Maximizing Voya Retirement Investments: A Comprehensive Guide

Voya Financial offers a range of retirement investment options, including target date, target risk, equity, fixed income, and real estate mutual funds, as well as variable portfolios. Their retirement investment solutions are designed to help individuals save for retirement and provide sustainable income during retirement. Voya's Target Retirement Funds aim to balance the evolving risk-return profiles of participants as they age, maximising the probability of a successful retirement. Financial planning experts generally suggest that investors be more aggressive when they have a long time horizon until retirement and gradually become more conservative as they approach retirement. Voya's retirement investment options include various funds and portfolios tailored to different risk tolerances and investment objectives.

Voya's multi-manager approach

Voya offers a multi-manager approach to investing, which can be seen in its Multi-Manager International Factors Fund, Multi-Manager International Small Cap Fund, and Multi-Manager International Equity Fund. These funds are designed to provide long-term growth by investing in a diverse range of assets, including equity securities, convertible securities, and depositary receipts. The day-to-day management of these funds is handled by sub-advisors who act independently of each other and use their own methodologies for selecting investments. This approach allows for a more dynamic and flexible investment strategy that can adapt to market changes and help maximize returns while managing risk.

The Multi-Manager International Factors Fund, for example, is managed by PanAgora Asset Management, Inc. and Voya Investment Management Co. LLC, who employ different strategies to identify investment opportunities. Similarly, the Multi-Manager International Small Cap Fund is managed by Acadian Asset Management LLC and Victory Capital Management Inc., who bring their own unique approaches to selecting investments. This multi-manager structure provides a diverse range of expertise and strategies, allowing the funds to invest in various assets and markets, including international and emerging markets.

Increasing investment risk for higher returns

While higher-risk investments may offer the chance of larger returns, they also put your money at greater risk. If you are considering increasing the risk of your investments for higher returns, it is important to exercise caution and ensure you understand the risks involved. Here are some things to keep in mind:

Understand the Risks

High-risk investments are often advertised as high-return opportunities, but it is important to remember that there is no guarantee of higher returns. While high-risk investments can produce substantial returns, they also come with a higher chance of losing all your money. The lack of a direct relationship between risk and reward means that taking risks does not always lead to better outcomes.

Assess Your Risk Tolerance

Before investing in high-risk assets, carefully consider your risk tolerance. High-risk investments are generally only suitable for experienced investors who fully understand the risks involved and have the financial capacity to absorb potential losses. It is recommended that you invest no more than 10% of your total net assets in high-risk investments and diversify the remainder across mainstream investments.

Time Horizons

Time plays a crucial role in determining the appropriate level of risk for your investments. If you have a long-term investment horizon, you have more time to recover from potential losses and participate in bull markets. On the other hand, shorter investment time frames increase the risk proposition of the same investments.

Types of High-Risk Investments

There are various types of high-risk investments that offer the potential for higher returns, including:

• Options
• Initial Public Offerings (IPOs)
• Venture Capital
• Foreign Emerging Markets
• Real Estate Investment Trusts (REITs)
• High-Yield Bonds
• Currencies and Forex Trading
• Penny Stocks
• Cryptoassets
• Mini-bonds
• Contracts for Difference (CFDs)

Voya Retirement Plans

When considering increasing investment risk in your Voya retirement plan, it is important to carefully review the available investment options and assess their risk-reward profiles. Voya offers a range of retirement investment portfolios with different risk levels, including the Voya Retirement Growth Portfolio, which seeks a high level of total return consistent with a higher risk compared to the Voya Retirement Moderate Growth Portfolio.

Additionally, Voya offers the Voya Retirement Income Generator (Voya RIG) program, which seeks to provide retirement income solutions to help participants meet their spending needs during retirement. This program includes a tool that provides guidance on withdrawal planning and is supported by the Voya Retirement Income Fund (RIF), a diversified, actively managed portfolio.

Reducing risk as retirement nears

As you approach retirement, it's important to reduce the risk in your investment portfolio. This means reducing exposure to the stock market and increasing exposure to fixed-income investments such as bonds. This is because, as your time horizon gets shorter, your portfolio has less time to recover in the event of a market decline. If you're drawing on your portfolio during a down market, the returns needed to get back to even are even greater.

