However, you can change your investment choices for your existing balances only once during any business day. Once you have made a change in your investment choices for your existing balances, you must wait until the following business day to make another change. Please refer to the Your Retirement Benefits book (YRB) to learn more about the Competing Funds Policy and the Frequent Trading Policy.
To view a complete list of available investment options, log in to your account at vanguard.com/retirementplans. In the top left corner, click Menu, Research Funds, Prospectuses and Reports.
For more information about any FedEx 401(k) plan investment option, including investment objectives, risks, charges and expenses, call The Vanguard Group at 1.800.523.1188 to obtain a prospectus or fact sheet. The prospectus or fact sheet contains this and other important information about the investment option. Read and consider the prospectus information carefully before you invest. You can also download Vanguard fund prospectuses at vanguard.com.
How to request a change
Vanguard provides an automated service that allows you to select or change your investment options. Changes can be made any day, 24 hours a day, online at vanguard.com/retirementplans or by calling Vanguard’s VOICE® Network at 1.800.523.1188. You can also speak to a Vanguard associate between 7:30 a.m. and 8 p.m. Central time, Monday through Friday, by calling Vanguard at 1.800.523.1188.
If you make elections/changes before the stock market closes (normally 4 p.m. Eastern time), your elections/changes are based on that day’s closing price. If you make elections/changes after the stock market closes, your elections/changes will be based on the next business day’s closing price.
When the stock market closes before 4 p.m. Eastern time, any elections/changes made before closing are based on that day’s closing price. Elections/Changes made after closing are based on the next business day’s closing price.
Vanguard will send a written confirmation of your elections or changes to your home address within seven business days.
Resources from Vanguard
The stock market can be unpredictable and, for some, it can seem daunting. Before you decide investing is just too complicated, remember that leaving your money stuffed under a mattress won’t get you ready for the future or retirement.
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. There you’ll find resources on saving for retirement and other financial topics. Also consider the advice tools available to plan participants that are discussed below.
A fully digital, comprehensive advice service that offers you a personalized financial plan and the peace of mind that comes with having ongoing money management tailored to all your personal needs and goals – not just retirement.
Go to vanguard.com/retirementplans.
*Employees in the FedEx Retirement Savings Plan for Puerto Rico and employees who have an address outside of the United States, or a mailing address in Guam or the U.S. Virgin Islands, are not eligible.
If you want the benefits of Digital Advisor combined with a personal touch, Personal Advisor might be for you. You’ll get ongoing access to our advisors, who will manage your money and help you tackle your most complex financial issues.
Go to vanguard.com/retirementplans or call 1.800.310.9228.
*Employees in the FedEx Retirement Savings Plan for Puerto Rico and employees who have an address outside of the United States, or a mailing address in Guam or the U.S. Virgin Islands, are not eligible.
If you want to speak with an advisor about a financial situation that pops up, Situational Advisor has you covered. You can get help with any financial topic, from buying a house to saving for college, and more. Your advisor will give you recommendations that you can put into action.
Go to vanguard.com/retirementplans to schedule an appointment online.
Contact Vanguard – 401(k) Assistance
1.800.523.1188
Monday thru Friday, 7:30 a.m. to 8 p.m. Central time
vanguard.com/retirementplans
Spanish speaking: 1.800.828.4487
Hearing impaired: 1.800.749.7273
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.