Diversification

As you approach retirement, it's important to diversify your portfolio to reduce risk. This means investing in a variety of assets, such as stocks, bonds, and other fixed-income investments. By diversifying, you can reduce the impact of market downturns on your portfolio.

Annuities, Bonds, and Certificates of Deposit (CDs)

Adding some safer investments to your portfolio, such as properly structured annuities, bonds, bond funds, CDs, and cash, can help reduce risk as you approach retirement. These types of investments provide more stable returns and are less susceptible to market volatility.

Retirement Bucket Strategy

A retirement bucket strategy involves dividing your retirement savings into three buckets:

• Liquidity (immediate needs): This bucket covers your day-to-day needs for the first three to five years of retirement. These funds should be kept in liquid assets with minimal exposure to market fluctuations, such as cash-equivalent investments (CDs, money market accounts) and short-term bonds.
• Lifestyle (short-term savings goals): This bucket is for the next five to ten years of retirement. These funds can be invested more aggressively in a diversified portfolio for potential growth, with some money regularly shifted to replenish the first bucket.
• Legacy (long-term planning): This bucket is for the latter part of your life and can be invested with future generations or charitable causes in mind. These funds can be invested in assets outside of traditional stocks and bonds, providing more flexibility.

Evaluate Your Portfolio

It's important to periodically evaluate your portfolio to ensure it aligns with your risk tolerance and retirement goals. Meet with a retirement planner or use a stock portfolio evaluation tool to get a qualified analysis of your portfolio. This will help you understand your current asset allocation and the recommended risk level for your age.

Voya Retirement Income Generator (Voya RIG)

The Voya RIG program is designed to help individuals meet their retirement spending needs and reduce the chances of running out of money. It provides guidance on withdrawal planning and is supported by the Voya Retirement Income Fund (RIF), a diversified, actively managed portfolio. This program simplifies the transition to retirement and gives individuals control over their savings while providing a personalized retirement "paycheck".

Voya's glide path strategy

Younger participants can afford to take on more investment risk in exchange for greater potential returns. However, in later years, participants are more vulnerable to a market downturn, especially on the day they retire. Therefore, Voya's Target Retirement Funds shift emphasis to asset protection in later years, reducing risk and ultimately reaching a conservative equity allocation of 35% at retirement to help investors hold on to their savings.

The Voya Target Retirement Funds allocate 95% to equities 40-50 years before the target date, compared to the industry average of 89%. At the target date, Voya's funds allocate 35% to equities compared to the industry average of 42%.

Voya's active/passive blend

The active component of the blend offers the potential for excess returns in less efficient asset classes, such as fixed income or non-traditional investments. Active managers tend to outperform when markets sell off. Voya's active managers have 15+ years of experience and access to other well-known managers, which helps to enhance diversification and reduce risk.

The passive component, on the other hand, offers cost-effective exposure to highly efficient asset classes, such as US large- and mid-cap equity. Passive managers tend to outperform in rallying markets.

Voya's blend strategy is designed to meet the needs of investors at different life stages. For younger investors, the blend has a higher equity allocation to build wealth. For investors closer to retirement or already retired, the blend has a lower equity allocation to reduce risk and protect wealth.

Voya's Target Date Blend Series is designed to balance the evolving risk-return profiles of participants as they age, maximising the probability of a successful retirement. The series combines Voya's investment capabilities with those of other well-organised investment managers, enhancing diversification and reducing single-manager risk.

The blend strategy is also applied to Voya's Target Retirement Funds, which are designed to balance the evolving risk-return profiles of participants as they age. The funds have a higher equity allocation for younger participants, allowing them to take on more risk in exchange for greater potential returns. As investors approach their target retirement date, the funds reduce equity allocation to lower risk and protect wealth.

In summary, Voya's Active/Passive Blend offers a balanced approach to investment management, utilising both active and passive strategies to maximise returns, minimise costs, and meet the needs of investors at different life stages.

Frequently asked questions